Microcredit recently hit international headlines after Mohammad Younis won the 2006 Nobel Peace Prize for his work with the Grameen Bank in helping Bangladesh's poor gain access to credit.

Microcredit has been celebrated for helping the poorest of the poor find a way out of poverty. Unlike conventional lending practices, microcredit institutions loan money without collateral, to groups of people rather than individuals, relying on peer pressure and group cohesiveness to ensure repayment.

According to Timothy Jokkene, a Ugandan businessman and owner of a microcredit lending institution in Gulu, loaning money to the poor is part of the path to recovery for the people of northern Uganda.

"Unemployment in Uganda is widespread. There are no jobs, so people need to find ways to create their own jobs, which is why microcredit is so popular," he told Weekend Review.

"There is no future in [programmes like] the WFP in the long term. We don't need handouts. We need business. For over a decade, NGOs have been meeting the needs of the local population, where the government either couldn't or wouldn't provide the basic services needed. It has become so that people are just used to putting out their hands and asking for aid."

The time has come, he said, for people to learn how to support themselves.

Training for self sufficiency

Jokkene explained that new applicants come in pre-organised groups, and he and his team talk to them so that they know that they are not getting free money.

"It is a loan that they must pay back. We educate them about simple financing," he said, adding that they need to come to the centre with a business plan.

"We conduct the basic training for them to be able to assess capital, expenses and profits. Borrowers need to understand how much is coming in versus how much is going out. The size of the loan groups vary from 30 to 50 people and the average loan size is about 100,000 Ugandan Shillings or $50. Some use the money to buy seeds and farm equipment. Others take it for tailoring, to trade or metal working."

Loans are mostly taken over a period of 2 to 3 months and are given at a fixed rate of 2.5 per cent monthly interest. Payments have to be made on a weekly basis.

One woman who has benefited from the programme, is 45-year-old Mary Oloma. This single mother of five sells jinnut — similar to peanuts — and white ants, which are cooked and sold. She borrows money with a group of 20 women and makes 28,000 Ugandan Shillings per week (about $16) profit. She pays 10,000 Ugandan Shillings back per week, earning 18,000 Ugandan Shillings per week. This is enough for her children's education and to buy food for herself and them.

"Before I was just at home running the house, but now I am a businesswoman."