What you need to know:
Service. Borrowers will also be able to access credit facilities by phone.
Kampala. Mobile phone users will be able to borrow directly from banks, thanks to a new service company, launching on the Ugandan market.
In a fortnight, Metropol, a business information and credit management company, will open shop in Uganda to provide credit rating and credit reference services as well as mobile-phone based banking.
The development will also see borrowers’ credit history documented and made available to lenders (and financiers) including utility companies and SACCOs, who will refer to it before transacting business with individuals or companies.
The group managing director, Mr Sam Omukoko, said they will be looking at linking mobile phone users with commercial banks where they will be able to get credit facilities the same way they would borrow airtime after running short of it.
Speaking at a breakfast meeting in Kampala yesterday, Mr Omukoko said: “We shall start by trying out our systems and we also have a product that allows banks to link with mobile phone borrowers.”
With good ratings of individuals’ and institutions’ credit worthiness, the levels of non-performing loans (default and losses) will be manageable. This will also influence the rates charged on interest.
More people could access loans for investment which may in turn lead to job creation and stronger purchasing power.
Worth noting is that Metropol Corporation is not the only institution doing credit bureau services. About six years ago, Bank of Uganda licenced Compuscan, partly owned by Actis, to provide these credit related services.
Metropol was established in Kenya in 1996 as a business information and credit management company.
Currently, all borrowers are expected to present a financial card detailing their credit history during loan appraisal.
To access credit, an individual or company must present a financial card to a commercial bank. This is done to help the banks track customers or understand their payment ability and behaviour.
There are nearly one million clients in Uganda with financial cards and despite that the cost of borrowing still remains high.