The Permanent Secretary and Secretary to the Treasury , Mr Ramathan Ggoobi, says lack of genuine collateral security and forged documents are the major bottlenecks to access to cheap capital from Microfinance Support Centre.

Ggoobi, who was on Wednesday unveiling the second National Microfinance and Savings Groups Conference 2024, says this impedes microfinance sustainability.

Uganda has experienced significant evolution in its microfinance sector, tracing back to the establishment of financial cooperatives in the 1960s, followed by the emergence of the microfinance movement in the 1990s, and now transitioning into a phase of commercialisation and regulation.

Despite these advancements, the sector continues to require targeted interventions from various stakeholders to address existing fragmentation issues like lack of access to cheap capital for microfinance sustainability in the country

Day One of the conference in Kampala, saw bankers, microfinance practitioners raise concerns on the increased rates of forged documents in the microfinance industry which they believe slows down microfinance progress in the country.

The Minister of state for Microfinance, Mr Haruna Kyeyune Kasolo, reinstated the need for financial institutions to reduce on interest rates of borrowed money.

Kasolo said this slows down a saving culture that fosters financial inclusion and transformation.

"Banks should try to reduce their interest rates because that alone scares away people who want to get money, that alone cannit let our financial sector thrive," Kasolo said.

At the conference, the government noted that the Financial Capability Survey 2020 showed that only 15 percent of Ugandans save money in deposit taking institutions regulated by the central bank, reflecting a sustainable effort by financial institutions to pull more savers from informal methods to drive financial inclusion.