Mobile Money Loans Driving Financial Inclusion, but Rising Default Risks: BoU Wants Banks to Tighten Borrower Assessment and Monitoring Uganda’s mobile lending boom is widening access to credit for millions, but banks warn it’s also fuelling a new wave of defaults. As digital platforms multiply, regulators and lenders face a growing challenge, how to balance financial inclusion with responsible lending and protect borrowers from falling into debt traps.

The rapid growth of digital and mobile lending is transforming Uganda’s financial landscape. It is expanding access to credit for millions who were previously excluded from the formal banking system. But as financial inclusion deepens, a new challenge is emerging: a rise in loan defaults and growing concerns over the sustainability of unsecured digital credit. A new Bank of Uganda Bank Lending Survey Report for the first quarter of the 2025/26 financial year indicates that commercial banks are warning that the very innovation meant to bridge access gaps is now creating new vulnerabilities in the credit market. At least 13%…