This Occasional Paper addresses issues surrounding measuring microcredit delinquency rates. Not only can poor ratios mislead donors, they can also obscure urgent problems from microfinance institution managers until it is too late to reverse them.
Over the past five years, the microcredit sector has experienced unprecedented growth. The number of borrowers served by microfinance institutions (MFIs) has increased threefold to reach 120 million clients.
In many countries, including Uganda, Bangladesh, and Bolivia, microfinance has become more competitive in recent years. Competition is generally expected to benefit consumers by offering a wider choice of appropriate products and providers, better service, and lower prices.
This report shares the findings, observations and insights from a nationally-representative survey of smallholder households in Uganda. It examines how smallholder households in Uganda manage their income and expenses,and explores financial inclusion in the smallholder sector.
Financial services providers for low-income customers typically believe that their business case is based on expanding the number of accounts or the number of transactions made by these customers. This is only part of the equation to business success.
Advances in digital technologies and the increased availability of data can be used to support low-income customers to do more than make payments. These advances can help them to make financial decisions and develop strategies to manage their finances.
Customers are turning to formal channels that use digital and mobile technologies for remittances because these are often able to offer services at lower costs. As more customers turn to formal services, remittances will have an even stronger developmental impact, notably in countries where protracted humanitarian crises affect large numbers of people.