Marketplace Lending (Consumer) - Uganda

The total transaction value in the MarketMarketplace Lending (Consumer) market market in Uganda is projected to reach US$1.02m in 2024.
When looking at a global comparison, it is evident that the highest transaction value is expected the United States, reaching US$28bn in 2024.
The Key Market Indicators offer a glimpse into the social and economic landscape of Uganda, shedding light on market-specific trends.
These indicators, along with data from statistical offices, trade associations, and companies, form the basis for the Statista market models.
In Uganda, Marketplace Lending for Capital Raising is gaining traction, offering consumers alternative financing options outside traditional banks.

Definition:

Marketplace Lending platforms offer private users the option to place requests for loans in an online marketplace to find private investors who would invest at an appropriate interest rate. These services apply a credit score and list the financial requests by intended purpose before fixing a lending rate. One or more investors can then serve the credit request. Although banks act in cooperation with the platform providers, the lending is done, in principle, without direct exposure, risk audits or the formal requirements normally associated with credit lending. This is attractive for many users because the processes are expedited, there is less demand when it comes of the borrower’s creditworthiness and the conditions are often more flexible than with traditional bank loans. Users are defined in this case as active borrowers on an online platform; applicants or investors who are only partially recorded as users are not included. The amount of outstanding, short-term installments or consumer loans recognized during the applicable year is used here as a benchmark.

Additional Information:

Key players in the market are Lending Club, Zopa, Auxmoney and Prosper.

Online marketplace for personal loan applications and private investors
Peer-to-Peer loans with interest rates depending on internal credit scoring of the platform provider

Online comparison websites for bank loans
Traditional bank loans
Loans for business purposes (see Crowdlending)

Marketplace lending, also known as peer-to-peer lending, has been gaining traction in Uganda in recent years. This alternative form of lending allows individuals and small businesses to borrow money directly from investors, bypassing traditional financial institutions. The marketplace lending market in Uganda is developing rapidly due to several key factors.

Customer preferences: One of the main reasons for the growth of marketplace lending in Uganda is the changing preferences of customers. Many borrowers are turning to marketplace lending platforms because they offer faster and more convenient access to credit compared to traditional banks. These platforms often have streamlined application processes and quick approval times, making them attractive to borrowers who need funds urgently. Additionally, marketplace lending platforms often offer more flexible loan terms and lower interest rates compared to traditional banks, making them an appealing option for borrowers.

Trends in the market: The marketplace lending market in Uganda is experiencing several notable trends. Firstly, there has been a significant increase in the number of marketplace lending platforms operating in the country. This is driven by both local and international players who see the potential of the Ugandan market. As a result, borrowers have a wider range of options to choose from when seeking loans. Another trend in the market is the increasing focus on financial inclusion. Marketplace lending platforms are filling the gap left by traditional banks, which often have strict lending criteria and may not serve certain segments of the population. By providing access to credit to underserved individuals and small businesses, marketplace lending platforms are helping to promote financial inclusion in Uganda.

Local special circumstances: Uganda has a large unbanked population, with a significant portion of the population lacking access to formal financial services. This presents a unique opportunity for marketplace lending platforms to fill the gap and provide financial services to those who have been excluded from the traditional banking system. The digital nature of marketplace lending platforms also makes them accessible to individuals in remote areas who may not have easy access to physical bank branches.

Underlying macroeconomic factors: The development of the marketplace lending market in Uganda is also influenced by underlying macroeconomic factors. The country has experienced steady economic growth in recent years, which has led to an increase in disposable income and a growing middle class. This has created a demand for credit, and marketplace lending platforms are stepping in to meet this demand. Additionally, the advancement of technology and the increasing penetration of smartphones in Uganda have made it easier for marketplace lending platforms to reach potential borrowers. Mobile money services, such as M-PESA, are widely used in the country, further facilitating the adoption of marketplace lending. In conclusion, the marketplace lending market in Uganda is developing rapidly due to changing customer preferences, trends in the market, local special circumstances, and underlying macroeconomic factors. As more borrowers seek faster and more convenient access to credit, marketplace lending platforms are filling the gap left by traditional banks and promoting financial inclusion in the country. With the continued growth of the Ugandan economy and the increasing adoption of technology, the marketplace lending market is expected to expand further in the coming years.

Data coverage:

The data encompasses B2C enterprises. Figures are based on transaction values / revenues / assets under management and user data of relevant services and products offered within the FinTech market.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use annual financial reports of key players, industry reports, third-party reports, publicly available databases, and survey results from primary research (e.g., the Statista Global Consumer Survey). In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, consumer spending, population, internet penetration, smartphone penetration, credit card penetration, and online banking penetration. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

Crowdfunding is the collective effort of a large number of individuals who network and pool small amounts of capital to finance a new or existing business venture. Each campaign is set for a goal amount of money and a fixed timeframe, each day is counted down and the money raised will be tallied up for visitors to follow its success. The size of the global crowdfunding market is growing and the largest markets are North America and Asia.