Earlier this year, ICRA became the first local credit rating agency in Uganda to be recognized by the Bank of Uganda. How does this milestone specifically benefit Uganda’s financial sector, and what opportunities does it unlock for local businesses and investors?

Before ICRA there wasn’t any single Credit Rating agency based inside the country with local presence.  Now microfinances, Insurance companies, and very importantly banks are having this service within the country.  At the moment stakeholder consultations within the sector are ongoing. Since Credit ratings play a pivotal role in the financial sector, now Ugandan Entities can reach out to international markets with the help of ICRA services.  
 
ICRA has forged partnerships with key entities in Uganda, such as Private Sector Foundation Uganda -PSFU. How do these collaborations enhance ICRA’s ability to support the Ugandan market, and what specific initiatives are planned to foster financial growth and stability in the country?
 
As a Ugandan entity, ICRA has looks at partnering with Key Local Entities such as Associations, umbrella bodies were Potential Corporations and Microfinance institutions can reach out to ICRA through their respective platforms. By utilizing ICRA credit ratings and reports, these organizations can approach both domestic and international banks and investors to receive fair evaluations for debt and equity financing.
 
ICRA, in collaboration with UBA, AMFIU, UMRA, PSFU, IRA and many more aims to educate and provide technical knowledge through physical events and webinars on various topics related to the financial sector. These include understanding Basel and its effects on key financial ratios like CAR and LCR, Common Equity Tier 1 and Additional Tier 1 Capital requirements, and regulatory reporting. Additionally, the events will cover other important topics such as the Syndicated Loan Market, ESG rating and its impact, and how it can help lenders and borrowers access low-cost green funding. A fair, independent credit rating can also help financial institutions reach out to international financial institutions in establishing RMA Keys, Trade advising, and credit lines to facilitate their asset clients.
 
ICRA is also looking forward to partnering with Credit Bureaus, licensed by BOU. ICRA does not base its credit reports and ratings on unverified publicly available information. Instead, ICRA requires information directly from the issuer or reliable sources like credit bureau reports and other government-issued information. This is one of ICRA’s key practices that adds value to its reports and earns the trust of lenders and international financial institutions, when making their decisions.

Investors from both international and regional markets have expressed interest in investing in African businesses, especially Uganda’s financial and non-financial institutions. ICRA Credit has developed credible methodologies that have been well-received by investors and financial institutions based in Europe and the GCC. These investors are open to receiving ICRA credit rating reports to facilitate their initial assessment and prompt decision-making.

How does ICRA intend to attract and facilitate investment into the Ugandan market while ensuring transparency and risk management?
ICRA:  Investors are keen to invest in Ugandan institutions. However, due to the lack of proper information and understanding of local risks, they are not able to evaluate the credit risk and local markets effectively. ICRA, being a rating agency with a local presence, has unique advantages in terms of data collection practices, collaborations with associations and bureaus to obtain authentic information, and credit assessment and rating methodologies that are widely accepted globally. This sets ICRA apart from other rating agencies in similar categories.

How does ICRA tailor its credit rating methodologies to the unique characteristics of the Ugandan market, and what measures are in place to ensure the reliability and relevance of ratings for Ugandan businesses and investors?

ICRA’s understanding of the local market practices, risks, and opportunities. Combining local expertise with the centralized Credit Department’s international experience, it provides investors with the comfort they need to make their decisions. ICRA issues country-level credit ratings, meaning that Ugandan entities are compared within the local market. This means that local banks are assessed and reviewed within the local banking sector. Thus, investors get to know the standing of the bank within the domestic markets.
 
As ICRA expands its presence, what specific strategies are being implemented to address the country’s financial inclusion challenges and promote sustainable economic development?

Looking ahead, what are the key trends and opportunities that ICRA anticipates in Uganda’s financial landscape, and how does the agency plan to leverage its expertise to support the country’s growth agenda?

Credit rating plays a pivotal role in the financial sector. It reduces the turnaround time of decision-making and provides authentic information to decision-makers. Credit rating reports of institutions in Uganda, which are not available for investors and international financial institutions, will help them understand the risks and opportunities. Credit rating reports will also help local entities assess themselves in the eyes of investors. They can rectify their weaknesses and utilize their strengths to provide timely services to corporations and other non-financial institutions.

Banks are the backbone of the country’s ecosystem, and corporations are the main drivers of the economy. As credit ratings are not alternatives to internal risk assessments, they work as supplements and help make decisions with reduced TAT, which can bring foreign investments into the country and also give a positive image of local entities in the international markets.