Microfinance Support Centre reports heavy losses after huge loan write-offs

Uganda’s Microfinance Support Centre, a government-owned lender set up to extend affordable credit to low-income borrowers, has recorded a substantial loss after writing off billions of shillings in unrecovered loans, according to the latest report by the Auditor General.

The report says the company wrote off loans worth 62.53bn shillings (about $17m) during the financial year, a move it says contributed to an overall loss of 22.67bn shillings (about $6m). The Auditor General states that the write-offs affected the institution’s reported performance for the year.

The findings raise questions for the Centre’s executive director, John Peter Mujuni, and its board chairperson, Kiiza Aliba Emmanuel, over lending practices and internal controls at an institution that channels public funds to small borrowers, savings groups and co-operatives.

The report identifies several weaknesses in how loans were issued and managed. It says 17 loans worth 7.78bn shillings took longer than the maximum processing times set out in the Centre’s own rules, with some taking more than a year to complete. It also found that 2.725bn shillings was disbursed to savings and credit co-operative societies, known as SACCOs, that did not hold valid operating licences from the Uganda Microfinance Regulatory Authority, in breach of the company’s credit policy.

The Auditor General further reports that loans worth 6.526bn shillings were assessed using collateral valuations that were out of date, some dating back as far as nine years, which it says could distort the Centre’s estimate of the risk it faces. Efforts to recover money already written off were largely unsuccessful: against projected collections of 1.271bn shillings, the Centre recovered 0.167bn shillings.

The report also points to funds that were budgeted but not fully used. Of 44.7bn shillings planned for disbursement, 23.4bn shillings was lent out. Under Emyooga, a government programme intended to help communities generate income through savings and credit, 13.21bn shillings of a 134.206bn shilling budget was left unspent. The Centre fell well short of a strategic funding target of 1.792 trillion shillings, mobilising 969.37bn shillings, while government support of 133.341bn shillings came in below the 161.23bn shillings that had been appropriated.

On the quality of the loan book, the report says 83bn shillings in conventional loans remained outstanding, of which 52%, or 44.7bn shillings, were classified as non-performing. The concerns are not new. The previous year’s audit found that 66.4% of a larger conventional loan book was non-performing, most of it linked to loans to agriculture and trade, according to reporting by CEO East Africa. The report also notes that the Centre does not have an approved client service charter setting out the rights and obligations of its clients.

The institution has faced scrutiny before. In 2023, at least twelve members of staff, some in senior positions, were suspended in connection with a 50bn shilling loss tied to questionable loans, with investigators citing forged land titles and valuation reports, the Daily Monitor reported at the time.

The latest findings come months after the Centre launched a five-year strategic plan in October 2025, which set out targets to reach eight million Ugandans and create 1.2 million jobs by 2030. In response to earlier audit findings, the Centre’s management said it accepted the concerns raised and would tighten controls, review its policies and strengthen the way it vets clients and manages collateral.