When one of our team members (Marieke) worked with female entrepreneurs for a micro-finance organization in Uganda, she saw that small loans have a large positive impact on borrowers’ lives. She also realized that these loans were merely a short-term solution for entrepreneurs – they did not manage to grow their new business beyond a certain limit.
Once the entrepreneurs outgrew the micro-finance loans, there was still a long way to go before they could fulfill the requirements of a retail bank and receive the necessary funding for scaling up.
This shows a gap in the financial landscape in the developing countries. Microfinance is a great first step for aspiring entrepreneurs but does not necessarily allow them to complete the journey towards joining a retail bank. This is where mesofinance comes into the picture.
Our concept could work in all African countries (and in the majority of the developing world) where MFIs are present. However, we will launch our venture in Uganda, because of 2 reasons:
Growth potential for small and medium sized business in the next few years and lack of finance to develop them
Presence of our first MFI partner.
The growth potential can be deduced from a number of indicators
85% of Uganda’s population lives in rural areas, which means that these people do not have access to formal retail banks.
Between 2009 and 2013, there has been a 20% increase in formal bank lending and a 700% increase in formal non-bank lending.
All of this indicates potential, but perhaps the most exciting thing happening to business in Uganda right now is the soon-to-explode oil industry. Uganda has recently closed a deal worth an estimated $15 billion USD (nearly the size of their current GDP). This bodes very well for aspiring entrepreneurs, as the oil sector is ripe with opportunity for small businesses to service the many needs of the industry