Mobile money has been one of the biggest drivers of cashless transactions and financial inclusion in the country attributed to increased mobile penetration.
Daily Monitor
Tuesday February 02 2021
Summary
Policymakers in the cooperatives sector should use partnerships with relevant institutions in the market to streamline services.
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One in four adult Ugandans is a member of a cooperative, according to International Cooperative Alliance.
This is not without cause. Cooperatives play a critical role in mobilising savings, increasing credit access and facilitating activities along production and value chains.
Onen in Gulu might, on his own, struggle to access a tractor to plough his fields but as a part of a cooperative, he can access one at much better terms.
For this reason, cooperatives have grown from 13,179 in 2012 to about 23,485 in 2020, according to International Cooperative Alliance
“There is no way you can have an economy that is developed when the financial sector is underdeveloped,” Mugume said while making opening remarks at the event.
According to the study, Uganda maintained an interest rate between 12 and 16 percentage points between 2007 and 2018, a figure relatively higher than Kenya which peaked at 10 per cent in the same period.
For a while now, the deposit lending spread - a gap between the deposit and lending rates in banks - has been determined by the cost of bank credit and the level of interest rates.
EXPENSIVE BORROWING
Experts believe that high bank lending interest rates have reduced Uganda’s economic growth and made borrowing an expensive source of capital for investment. Uganda’s private sector depends heavily on commercial bank rates, accounting for more than 90 per cent of the credit in the market.