UCDO provides a line of credit to CSGs for integrated community development purposes. The types of loans issued range from income generation, general revolving funds and housing. CSGs need to show regular savings activities for at last three months before becoming eligible for credit. UCDO grants only a wholesale loan up to a maximum of 10 times the amount saved. The interest rate on the line of credit has been decided at the organization level. Requirements of collateral and repayment have been kept flexible within an overall framework.
Impacts and Lessons Learned
Over a period of three and a half years the UCDO was able to expand its activities to over 50 organizations, including 105 projects covering 111 communities for about 7900 families. Most groups being with a loan for a revolving fund and then start planning for the more complex income generation and housing loans. Of the 74 loans for housing to CSGs, a large proportion has been for repairs and improvement.
However, in value terms and reach across a number of families, the largest share is for purchasing land for relocation. While it may be too early to judge or assess its success, UCDO highlights the need to develop apex institutional structures which help to link the existing formal finance agencies and community groups effectively. The impact of the programme is also in terms of creating financial management capacity at the community levels.