FINCA Uganda’s Reserve Fund Saves Ayilo Settlement Business Group from Loan Default

A seven-member business group in Ayilo 1 Refugee Settlement has avoided a

potential financial collapse thanks to timely intervention from FINCA Uganda’s

Small Managed Group (SMG) Reserve Fund.

The Anyawi Amami Business Group, made up of members from both the refugee and host communities in Pakele Subcounty, faced a repayment challenge after one member unexpectedly

relocated to Juba, South Sudan, leaving an outstanding loan balance of 800,000 UGX.

Because the group was in arrears, they were not eligible for another loan

until the balance was cleared. This affected not only the members who defaulted

but also the entire group, including well-performing clients who needed capital to

sustain their businesses.

Such scenarios are common in group lending, and this is where FINCA’s SMG

Reserve Fund plays a crucial role. The fund is designed to support groups like

Anyawi by helping them maintain solidarity and ownership while recovering from

setbacks so they can continue accessing credit.

“FINCA’s support was a lifesaver for us. We were about to lose our chance to

access more loans, but during one of our biweekly meetings, our Relationship

Officer told us that FINCA has an initiative that supports groups with a member

who has been in arrears for over 60 days. He encouraged us to clear at least half of

the arrears, and FINCA covered the remaining half, enabling us to borrow again,”

said Assina, Chairperson of the Anyawi Group.

The Anyawi Amami Business Group operates small enterprises including fresh

food vending, crop produce trading, and grocery businesses. Chairperson Assina

Araba and member Andrisi Rukia have maintained strong repayment records,

while other members are gradually expanding stock and improving working

capital in the current loan cycle.

Through the SMG Reserve Fund, FINCA Uganda has empowered many groups

that had dropped out due to outstanding balances—helping them regroup, work

together to raise savings to clear part of the arrears, and regain eligibility for

refinancing.

Disan Katabalwa, Deputy Project Manager at FINCA Uganda, said the reserve

fund is intended to protect lending groups from unforeseen disruptions.

“We understand that unexpected challenges can arise, and we’re committed to

supporting our clients through thick and thin. Our SMG Reserve Fund is designed

to cushion groups like Anyawi against shocks that could reverse their progress. In

settlement settings, where incomes are often unpredictable, timely support ensures

clients maintain access to credit and continue growing their businesses,” Disan

said.

Ada Jackline, the Branch Manager at FINCA Uganda, added that the group’s

resilience and commitment to repaying their loan is commendable. “We’re happy

to have an intervention that strengthens financial discipline within groups and

promotes long-term client retention.”

Financial experts note that reserve mechanisms like this are vital in refugee

settlements, where economic activity is largely informal and vulnerable to shocks.

With this support, the group has resumed stable operations and continues serving

customers within Ayilo 1 Settlement and surrounding communities.