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Mobile money boosting credit access in Uganda

Mobile money boosting credit access in Uganda

(Courtesy photo)

In a recent report by Standard Bank, Uganda has emerged as one of the leading countries in Africa when it comes to the ease of access to credit.

The Africa Trade Barometer report, which assesses various economic parameters, highlights that Uganda’s growing reliance on mobile money has significantly improved access to credit for its citizens.

The report indicates that 49 percent of surveyed businesses in Uganda believe it is now easier to access credit, representing a notable increase from 38 percent in previous surveys. This trend places Uganda just behind South Africa, where 50 percent of surveyed businesses reported improved access to credit, up from 34 percent.

The key driver behind this improvement in Uganda’s credit accessibility is the growing influence of mobile money. Mobile money has become a major tool for financial inclusion in the country, with the government recognizing its potential to support private sector credit growth. In August, the Ministry of Finance recorded that mobile money loans contributed to a monthly average of Shs33 billion, equivalent to 2.9 percent of private sector credit.

While the ease of access to credit in Uganda is on the rise, the report acknowledges that the cost of credit remains relatively high. Nevertheless, the extension of credit through mobile money services has provided a lifeline for many Ugandans seeking financial assistance.

On the other hand, some African countries, like Mozambique and Ghana, have experienced significant declines in the perception of access to credit due to the high costs associated with borrowing.

The Africa Trade Barometer report offers a comparative view of enablers and challenges related to trade across 10 key African markets. The findings are based on qualitative and quantitative data collected from 2,554 firms across these economies and are further enriched by third-party sources such as the World Bank, the International Trade Centre, and central banks.

However, the report highlights that while Uganda excels in credit accessibility, it faces considerable challenges in terms of infrastructure. Uganda, along with other countries, grapples with impaired roads, ports, airports, telecommunications, water supply disruptions, and customs and trade regulations. These issues pose significant obstacles to trade and economic growth in the region.

In summary, Uganda’s improving access to credit, driven by the growth of mobile money, is a positive development for its economy. Still, the country must address infrastructure challenges to fully harness its economic potential and support sustained growth in the future.

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