Small lenders overtake banks in credit data requests, central bank says

KAMPALA, Uganda — Saccos and non-deposit-taking microfinance institutions have overtaken commercial banks as the primary users of credit reference bureau services, according to the Bank of Uganda’s 2025 annual supervision report.

These institutions now account for 41.4 percent of all credit reports requested, marking a significant structural shift in how credit risk is managed in the country. The central bank report indicates that credit enquiries rose 28.4 percent over the past year, jumping from 653,400 to 838,700.

The number of registered borrowers across Uganda’s three licensed bureaus also surged, rising from 2.9 million to 4.1 million.

This expansion is driven by a sharp increase in accredited credit providers, which grew from seven in June 2024 to 31 by June 2025. The new providers include Saccos, digital lenders and money lenders. The shift means that borrower credit histories are increasingly shaped by high-frequency, smaller lenders operating in the informal and semi-formal economy.

For Saccos and microfinance institutions, the transition represents a move away from relationship-based lending toward data-driven decision-making. By using bureau services, these lenders can better detect multiple borrowing and reduce defaults that threaten their smaller balance sheets.

The World Bank cautioned that while credit reporting is expanding, Uganda must sustain strong growth to create jobs and improve living standards. Per capita income is projected to grow by 2 percent annually in 2026-27, a rate the bank says is too slow to absorb the growing labor force amid high public debt.

The central bank noted that the boom in credit reporting carries risks for low-income borrowers. While a strong history can unlock loans across various lenders, a single default on a small loan can now result in system-wide financial exclusion.

To address data quality gaps, the Bank of Uganda has moved to establish a central data hub. The hub is intended to standardize submissions and ensure accuracy across all licensed bureaus.

The success of this market transformation will depend on the evolution of consumer protection, data accuracy and dispute resolution mechanisms as more Ugandans enter the formal credit ecosystem.