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Finnovation Africa: Uganda 2017 opened its doors to more than 300 FinTech leaders seeking to drive the constructive transformation of banking and financial services across Africa
Daily Monitor
Tuesday June 01 2021
Summary
Standalone business. E-commerce platforms of Airtel Uganda and MTN Uganda have automatically become standalone businesses from their parent companies –the telecoms, a move that is likely to drive partnerships among payment service providers.
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Is it a good move, or a risky one? Whose business is it going to impact mostly? Is it the savers, banks or telecoms that have been managing mobile money services?
These are the lingering questions in the corridors, sparked off by the recent pronouncement by Bank of Uganda (BoU) Governor Emmanuel Tumusiime Mutebile that the Central Bank had commenced licensing of payment system operators, payment service providers and issuers of payment instruments.
“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.