Inachee(noun) [In-a-chee-]: Home Grown Energy in Motion.

By D. E Wasake, FCCA, Principal at Inachee

Basic information

Who is behind the Facility?

Opportunity Bank is a leading credit institution with over 15 years of experience targeting the low income earners but economically active Ugandans with both loan and saving products.

Behind the finance entity is Opportunity Transformational Inc, which has the highest shareholding (85.79%) followed by Faulu Uganda Trust (7.14%), Opportunity International Canada (6.06%) and Food for the Hungry Organisations (1.01%). They include Opportunity International Network, USAID, DFID.

Opportunity Bank Uganda has an asset base amounting to $22.8 million in the first quarter of 2014. It had a loan portfolio of about $13.8 as of March 2014.

What is the process like?

Opportunity Bank gives the loan interest of 20% for financing the assets required by its customers, then it is expected that the loan application process will be very precise.

The borrower should have documents and present financial statements that show their progress in the businesses through use of assets for their businesses.

Furthermore as the loan seems to be primarily for purchasing value addition/processing machinery and small or medium sized operation equipment, it will be critical to have already obtained detailed information from the equipment manufacturers including a detailed case for how the purchase will make a difference.

Otherwise as with all products, the process is expected to be as follows:

• Application (filling of forms)

• Due diligence process including a site/farm visit assessment to validate business activity;

• Securing of the collateral (and deposit) – most likely via the assets being purchased in the bank’s name; and

• Disbursement of funds in line with terms and conditions.

The tips for success

As mentioned, as the loan is subsidized, the competition for it will be high and so you need a robust business plan including the following:

1. Know the kind of asset needed (collateral or no collateral). Opportunity Bank finances assets and they remain the names of the bank until the last payment is done hence assets should be used for the purpose in the businesses. Some loans however don’t need formal collateral to secure, like the Opportunity Solidarity Loan.

2. Seasonal weather effect. A key element of the loan is the uncertainty in paying back the money. As agriculture is seasonal, you get a grace period of up to 3 years. The forecasts will need to clearly justify how the accumulated loan principal and interest will be easily repaid once the grace period is over.

3. A few documents needed. This is true especially for business/SMEs which have been in operation for a given number of years. This enables the financier to gauge the ability and commitment of the borrower to pay back amounts. Also record keeping (with books of accounts) to keep track or monitor cash flows of the borrower’s business.

Otherwise best of luck!  If you need further assistance or guidance, contact our team

Disclaimer

Inachee is not an agent or connected to this entity. It is an independent thought leadership and advisory firm.

The information provided is based on our research, experience and if we are able to contact them, by speaking to this entity’s personnel. Whilst we have taken steps to ensure the accuracy of the information presented here, there can be no guarantee that it will remain accurate.