TONDEKA FACILITY ILS SALIENT FEATURES

Particulars Feature
Eligibility Micro, Small and Medium Enterprises (MSMEs): ILS
 Directly impacting SDG localization by offering employment
opportunities to the youth and FDPs, innovate products and
services that supports SDG localization amongst the youth,
Women and FDPs in the urban areas.
 Must have been in business for at least 6 months.
 Have a clear impact story, be it at the product level or at the
practice level, where the business adopts its model to increase
participation of the target group (Youth and FDPs). The impact
is relative but for purposes of this project, impact will be
measured in form of employment creation, supporting the
supply value chain, innovating products and services as well as
knowledge transfer.
 Have proof of business in line with Pride’s policies and
procedures
 Have a commitment to comply with UNCDF’s gender, social
and environmental standards.
 Although not a pre-requisite, the facility will be keen to fund
MSMEs that women, youth and FDP led.
 Support is open to all sectors that are legally acceptable with
focus on; Agriculture (agribusiness), manufacturing, metal
works, trade and commerce, leather works, garment and
textiles.
 Guarantor ship shall be in line with Pride’s policies and
procedures.
 Clients falling under this category shall comply with individual
loan-based products policies and procedures.
Loan Limits Minimum amount of UGX 10,000,000 and a maximum of UGX
40,000,000.
Loan Shall be as per the Pride Individual loans policies and procedures.
repayment
Collateral Procedures and security for MSMEs shall be in line with the Pride
Individual loans policies and procedures.
Interest rates  Interest will be charged at 18% per
(pricing) annum flat rate. The interest rate will
be distributed as follows:
 Administration fees of Pride Microfinance
Limited – 9% Credit risk and inflation – 3%
 Facility growth – 6%
 The credit risk and inflation portion will be capitalized to
the facility to maintain its intrinsic value.
 The PML in close consultation with UNCDF and approval of
 the steering committee can vary this interest rate depending on
market conditions and CBR established by the Bank of Uganda.
Loan processing The loan processing fees are segmented as follows:
fees  Insurance – 1% of the loan
amount Credit Reference
Bureau:
 Compuscan – For all amounts less or equal to UGX 250,000,
a charge of UGX 7,000 will ensue.
 For all amounts greater than UGX 250,000, a charge of
UGX 9,000 will ensue.
 Metropol – All amounts attract a uniform charge of UGX 7,100.
 LIF as per group loan policies and procedures for groups.
 Member fee of UGX 3000 (Paid by new members only).
Exit strategy This is designed to be a revolving periodically re-capitalized blended
finance facility that will continuously run even after the lapse of the
project. This will ensure sustainability and continuity of lending to the
target group by Pride Microfinance.
Partial Loan Guarantee:

The Loan Guarantee Fund (LGF) will provide partial coverage on a portfolio of loans made to the
qualifying target group. The qualifying target group must fall within the pre-agreed definition of eligible
borrowers, which for purposes of this project includes Youth, urban FDPs, value adding businesses and
other vulnerable groups. This will encourage lending to the target group, thus lowering the collateral
requirements for loans secured by guarantees.
Loan monitoring UNCDF will establish a mechanism to monitor the repayment progress
of
borrowers and the servicing performance of Pride Microfinance
Limited.
Coverage The guarantee will cover up to 50% of the outstanding loan
principal amount of individual loan portfolios. The balance will be
borne by Pride
Microfinance Limited.
Claims procedure If a borrower defaults on a loan, Pride Microfinance Limited will
submit a claim to UNCDF in accordance with the terms of the
Memorandum of Understanding (MoU). The MoU will specify the
responsibilities of Pride
Microfinance in pursuing available remedies to collect unpaid principal
and interest prior to submitting a claim.
Operation of the UNCDF will set aside funds (LGF) in a reserve or escrow account. The
reserve account escrow account will be maintained by Pride Microfinance Limited.
Outstanding amount in the escrow account will attract interest at a rate
of 8% per annum. Interest earned may be used to capitalize the
fund for
continuity and sustainability.
Exit Strategy This is designed to be a revolving periodically re-capitalized blended
finance facility that will continuously run even after the lapse of the
 project period. This will ensure sustainability and continuity of
lending to the
target group.
UNCDF’s liability UNCDF’s liability will be limited to the guaranteed funds in the
escrow
account.