Policy Brief: Mystery shopping assessment of credit cost disclosures in Uganda

The document reports on a mystery shopping exercise conducted by Innovations for Poverty Action (IPA) in Kampala, Mbarara, and Gulu to evaluate how loan officers disclose interest rates, fees, and the total cost of credit. It finds significant gaps in disclosure, particularly for inexperienced borrowers and women, and notes that regulatory requirements for Key Facts Documents (KfDs) and total cost disclosures are frequently ignored. The brief recommends improving staff training, standardizing KfD formats, expanding cooling-off periods for smaller loans, and harmonizing consumer protection policies between the Bank of Uganda (BoU) and the Uganda Microfinance Regulatory Authority (UMRA).

• Loan officers frequently failed to disclose the total cost of credit, despite it being a regulatory requirement and most officers being familiar with the concept. Only 50% of shoppers received this information, and it was provided spontaneously in only 36% of cases where it was mentioned.
• There is a significant disparity in information disclosure based on the borrower's perceived experience and gender. Experienced shoppers were more likely to receive interest rate information (98%) than inexperienced ones (69%). Women were less likely than men to be spontaneously provided with the total cost of credit (29% vs 41%) and interest rates (28% vs 59%), and were significantly less likely to receive explanations on how these costs were calculated.
• Non-interest fees have increased from just over 2 per loan in 2005 to more than 4 per loan in 2019, but these are poorly disclosed. Experienced shoppers were told about more fees (average 3.58) than inexperienced shoppers (average 2.97), with insurance (59%) and application fees (60%) being the most mentioned.
• Compliance with requirements for providing Key Facts Documents (KfDs) and payment plans is very low. A KfD was shown in only 5.9% of loan visits, and a payment plan in only 10%. Additionally, less than 40% of collected promotional materials stated an interest rate, and very few stated the total cost of credit.

APA

FSD Africa (2020). Policy Brief: Mystery shopping assessment of credit cost disclosures in Uganda. https://fsdafrica.org/wp-content/uploads/2025/05/IPA-report-summary-08.05.20.pdf

Chicago

FSD Africa. Policy Brief: Mystery shopping assessment of credit cost disclosures in Uganda. 2020. https://fsdafrica.org/wp-content/uploads/2025/05/IPA-report-summary-08.05.20.pdf.

Wikipedia

{{cite report |author=FSD Africa |title=Policy Brief: Mystery shopping assessment of credit cost disclosures in Uganda |date=May 2020 |url=https://fsdafrica.org/wp-content/uploads/2025/05/IPA-report-summary-08.05.20.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{fsdafrica2020policy, author = {{FSD Africa}}, title = {{Policy Brief: Mystery shopping assessment of credit cost disclosures in Uganda}}, institution = {FSD Africa}, year = {2020}, month = may, url = {https://fsdafrica.org/wp-content/uploads/2025/05/IPA-report-summary-08.05.20.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }