Company Profiles: Front Page Microfinance - A Revolution in  Microfinance Provision
Front Page Senior Officials at a function.

Company Profiles: Front Page Microfinance - A Revolution in Microfinance Provision

We are not just looking at earning profits, but at serving the Ugandan society as well.

By Gerald Businge
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First published: June 13, 2007

Access to credit for business finance is considered one of the major tools against poverty eradication. Commercial banks, which are the traditional sources of credit for most Ugandans lend only to people or businesses with 'acceptable' collateral. Yet many micro, small and medium enterprise owners do not own such collateral. Therefore, many people with good business ideas could hitherto not undertake or grow their businesses due to lack of credit. However, with the arrival of many microfinance service providers in Uganda, many people have been able to access credit from these microfinance institutions either as individuals or in groups. Unlike traditional banks which restrict their branches to major towns, microfinance companies are striving to reach almost every corner of the country.

One such microfinance company is Front Page Microfinance Co-operative Savings & Credit Society Ltd. Front Page was originally formed as a cooperative and credit organisation to enable its members access credit to finance their businesses as well as mobilize members to save. Today, Front Page Microfinance is one of the most known businesses in Uganda, at least judging from its media presence.

At the beginning, the announcement that Front Page Microfinance was offering loans to people without requiring collateral and at 1% interest per month seemed unbelievable. But many Ugandans have joined the queue and have since accessed loans at some of the lowest interest rates available in the country. Yiga Muwonge, the Chief Manager of Front Page Microfinance says that they have introduced unique ways of lending money, promoting (accepting) savings from members, offering business and financial advice to their members.

The Government of Uganda has recently been encouraging its citizens to form groups in order to access credit and financial services in attractive numbers. Many Ugandans may be interested to learn that Front Page marketed itself as a membership-based institution, owned mainly by the lower classes of Uganda. According to Yiga, Front Page was formed to benefit from government and other loans to finance members' businesses so that they can effectively engage in income generating activities. "We have helped the Ugandan government to mobilize people to embrace saving and accessing credit. We now have 20,000 members saving and accessing financial services with Front Page. Unlike other saving and credit co-operative organisations (SACCOS), we have not waited for the Bonabagagawale (prosperity for all) government scheme to access credit. If the money comes, it will find us active as a SACCO saving, lending and offering business services," Yiga says.

Background of Front Page Microfinance
Front Page was registered as Front Page Microfinance Co-operative Savings & Credit Society Ltd. Yiga says it was registered on January 21st 2004 as a member based financial services company with the Registrar of Companies. In 2005, it was transformed into a savings and credit co-operative organization (SACCO) to operate under and in accordance with the Co-operative Societies Statute, 1991, and Regulations, 1992.

Their mission is to mobilize, organize and empower Ugandans, especially the economically active women, people with disabilities, youths, and elderly in rural and peri-urban areas to tap their full potential through project initiation, savings mobilization, credit extension, and provision of business information and sharing experiences to promote business and beneficial economic activities. In just three years as a business, Front Page Microfinance has strengthened its foothold in the microfinance business, as well as become a company with a social leaning in Uganda. When they started business on February 1st, 2005, Front Page had 238 members as a SACCO. Today, the company has more than 20,000 members.

FrontPage and Utl distribute phones on credit. FrontPage and Utl distribute phones on credit.
Click to enlarge

Providing unique microfinance services for Ugandans
What strategy has Front Page Microfinance used to win over customers, as well as become popular with Ugandans?

In addition to providing loans to members, promoting savings amongst them, and providing business management consultancy services, the company has embarked on what it calls a social marketing program to keep it relevant to its customers. "In an effort to identify with the society where it operates, Front Page is involved in the promotion of talent and traditional culture as well as supporting local communities through helping disadvantaged people like Aisha Nabukeera," says Henry Livingstone Watira, the Public Relations Officer of Front Page Microfinance.

Front page's Yiga Muwonge (right) hands over a solar panel to a beaming client on credit
Front page's Yiga Muwonge (right) hands over a solar panel to a beaming client on credit.

