The respondents of the World Bank’s Doing Business Survey reported in the 2013 African Competitiveness Report cited access to finance as the second most problematic factor for doing business in Uganda (after corruption). The main reason why interest rate spreads in Uganda are so wide is the high fixed and operating costs of the banks.
Interest costs comprise less than a third of the total expenses of commercial banks in Uganda; the rest of the costs comprise salaries, utilities, the maintenance of buildings and provisions for bad debts. Reducing bank operating costs is essential if interest rate spreads are to narrow and lending rates for borrowers are to be made more affordable.