Mystery shopping assessment of credit cost disclosures

A mystery shopping study of 1,102 visits to financial institutions in Kampala, Mbarara, and Gulu reveals significant gaps in the disclosure of the total cost of credit and interest rates in Uganda. The report finds that inexperienced borrowers and women receive substantially less information than experienced male borrowers, and that written disclosure materials, such as key facts documents, are rarely provided. Analysis of Bank of Uganda data also indicates a steady increase in the number of non-interest fees charged to borrowers since 2005.

• Loan officers failed to consistently provide information on the total cost of credit, mentioning or explaining it in only about 50% of visits. Tier 1 institutions were the least likely to disclose this information, doing so in only 41% of visits.
• There is a significant information gap based on borrower experience; only 12% of inexperienced shoppers were informed of the total cost of credit, compared to 68% of experienced shoppers. Similarly, 98% of experienced shoppers received interest rate information, while only 69% of inexperienced shoppers did.
• Gender-based disparities exist in the spontaneous provision of cost information. Only 29% of women were spontaneously given the total cost of credit compared to 41% of men, and only 28% of women were spontaneously given interest rate information compared to 59% of men.
• Compliance with requirements for written documentation is very low. Key facts documents were shown in only 6% of first visits, and payment plans were shown in only 12% of visits.
• Promotional leaflets often fail to meet Bank of Uganda guidelines; fewer than 40% of collected leaflets stated interest rates, and none of the leaflets that included both interest rates and total cost of credit displayed the total cost more prominently.
• The number of non-interest fees charged by commercial banks has increased significantly over time, rising from just over two additional charges per loan in 2005 to more than four per loan in 2019.
• There is a lack of standardization in fee naming, with different institutions using different names for the same charges, such as using both "application fees" and "processing fees" for the same purpose.
• Information regarding penalties for late payments was provided in only 39% of visits, despite 96% of the institutions studied actually charging such penalties.
• Many institutions, particularly Tier 4, use flat balance interest calculations despite regulatory requirements from the Uganda Microfinance Regulatory Authority (UMRA) to use a declining balance method.

APA

Atuhumuza, E., Mazer, R., Smits, J., & Ssempiira, J. (2020). Mystery shopping assessment of credit cost disclosures. FSD Africa. https://fsdafrica.org/wp-content/uploads/2025/05/IPA-Report-08.05.20.pdf

Chicago

Atuhumuza, Elly, Rafe Mazer, Joeri Smits, and Julius Ssempiira. Mystery shopping assessment of credit cost disclosures. FSD Africa, 2020. https://fsdafrica.org/wp-content/uploads/2025/05/IPA-Report-08.05.20.pdf.

Wikipedia

{{cite report |last1=Atuhumuza |first1=Elly |last2=Mazer |first2=Rafe |last3=Smits |first3=Joeri |last4=Ssempiira |first4=Julius |title=Mystery shopping assessment of credit cost disclosures |publisher=FSD Africa |date=May 2020 |url=https://fsdafrica.org/wp-content/uploads/2025/05/IPA-Report-08.05.20.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{atuhumuza2020mystery, author = {Atuhumuza, Elly and Mazer, Rafe and Smits, Joeri and Ssempiira, Julius}, title = {{Mystery shopping assessment of credit cost disclosures}}, institution = {FSD Africa}, year = {2020}, month = may, url = {https://fsdafrica.org/wp-content/uploads/2025/05/IPA-Report-08.05.20.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }