By Ambrose Dillan Masengere
The just concluded 10X MSME Finance Exchange, convened by the United Nations Capital Development Fund (UNCDF) under the 10X Programme, explored a central question in Uganda’s financial ecosystem: what truly makes MSMEs attractive to lenders and development partners.
A key takeaway from the discussions is a clear shift away from traditional lending criteria such as collateral and formal registration, toward data-driven indicators including digital transaction history, consistency of cash flows, and overall business activity over time.
For many years, MSMEs have remained underserved by formal financial systems despite being the backbone of Uganda’s economy, largely due to informality and limited financial records. However, emerging digital financial systems are now enabling lenders to assess businesses based on real performance data rather than ownership of assets.
Across the ecosystem, financial institutions and fintech lenders are increasingly relying on alternative data such as mobile money transactions, digital sales records, and platform activity to assess creditworthiness. This is redefining MSMEs not by what they own, but by what they consistently do.
The discussions also highlighted a growing gap between basic digital usage and structured business adoption. While many MSMEs use mobile money and digital tools, few deliberately use them to generate business records or manage operations in a structured way—an increasingly important factor in financial attractiveness.
Samantha Malambo, Country Coordinator for FinWise at UNCDF, emphasized that “MSME finance requires a coordinated ecosystem approach, where inclusion is driven by interoperability, data use, and collaboration across financial institutions, fintechs, and development actors.” She noted that sustainable inclusion depends on systems that reflect the real financial lives of women entrepreneurs.
Initiatives under the 10X Programme, including the “Business Ku Siimu Yo” campaign, are addressing this gap by encouraging entrepreneurs to use mobile phones as business management tools that generate financial records, track performance, and build a credible digital footprint over time.
Tusuubira Edith, Commissioner of the Microfinance Regulation Department at the Ministry of Finance, highlighted the government’s role in enabling an adaptive regulatory environment that supports innovation while safeguarding consumers. She stressed the importance of responsible lending, MSME formalization, and regulatory frameworks that evolve alongside digital financial services to deepen inclusion.
Ultimately, the Exchange concluded that MSMEs are becoming more attractive to lenders not because they have collateral, but because they can now demonstrate consistent, measurable financial activity. In this emerging system, digital visibility and structured financial behaviour are becoming the strongest signals of creditworthiness and growth potential.
