Across Uganda, millions are "credit unworthy" not for squandering cash, but simply because they lack such traditional financial records or collateral. Just 10% of Ugandans use formal credit, with the rest, over 70%, still resorting to traditional means like SACCOs, friends or family, or neighborhood moneylenders. This outdated credit model excludes many families from potential business growth, education, or homeownership imply because they lack a bank statement or title to property.
But local savings are rewriting this narrative in silence. When households save regularly whether using mobile wallets, village savings schemes, or microfinance they begin to build a financial history. Histories of savings demonstrate dependability, discipline, and regularity qualities any lender would cherish.
With over 60% of Ugandans actively using mobile money, digital footprints from savings, transfers, and payments are increasingly being used as useful inputs in assessing creditworthiness, especially for those who are outside the formal banking system.
Actually, online lenders in 2023 extended more than UGX 500 billion in microloans based on these non-traditional credit indicators. This credit enabled market vendors to increase stock, boda boda riders to buy motorcycles, and rural traders to expand their businesses. Most remarkably, repayment levels have been high indicating that individuals without collateral can be good borrowers too.
For most Ugandan households, a steady savings habit is not just an insurance policy it's a steppingstone to being heard and respected as a money maker.
To unlock the potential of savings to build credit, Uganda needs inclusive lending policies that enable such growth.
This entails creating data-sharing arrangements on all financial platforms, protecting consumers, and educating households on the value of savings to improve their economic position. By viewing savings as not merely saved money, but as proof of credit, all households in Uganda will gain the tools necessary to thrive.
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