Yiga says their master stroke is the way they offer their microfinance services. "We lend money with the lowest interest rate of 1% per month. We do not require any security from people coming to borrow. All you need is to be a member, and save at least 30% of the money you wish to borrow first," Yiga says in an interview. "We were also one of the first micro finance institutions (MFIs) in Uganda to introduce a monthly repayment system or repayments as negotiated instead of weekly repayments commonly required by most MFIs. We also allow a flexible repayment period of a year, unlike most MFIs. We were also among the first MFIs to begin lending to individuals instead of groups," Yiga adds.

The company has also introduced an asset-based scheme where borrowers can access motorcycles, motor vehicles, solar panels, among other products on credit. "We are not just looking at earning profits, but at serving the Ugandan society as well. That is why we are sponsoring cultural activities, promoting artistes, footballers and athletes. We recently raised 6.8 million Uganda shillings for Aisha Nabukera to support her as she undergoes surgery abroad. We helped Alia Birungi go to India for heart surgery together with other people of good will," Yiga says. The services and social activism exhibited by Front Page in recent months has clearly underlined their vision to become the leading financial services provider in Uganda.

Brand new 
motorcycles awaiting distribution to successful motorcycle loan applicants 
outside Front Page offices. Brand new motorcycles awaiting distribution to successful motorcycle loan applicants outside Front Page offices.
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A busy organization.
If you paid Front Page main branch on the second floor of Ivory plaza, Wilson Road on any business day a visit, you would find hordes of people lining up patiently waiting to be attended to. It is a bee hive of activity in the banking hall as clients speak to the banking officers to secure a loan or other business services. "I was very frustrated with the 'big' banks until I discovered Front Page. The big banks would make us wait for a year promising to give us a loan. They provide a valuer (to verify the security) before you get the loan. At Front Page, they process loans quickly and you can talk to everybody from bottom to top. Moreover their interest is low and you can negotiate the repayment period. I also like the care they give to us. They make you feel part of them," says Victor Nalima, the Principal of Institute of Data Processing, Seeta, a Front Page client whom Ultimate Media found at the main branch.

But a client who preferred anonymity expressed concern at the company's demand for 25% of the loan value one wants to be retained by the institution, as well as requiring the guarantor of the borrower to deposit a cash value with the company of 20% of the loan that is being applying for. "When you add 2% for insurance, 3% for loan processing and 2% for loan monitoring, it means more than 50% of the money you are borrowing remains with them, yet you pay interest on the total amount," she says. Yiga clarifies that the company only requires those who want to borrow to have saved at least 25% of the amount they want to borrow. "You cannot wish to borrow when you have nothing on your account. The money on the account is your savings, which you can access after repaying the loan. The guarantor also has to have saved with us," he says.

Some people have also expressed concern over the company's ambitious marketing and sponsorship deals, with some expressing worries that Front page may be history in the near future, if it is spending its current resources/capital on excessive promotion of its services. Yiga however answers that Front Page has a strong financial and organizational position and is undertaking all promotions to make the company more profitable and appreciated by people. "We are making every investment and initiative strategically. Our strength lies in our numbers, as well as in joint ownership by the ever increasing number of members. We have 20,000 owners," he says. The company also accesses loans from other banks, the Government of Uganda, local and international lending institutions, as well as grants for capacity building from partner organizations.

Pupils attend a sports day sponsored by Front Page in Nakaseke. Pupils attend a sports day sponsored by Front Page in Nakaseke.
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How to become a member of Front Page Microfinance
For one to become a member of Front Page Microfinance, one needs to open an account with a deposit of 20,000/= (twenty thousand Uganda shillings). You can save and withdraw from that account at any of their branches across the country. But to be among the owners, a member needs to buy a minimum of one share or up to 1/3 of the company's paid up shares. Each share is 10,000/= (ten thousand shillings). However, unlike savings, a member cannot withdraw their shares, as it is an investment into the company/society. But by recruiting members who at the same time borrow from their own and each others' savings, Front Page shows how it is possible to mobilize the poor to save, borrow and engage in income generating activities, thereby towing themselves out of poverty.

Affiliated and networked across the country
Yiga says they are the fist SACCO to have an extensive branch network across the country. Front Page operates 14 branches: Kampala (Main Branch), Makerere Kavule, Mubende, Kikyo, Kamara, Karugutu (Bundibugyo district), Kayunga, Buwenge (Jinja district), Kamuli, Kaliro, Nambale (Iganga district), Mayuge and Kaberere in Isingiro district. Watira says Front Page is growing to be able to serve more and more customers in different parts of the country by extending financial and organizational strength to the working poor across the country.

