Last week, I was so blessed to get to attend a village bank meeting out in one of the villages surrounding Jinja. It was very exciting to me because I spent the past 7 years working in a bank and audited banks previous to that. A village bank is a group of between 15-40 people that form a savings and loan program amongst themselves. These banks are critical in the development of small and micro businesses in these villages because access to credit for people with no credit history or assets is very difficult. To add to the difficulty, the banks do not want to deal in the sizes of loans that they are looking to borrow. They also tend to make the process of opening accounts extremely difficult by requiring different documents each time someone attempts to open an account. The cost of transportation to get from the village to Jinja town makes it hard to continue returning to the bank with the document they are now requiring. Many have given up on trying to open an account at a bank in town. There are two parts of the village bank, a savings piece and a loan piece. The savings piece allows the villages to save up their money in a safe place and earn dividends on their money. The money is deposited on a weekly basis during their meetings. The savings are then recorded in a ledger and a passbook for each member. The loan piece allows them to take out capital loans to start up businesses, grow existing businesses or to take out capital loans. This is a critical aspect because it promotes business development. A loan committee reviews loan applications to determine approval of loans depending on amount of savings, ability to repay with projected cash flow, and funds available to loan out. Many villagers have been able to start businesses to increase their income potential with these loans. If they are able to make more money, they can save more, provide education opportunities for their children, and enable others to borrow money. Paid off loans are celebrated by all the members of the bank during the meetings. There were two loans that were paid off during the meeting I attended and there was much excitement!

I was very impressed by the controls that are in place to prevent fraud or theft. They also have opened an account at a commercial bank in town to deposit excess funds to reduce the amount of money they store in their vault in the village. Great care was taken to balance the ledgers and all accounts at the end of the meeting.