Interest Rates in Uganda Heading for a Decline

Posted 09 July 2008 @ 07:38 pm EET     Print     Reprint     E-Mail     Comments

Kampala (IBTimes.com) - The interest rates in Uganda are heading for a decline as more banks emerge increasing competition in the banking sector.

"The emerging competition in the financial sector is a welcome development, which should foster financial deepening, increasing efficiency and reduce bank charges as well as the interest rates," said Emmanuel Tumusiime Mutebile, governor, Bank of Uganda.

Mutebile added that there have been attempts to re-introduce capping on interest rates and his position has always been that competition will do the trick but he is about to win the battle, noting that interest rates are about to fall.

"With the Credit Reference Bureau, the banks will capture information about borrowers, which should help them assess the risk of lending to them," said Mutebile.

There have been speculations that the bureau was coming in after a long time because the central bank kept promising without delivering.

However, Mutebile warned that Ugandans with a habit of borrowing from different financial institutions using the same collateral would be checked by the bureau.

The central bank has already licensed Compuscan CRB, a South African company, to offer credit information to lenders.

The central bank governor assured that the operation of the Credit Reference Bureau will be open to competition three years after Compuscan commences business.