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

This policy brief details a mystery shopping assessment conducted by Innovations for Poverty Action (IPA) between July and August 2019 to evaluate credit cost disclosures among Tier 1-4 lenders in Uganda. The study found significant gaps in the disclosure of interest rates, total cost of credit, and non-interest fees, with inexperienced borrowers and women receiving less information than experienced borrowers and men. The brief recommends improving staff training, standardizing Key Facts Documents (KfDs), and harmonizing consumer protection policies between the Bank of Uganda (BoU) and the Uganda Microfinance Regulatory Authority (UMRA).

• Lenders frequently failed to disclose the total cost of credit and interest rates, particularly to inexperienced borrowers. While 98% of experienced shoppers received interest rate information, only 69% of inexperienced shoppers did. Only 50% of all shoppers were provided the total cost of credit, and in most cases, this information was only provided if the shopper explicitly requested it; spontaneous disclosure occurred in only 36% of cases where the total cost of credit was mentioned.
• Gender disparities exist in the disclosure of loan costs. Women were less likely than men to be spontaneously provided with the total cost of credit (29% for women vs 41% for men) and interest rate information (28% for women vs 59% for men). Women were also significantly less likely to receive explanations on how these costs were calculated, with a 33 percentage point gap for interest calculations and a 43 percentage point gap for the total cost of credit.
• There is a lack of transparency regarding non-interest fees, which have increased from just over 2 additional charges per loan in 2005 to more than 4 per loan in 2019. Experienced shoppers were told about more fees (average 3.58) than inexperienced shoppers (average 2.97). The most common fees mentioned were application fees (60%) and insurance (59%).
• Compliance with regulatory requirements for providing Key Facts Documents (KfDs) and payment plans is very low. A Key Facts Document was shown in only 5.9% of loan visits, and a payment plan was shown in only 10% of visits. Additionally, fewer than 40% of the institutions' collected printed 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} }