Ugandan banking sector’s on the line, says McKinsey

Uganda, March 13 – Global management consulting, McKinsey & Company has highlighted the risk Ugandan banks could be facing in the next five years. The trusted adviser has considered the banking sector to face a major challenge in reduced revenues and perhaps in the long run, be out of business.

It is a bold statement by the financial advisor that has foreseen the success of world’s leading companies in its regime. According to the company, the tough economic times in the country has compelled customers to seek for convenient banking services and financially affordable. The rate of competition is quite high and it remains to see how many financial institutions will lower their rates to suit the demographic of its nation.

President Yoweri Museveni will indeed need to keep the economy of the state on a stable platter but will have to balance the options to ensure they remain competitive in the East African region. Looking at the region in general, each state has a different rate set for the banks that could lure customers or shy them off. Such decisions also affect the investors’ interest and number of businesses in the country.

High cost of loans, due to the high interests has been a major concern on financial security for businesses and entrepreneurs in the country. The decry of the public has been heard but little customary changes made. It has made a number of citizens shift their attentions to other avenues of raising capital, limiting the banking services perhaps only to other companies with financial strength.

The high cost of loans reduces credit to the productive sectors of the economy, thereby slowing down economic growth. Should there be need to steer the economy to the right competitive direction, it would need better adjustments to suit the customers and save the banking sector.

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