Risk management & credit scoring critical for Ugandan MSEs

Small and medium enterprises (SMEs) are the lifeblood of any economy, providing job opportunities and contributing to economic growth. In Uganda, Micro and Small Enterprises (MSEs) play a crucial role in driving the country's economy. However, one of the major challenges facing these MSEs is accessing formal financial services due to inadequate risk management and credit scoring processes. CNBC Africa recently spoke to Collin Mutungi, Manager of Banking & Financial Services at Microsave Consulting, to shed light on the significance of risk management and credit scoring for Ugandan MSEs. Mutungi highlighted the crucial role played by credit reference bureaus (CRBs) in ensuring that MSEs are fairly represented in the credit scoring process. He emphasized the importance of CRBs aggregating information from various sources, including telecom data, to provide MSEs with fair interest rates based on their credit profiles. This article explores the key points raised in the interview and delves into the importance of risk management and credit scoring for the growth and sustainability of Ugandan MSEs. Managing risk and improving credit scoring mechanisms are essential for unlocking access to formal credit for Ugandan MSEs.