One of the largest Microfinance institutions in Uganda BRAC has transformed into a Tier 2 Credit Institution (Bank) after receiving a license from the Bank of Uganda.
Now the former microfinance BRAC, which boasts of over 270,000 customers according to Jimmy Onesmus Adiga the Chief Executive Officer, will trade as BRAC Uganda Bank Ltd.
“We have refurbished 32 of our 163 branches and outlets in 84 districts of Uganda. Upgraded all our software and hardware to meet the required Bank of Uganda standards for Tier 2 institutions,” said Adiga during the Bank’s official launch at Kampala Serena Hotel.
He said they have moved all the journey from being an unregulated institution in Tier 4 13 years ago to a Tier 2 Credit Institution (Bank) in 2019.
According to Bank of Uganda rating, Tier 2s are Credit Institutions but not fully fledged Commercial Banks. BRAC has now joined the likes of Mercantile Credit Bank, PostBank Uganda, Opportunity Bank Uganda and Top Finance Bank Uganda Limited as a regulated credit institution under Bank of Uganda’s rated Tier 2 banks.
Adiga said BRAC Uganda Bank Ltd is the first regulated BRAC branch in all the countries they operate in outside Bangladesh. “We shall continue to impact lives of the poor especially rural women, youth and children as our slogan goes Now you can do More. This banking license is an enabler for us to provide more services and products like micro-insurance, savings, deposits, provide seeds and loans to farmers,” said Adiga.
Adiga said in the 13 years of business, they have been able to extend credit to 4 million Ugandans of which 97% are rural poor women and youth. He added that their loan repayment rate is recorded at 98% giving them an upper hand to champion financial inclusion in rural Uganda.
“Though our core business will be impacting lives of poor rural women and youths, as a bank, we shall serve every person. We call on fixed depositors to join us as we embark on this journey of transforming people’s lives and deepening financial inclusion,” He stressed.
Adiga said that in 2018, they managed to record a profit of Ush 17 billion after tax.
As part of this transformation process, BRAC has partnered with three mission-aligned investors DEG (Deutsche Investitions-und Entwicklungsgesellschaft mbh), the German development finance institution, Equator Capital Partners, a fund manager investing in financial inclusion and Triple Jump, the Dutch impact investment manager advising the ASN Microkredietpool fund.
Mackay Amau, the Bank of Uganda’s Director for National Payments Systems said the law allows BRAC Uganda Bank Ltd to operate as a tier 2 institution under the agent banking law. He said they are drafting the national payment systems bill that will allow them to issue licenses to operators of electronic money like Bitcoin, Dagcoin, Easymoney etc.
BY PAUL TENTENA