Uganda Registration Services Bureau (URSB) registered a significant increase in borrower securities or collaterals under the Security Interest in Movable Property registry in the year ended June 2024, an indication of increased search for credit.
Data contained in the URSB Annual Report for the 12 months to June 2024, indicates that during the period, borrowers registered double the number of securities against which more than 11,350 loans were advanced in the 2023/24 financial year.
Data further indicates that registered securities – as collateral for loans – increased by 57.5, rising by 4,551 from 6,179 in the 12 months to June 2024 to 10,730 amounting to UGX 16.3 trillion.
The law requires borrowers to register securities against which they are seeking to access credit under an automated system – Security Interest in Movable Property registry – which has been vital in supporting private sector development by providing access to credit.
URSB data further shows that individual borrowers accounted for more than 94% of the security interests registered, which stood at 10,086 out of the 10,730 securities registered in the period.
Small enterprises registered 153 or 1.3%, while medium enterprises registered 329 (2.9%) and large enterprises 118 (1%).
Micro enterprises registered the least securities amounting to 20 or 0.2%, which shows that individual borrowers predominantly rely on their assets and properties to access credit.
URSB data further indicates that security interest for individual borrowers was the highest, returning a value of UGX 7.18 trillion, while medium enterprises followed with the value of UGX 5.05 trillion, registered in different currencies including Shillings, Euros and Dollars.
Anastacia Tshesane to become PwC SA CEOLarge enterprises registered securities worth UGX 3.26 trillion, while small enterprises and micro enterprises registered the lowest values of UGX 887.7 billion and UGX 3.618 billion, respectively.
The increase in registration of securities has been growing above targeting with at least 5,436 securities registered in the 2021/22 financial year, before growing to 6,179 in the 2022/23 financial year, which was a growth of 36.4%.
Access to credit remains a challenge in Uganda, partly due to absence of credible securities among borrowers.
This has also created credit default challenge for financial institutions, many of which have registered losses due to failure to recover money advanced to borrowers through disposal of mortgaged securities.
However, through the Security Interest in Movable Property registry, financial institutions have ensured that they avoid advancing money against incumbered securities.
URBS data further shows that the increase in registration of securities earned the Bureau a substantial amount of revenue of UGX 296 billion in non-tax revenue, which was at least 41% above target.
