Sources familiar with the deal told The Observer that Letshego Uganda would now shift from just offering loans to government employees to issuing out other products including mortgage loans, savings accounts, and SME loans to all interested clients.
"Competition is good. When it increases, the cost of loans will reduce and institutions will strive to be efficient to keep the old or attract new customers," he said.
"Buying into a microfinance operation will help the company diversify its products into the fast-growing micro lending market. Besides, transforming into a deposit-taking institution is the ultimate goal for money lenders seeking strong long term growth," David Ofungi, the regional executive director for
Asked whether there was still enough space to accommodate new players, our source said: "The space is there; Ugandans are interested in the turnaround time. If an institution can give money at the lowest time possible, people are ready to support it."
Most bank activities are also concentrated around the major towns, with rural customers largely ignored. That is the gap that institutions like
Speaking at the official opening of the
"The rural population constitutes a large share of the total population. This is, therefore, a large potential market for savings mobilisation, which is yet to be tapped by the financial sector," Kasekende said.
Cheap vs quick
Rates charged by moneylenders and microfinance institutions have averaged 20-36 per cent per annum compared with those of commercial banks, which fell to 22.5 per cent as of
Letshego Uganda, now with an estimated loan portfolio of Shs 70bn (including Micro Uganda's portfolio) is expected to gain much from customer deposits. Recently,
By close of
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