The Growth of Pearl Microfinance Limited
Pearl Microfinance CEO, Jennifer B. Mugalu speaking to Journalists at a recent function.

The Growth of Pearl Microfinance Limited

Widows provide enriching microfinance lessons.

By Enoch Mutabaazi
more from author >>
First published: December 14, 2006

Following the 1986 war that brought the current government to power, many villages had been heavily looted and destroyed here in Buikwe, Mukono district. Many men were killed in the war, leaving many widows and helpless children. In the proceeding years, many widows had to survive on relief care from many organizations. But it soon became obvious to some women like Finah Ssemutumba that this care would not last forever. They became concerned of a return to the usual life of shortages.

"As women and mothers, a majority of them widows, we knew that any reversal of this relief would severely affect our families. Deep inside us, we knew something had to be done to sustain or even improve the new livelihood. We were energetic but financially stripped. As a group of mothers who had been receiving relief care from Feed The Children (a child care relief NGO), we asked that instead of physical relief assistance alone, we be given soft loans to reactivate our productivity," says Ssemutumba who together with other women started the Dembe Women's Group to help them access loans.

"The call from women was spontaneous and sporadic. We wanted to be sure of our future and take control of it. Our request of financial assistance in terms of soft loans was granted and that is how Feed The Children community banking started in Buikwe, Mukono district," reminisces Ssemutumba, who started with the Feed the Children Uganda credit scheme in 1994 and has been with it up to date.

She says they were over ten women and each was given one million shillings as start up capital. "We knew we were supposed to pay back. It was just a loan but the excitement was deafening! It was a miracle for our village for one to receive such financial assistance," recalls Faridah Yiga, one of the two remaining pioneer members of Ddembe.

Effect of no finance management
But soon the excitement turned into worry. With no proper financial management skills, the women were not making any profits and started failing to meet the loan terms including repayment. It was an awakening call for both the women and the organization that was providing the loans. From then on, the Feed The Children Community Banking project ( which was in November 2006 re-launched into Pearl Microfinance Limited) decided to change the method of giving out loans.

The organization had taken vital lessons from the first release of money to groups. In addition to realizing that the beneficiaries had to first acquire basic financial management, Feed the Children also realized that one million shilling loan to someone with no prior knowledge of business or running business was a mistake.

As the members of Ddembe Women's group struggled to service their loans, Feed the Children under its community Banking Progamme went back to the drawing board to revise how better the scheme could be sustained and better serve people like Finah and Faridah.

Feed the Children's next course of action was overhauling the entire loan scheme including slashing the start up loan amount from a million shillings to just 50,000/= (fifty thousand shillings). Members of Dembe Group, including Finah did not like this.

The new approach introduced the cycle system equivalent to four months as the loan repayment period. The loan beneficiaries would start servicing the loans in just a week after receiving the money and pay the now small total loan amount within four months.

"It was difficult adjusting from a million shilling loan to just fifty thousand shillings. But we had to stay on and adjust to the new strict loan conditions including following up group members, compelling them to pay and grow with the organization," says Finah.

Twelve years since, Finah and Ddembe Women's group members have been appreciating the developments in Feed the Children loan system. Finah says the loans from Feed have transformed their lives from relief dependent women to independent women with personal homes, having children in school and financially sound businesses.

"One of the most memorable things I have achieved with money from Feed, is being able to put all my five children to school. The oldest has finished his diploma and the rest are soon reaching there," says Mrs. Betty Ssekitoleko, 49, a member of Matale Women's group in Mukono. Ssekitoleko says her husband is unemployed but using the borrowed money from "Feed" as the women like to call it, she has also managed to put up a pigery and goat projects and intends to buy a dairy cow to improve their family's income.

"With my poultry business, I have managed to buy a plot and construct a house and contributed to paying my children school fees," says another member of Dembe Women's Group, Regina Kivule who joined Feed the Children's microfinance loan program in 1999 and is currently servicing a loan of 200,000/= (two hundred thousand).

