According to a recent report by Standard Bank, Uganda is now one of the leading African countries for easy access to credit. The Africa Trade Barometer report, which assesses various economic indicators, attributes Uganda’s success in this area to the increasing reliance on mobile money.
The report reveals that 49 percent of surveyed businesses in Uganda find it easier to access credit, a significant increase from the previous 38 percent. Uganda’s position is just slightly behind South Africa, where 50 percent of surveyed businesses reported improved access to credit, up from 34 percent.
Mobile money plays a pivotal role in Uganda’s improved credit accessibility. It 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 reported that mobile money loans contributed to a monthly average of Shs33 billion, equivalent to 2.9 percent of private sector credit.
However, the report acknowledges that the cost of credit in Uganda remains relatively high. Despite this, the extension of credit through mobile money services has been a lifeline for many Ugandans seeking financial assistance.
In contrast, some African countries, such as Mozambique and Ghana, have experienced declines in their perception of access to credit due to the high borrowing costs.
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The Africa Trade Barometer report provides a comparative view of trade-related enablers and challenges in 10 key African markets. The findings are based on data collected from 2,554 firms in these economies, supplemented by sources like the World Bank, the International Trade Centre, and central banks.
Nevertheless, the report emphasizes that while Uganda excels in credit accessibility, it faces substantial infrastructure challenges. Issues like poor roads, ports, airports, telecommunications, water supply disruptions, and customs and trade regulations are significant obstacles to trade and economic growth in the region.
Uganda’s improving access to credit, driven by the growth of mobile money, is a positive development for its economy. However, addressing infrastructure challenges is crucial to fully unlocking its economic potential and supporting sustained growth in the future.