According to Yiga, Front Page Microfinance is affiliated to the Uganda Co-operative Alliance and the Uganda Cooperative Savings and Credit Union. The company is also a member of the Barclay's Bank Business Club and Tropical Africa Bank Business. In April 2007, Front Page Microfinance won an award from Crystal Clear Software as the best user of the loan performer software in Uganda.

Applying professional and democratic management
Watira says that being a membership based company, Front Page is managed by a General Meeting (GM) made up of all the registered members as the supreme body and the Executive Committee (Board of Directors) made up of members elected by the Annual General Meeting. The Executive Committee is responsible for the general management of the organisation. Yiga Muwonge heads the management team of the appointed technical staff to deal with the technical activities of Front Page Microfinance.

The Executive Committee is currently chaired by Isabirye Mathias Dip.Educ(KYU), B.A Educ(MUK), PGD-HR(IUIU). Other members are Ssali Damascus BA.Arts; PGDE, MA. Lug; Makada Florence Bsc.CompSc(Dar), Bsc.Applied Accounting(Oxford Brooks), ACCA(UK); Ssenyonga K.Robert Bsc.(Hons)(MUK), PGDE(MUK), MA.Pam(MUK); Sseruyange John Baptista, BA.Econ&Banking(Nairobi Univ.), FCIB (UK); Mrs. Malole Zaminah, BA.Educ (IUIU), M.PA(Gajamadha-Indonesia); Dr. Cula Andrew Anthony PhD (MUK); Dr. Kasule Umar PhD(Indonesia) and Prince Bamweyana Ahmed B.Com.(Acc)(Greenwich), CIMA(UK).

Front Page aids access to credit in Uganda
The company says their loans are targeted at people employed in food processing (grain milling, bakery, brewing), clothing and footwear businesses (tailoring, cloth repairs, shoe repairs, etc), metal fabrication and repair (e.g. black smiths, nails and bolts makers, welders), wood processing (timber dealers, carpenters), hand crafts makers (basket, bags, mats, rugs, pottery makers, wood carving etc). They also serve traders of food items, charcoal and firewood vendors, newspaper vendors, kiosk operators, market stall operators, hawkers, food and drinks vendors, taxi operators, boda boda riders, wheel barrow pushers, passenger canoe operators, and people who offer many other kinds of services.

Senior officials of Front Page Microfinance meet the Kabaka on his 2007 birthday. Senior officials of Front Page Microfinance meet the Kabaka on his 2007 birthday.
Click to Enlarge

Watira is sure that Front Page Microfinance is set to remain at the fore front of microfinance service delivery in Uganda, because of the sensitivity it has demonstrated towards the needs of its customers. "Besides charging the smallest interest on loans, the variety of products we offer are client driven and tailored to meet the peculiar needs of our clients," Watira says.

"Our target is to have 100,000 members by the end of 2008. We also want to graduate from a SACCO to a Micro Deposit-taking Institution (MDI). We want to be a fully-fledged commercial bank by 2012. We welcome people who want to partner with us by lending us money which we lend to other economically active people in turn or by buying shares in our company or being equity providers," Yiga adds.


Front Page Microfinance Co-operative Savings & Credit Society Ltd. 
2nd Floor, Ivory Plaza,  
Plot 4 Wilson Road. 
P.O.Box 25397, Kampala. 
Tel: +256-41 231335 
Mob: +256-772 865 875, 0712 865 875

By Gerald Businge
more from author >>
First published: June 13, 2007
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Gerald Businge is a media practitioner and features Editor at Ultimate Media Consult in Uganda. He is a graduate of Mass Communication and several journalism and leadership certificates. He has been a practicing journalist since March 2001 and has worked at The New Vision as features writer, and has written extensively for different newspapers, magazines, newsletters in Uganda and internationally. He currently does fulltime media communication consultancy work as well as writing and editing at Ultimate Media Consult (U) Ltd where he is a founding member and CEO. You can get his attention so long as you are interested in and you are working for a better world.