Government unveils new cheap loan product for market vendors

The Government of Uganda through the Microfinance Support Centre (MSC) has rolled out a new affordable loan facility targeting market vendors across the country.

The product named Katale Affordable Loan is aimed at boosting small-scale trade and shielding traders from high-interest informal lending.

Speaking at a press conference, Tadeo Atuhura, the MSC Communications Manager said the government, through MSC, had introduced the land product to provide quick, accessible and low-cost credit to traders operating in major markets.

“We are very excited that we are introducing a new product. The Government of Uganda through MSC has introduced the Katale Affordable Loan product, a transformative solution designed to empower small scale traders with quick, affordable and accessible credit,” he said.

The facility attracts an interest rate of 8 per year and is designed to support vendors working in busy urban markets.

In Kampala, the loan will be available to traders in Owino, Nakasero, Kalerwe, Busega, Gaba and Nakawa markets. Outside the capital, beneficiaries will include vendors operating in Iganga Market, Soroti Market and Arua City Market.

According to MSC, the product is intended to help traders expand their businesses, stabilise their incomes and break free from exploitative lending practices that often trap vendors in cycles of debt.

Atuhura explained that the Katale Affordable Loan is offered through a group-based lending model, with applicants required to form groups of 10 members who guarantee each other. The loans are collateral free, making them accessible to traders who would ordinarily be excluded from formal banking.

Under the scheme, individual borrowers can access between Shs 50,000 and Shs 2 million, depending on their repayment capacity. MSC believes the approach will not only protect traders from predatory lenders but also strengthen saving habits, financial discipline and long-term enterprise sustainability.

He added that for the past 25 years, MSC has been a key driver of Uganda’s financial inclusion agenda, supporting savings and credit cooperatives and community groups. Through these interventions, close to 7.5 million Ugandans have benefited.

Early beneficiaries have welcomed the new loan product, praising its simplicity and affordability. Joan, an onion seller at Nakasero Market, said the application process was straightforward and fast.

“We are grateful to the government for this product; it is hustle free,” she said, adding that the money was quickly sent to their mobile phones. She noted that traders had also received guidance on proper use of the funds to ensure repayment and future access to credit.

Another trader, Faridah, said the Katale loan offered relief after years of struggling with expensive commercial bank loans. “When I heard about the Katale loan I did not hesitate,” she said, expressing confidence in her ability to repay and grow her business.