“We cannot afford life.” That is the famous catchphrase of former Vision Group CEO turned entrepreneur while speaking at a workshop centered on the implications of high commodity prices in the country. Unless you live under a rock, you probably can relate and have equally felt the pinch in your pocket. The country has been experiencing a steady rise in commodity prices from basic foodstuffs to fuel, an aspect that continues to affect the general standard of living. The inflation rate has equally gone up having recently hit 6.3%, the highest since 2017 against an average annual headline inflation figure of 5.01%. Ugandans just cannot seem to catch a break.
Quoted in an Oxfam report on ending inequality in Uganda, former Speaker of Parliament and now 1st Deputy Prime Minister and Minister for East African Community Affairs Rebecca Kadaga emphasized that it is not just taxes that affect the lives of Ugandans but also other factors such as access to credit.
According to World Bank data, only 14.2% of the private sector in Uganda had access to credit in 2020. This figure is significantly below its Kenyan counterpart whose private sector access to credit stood at 32% in the same period. Other countries in the region also have a fair amount of work to do with Tanzania coming in at 13.2%, South Sudan at 1.9% and the newest kid on the EAC bloc- Democratic Republic of Congo- registering 7.5% private sector access to credit.
Players in the financial sector say that the main factors behind the limited access to credit include the high default rate which makes the lenders more cautious, as well as high interest rates and unfavourable operating conditions.
This is where Metropol Credit Reference Bureau comes in to offer a remedy. Through our mandate under the regulation of the Bank of Uganda, we collect and aggregate credit information on individuals and non-individuals from different sources and provide that information through a credit information sharing mechanism (CIS) to credit providers in what is termed as a credit report.
What this means is that, through Credit Information Sharing (CIS), credit providers are able to make informed lending decisions as well as ease the process of accessing credit for you as a borrower. The information provided by Metropol CRB also helps credit providers to safeguard themselves against financial fraud, which is a growing and serious problem in the financial sector.
But that’s not all. There are also benefits that Metropol CRB presents to you as a borrower. For instance, a positive credit profile makes it easier for borrowers to distinguish themselves from persistent defaulters, hence keeping their reputation intact.
Additionally, having a positive credit profile also helps borrowers to negotiate favourable credit terms on the strength of their good repayment history. Metropol CRB makes credit reports available as evidence of good performance which could translate to a lower cost of credit, flexible repayment periods, and lower reliance on tangible collateral such as land and buildings amongst other preferential terms. This exposes you as a borrower to a wider pool of loan products from credit providers.
With that being said, the linkage between access to credit and the economic development of a country is quite crystal clear. Credit Information Sharing (CIS) creates an opportunity for a wider cross-section of the population to access credit, particularly those with no access to tangible collateral. And with access to credit comes improved standards of living even in light of a rise in the cost of living.
Metropol CRB is regulated by the Bank of Uganda. For any assistance, contact us.