Accion, a global nonprofit organization dedicated to financial inclusion, has announced a UGX 4.8bn ($1.41m) investment in UGAFODE Microfinance (UGAFODE MDI), one of the fastest growing microfinance institutions in Uganda.

The partnership with UGAFODE Microfinance will focus on digital financial services, notably agent banking, and mobile money services that are tailored to support farmers, businesses, and communities excluded from Uganda’s formal economy.

Accion will be working alongside the local entrepreneurs who helped found UGAFODE MDI as well as current investors Uganda Agency for Development, Access Africa Fund and Fonds Européen de Financement Solidaire pour l'Afrique.

Michael Schlein, Accion CEO and President, said: “Millions of Ugandans lack basic ways to build savings, start a business, or build a home.”

“UGAFODE MDI has made great strides to address that, but we believe that, together, we can do much more, and have an even greater impact across Uganda. To do so, we will deploy digital applications to extend savings and other financial services to rural Ugandans, where most people work on farms or raise their own crops to earn a living,” he added.

Fewer than one in five Ugandans have access to formal lending or borrowing, and rural Ugandans are often left to fend for themselves financially.

Since 1994, UGAFODE MDI has been working to change that.

The organization began as an NGO, and since its inception has focused on underserved and overlooked communities, investing in the rural and suburban areas that many others ignore.

Today, UGAFODE MDI is one of the fastest-growing financial institutions in Uganda, serving more than 58,440 borrowers and savers.

More than half of UGAFODE MDI’s clients work in agriculture, and 80% of its branches are located in rural and suburban areas.

Accion believes that UGAFODE MDI can serve many more Ugandans, and make an even bigger impact for the country and its economy.

Accion will bring decades of experience developing top-tier MFIs to help UGAFODE MDI become a national institution that remains focused on rural and suburban communities.

Innovative technological improvements will account for an increasing percentage of UGAFODE MDI’s reach.

The institution is already using a grant from the MasterCard Foundation and administered through the United Nations Capital Development Fund to promote micro-deposits for customers who have their savings accounts linked to mobile money.

The program allows mobile money agents to sell scratch cards that, once used, automatically credit clients’ UGAFODE MDI savings accounts.

The program has helped to more than triple group savings and UGAFODE MDI expects that it will continue to increase as a result of further micro-deposit integration.

UGAFODE MDI plans to open more branches in the east and north of the country and become a truly national institution.

With Accion as a partner, the institution plans to manage over 60,000 loans and 200,000 savings accounts, and make a significant push for broader financial inclusion across Uganda within the first five years of investing.

Wilson Twamuhabwa, UGAFODE MDI CEO, said: “Our new partnership with Accion will help UGAFODE MDI expand across Uganda and provide still more quality financial services to the communities, families, farmers, and entrepreneurs who have made do without them for far too long.”

“Combining Accion’s insights and decades of experience with UGAFODE MDI’s record of reaching rural communities will make an important difference for Uganda’s people and businesses,” he added.