One notable effect has been to enhance the role of markets, whose task it is to transmit information about the value of assets among borrowers and lenders. This in turn is forcing traditional intermediaries to redefine their roles. A second important force for change is innovation, which has permitted the development of products that facilitate the pricing and management of risk.
The Economic Update argues that the “high cost and limited access to credit has become a binding constraint on Uganda’s economy”. While I do not dispute that bank lending rates are too high and need to be reduced in a sustainable manner over the long term, I do not think that this claim is really tenable.