Strong growth in borrowers’ files captured by the credit reference bureau propelled Uganda’s ratings on access to credit, according to the latest World Bank Doing Business indicators, but lack of integrated land administration reforms has constrained progress on registering property and made it harder for real estate players.
The World Bank’s Doing Business scorecard shows that access to credit improved significantly this year, registering 42 points compared with 128 points recorded in 2014. Although the credit reference bureau system initially covered borrowers from commercial banks, it has since widened its scope to include borrowers from microfinance and licensed credit institutions that are regulated by the Bank of Uganda.
The number of borrowers registered on the country’s single credit reference bureau platform has grown to more than 500,000 people since 2009, which is an indicator of increased documentation of borrowers.
“It has become difficult for a weak borrower to access credit from more than one bank because of tight credit assessment tools and vital financial information shared by banks in relation to a single client,” said Charles Abuka, head of BoU’s financial stability department.
Lending rates still high
Consequently, improved documentation of borrowers has not translated into cheaper lending rates. Prime lending rates charged by Ugandan banks averaged 24 per cent in September while the central bank raised its rate from 13 per cent recorded in June to 17 per cent last month, financial market reports show.
Nevertheless, notable gains posted in this area partly boosted the country’s overall ratings compared with other categories.Uganda was ranked 122 out of 189 countries in the World Bank’s Doing Business indicators for 2015 compared with 135 out of 189 registered in 2014.
Source: The East African

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