From getting group loans (between 15-45 people), solidarity group loans (5-10 members), some of the members of the groups and individuals are borrowing under individual loans. Some benefit from the company's village phone loans in partnership with MTN, 5 and above salary group loans, loan insurance, savings mobilization and basic training in credit and business management skills that are provided by Feed the Children microfinance arm.

Feed the Children Uganda Country Director, Sarah Mangali says Feed the Children has grown from a widows credit support program to a fully-fledged micro finance company, PEARL Microfinance limited. PEARL (Promotion of Economic transformation And Realization of Sustainable Livelihoods) is a company limited by shares, and 99% owned by Feed the Children Uganda limited (FTCU). She says they launched the microfinance programme into a new company to make it a sustainable business, which can in future help meet Feed the Children's social objective of child care in communities.

Jennifer B. Mugalu, the acting Chief Executive Officer of PEARL Microfiance limited says they are currently serving more than 52,600 clients in 15 districts of Kampala, Wakiso, Mpigi, Mukono, Kayunga, Jinja, Mayuge, Mubende, Mityana, Kyenjojo, Ibanda, Bushenyi, Ntungamo, Rukungiri and Kanungu. She says they have been able to give out cumulative loans to the tune of 40 billion shillings.

"Through Pearl Microfinance Limited, we shall continue to offer better, reliable and suitable quality financial services which are quick and affordable," says Mugalu.

Better services demanded
Where as women and other beneficiaries fully appreciate the work done by Pearl Micro Finance, the women feel the organization can still do much better now that it has re-launched and transformed into a potential deposit taking institution. Finah says the biggest challenge facing group loan members is the short period they are given to start servicing the loan, which is one week in her group's case.

"In one week it is very difficult to have invested the money and start servicing the loan. In most cases we just return part of the loan money without first investing it into business," says Sarah Naziwa, a member of Matale Women's group.

"We request for a grace period of two weeks before one starts servicing the loan. I do not mind starting to pay on a weekly basis there after so long as I am allowed time to inject the money into business and realize some profits," says Annet Jibwa who runs a retail shop jointly with her husband in Matale.

But the Operations Manager of Pearl Microfinance, Elaine Mulagwe Wako says that they provide different pay-back options from which each group chooses. "We normally ask people choose how they want to pay back. They can pay monthly, weekly or bi-monthly. Some groups prefer shorter periods like a week to increase payback," she says.

According to Pearl Microfinance loan officer in charge of Ddembe and Matale women's groups, Josephine Nakiyimba, the pay back period may depend on the nature of business of the members of a particular group. "The applicant must be having a running business, which she or he intends to boost with the loan. Some businesses can recover money invested in a week," Nakiyimba says. But there are other underlying behavioral challenges.

" Many people divert the money to more pressing social challenges like school fees and paying earlier debts, which are clearly not profitable at least in short term," observes Francis Turyamwesimira, a senior credit officer with Pearl Micro Finance in Kihihi, Kanungu district.

As if to confirm what Turyamwesimira is saying, many women and men alike (over 80%) of those interviewed confessed to having used the loan money to pay school fees without first investing it, yet none had declared that they are applying for the loan to pay school fees for fear that the loan will not be given to them.

Whatever they use the money for, at just 2.5% interest rate, it is obvious the loans are making a positive impact on the lives of many less financially able people and only financial discipline is needed for the beneficiaries to harvest maximally from their income generating activities.

By Enoch Mutabaazi
more from author >>
First published: December 14, 2006
To learn more about Ultimate Media Consult go to

Enoch Mutabaazi is a media practitioner at Ultimate Media Consult with more than six years experience in the print and electronic media. Since he majored in Broadcast Journalism at his graduate studies Mutabaazi first worked as a reporter at Uganda Television (now Uganda Broadcasting Corporation TV) before he discovered his multidimensional skills in writing and public relations at Ultimate Media Consult. He is currently the Production Executive at Ultimate Media Consult (U) Ltd and writes occasionally.