Uganda has the lowest savings to GDP which limits the funds available to the financial sector.
The formal financial system largely concentrated in the urban areas and the rural areas are excluded. This limits the growth of the sector.
The rural areas where poor people live are mainly served by semi-formal and informal institutions which are weak and not regulated. The savings of the majority in rural areas are not safeguarded. The interest rates charged to the poor people in the rural areas are quite exorbitant.
Limited number of financial instruments on the market.
Low return on savings due to high liquidity in banks
The interest rates charged on loans both short-term and long –term are quite high which in away have limited borrowing by the private sector.
The capital market is still quite weak to mobilize domestic resources into the financial formal sector.
The lending to individuals is constrained by lack of legal documents like national identity cards which can be used to verify the credit worthiness of borrowers.
The lack of funds and security mechanism to lend to specialized areas like agriculture and animal and fisheries. Limited lending to sectors has slowed down the economic growth of the country.