The Rating service in Uganda is a new concept that is slowly spreading within the microfinance industry. The spread of the microfinance services in Uganda has correspondingly brought about various challenges to the microfinance sector; the challenges faced by Microfinance Institutions (MFIs) tend to differ from institution to institution. Some MFIs are supervised and regulated by Bank of Uganda e.g. the Microfinance Deposit Taking Institutions (MDIs) and others; in fact the majority of the small micro finance institutions like the Savings and Credit Cooperatives (SACCOs) and smaller Non-governmental organizations are not supervised nor monitored by Bank of Uganda.
Microfinance institutions that are not regulated by Bank of Uganda are the Tier 4 institutions. Such institutions hold savings from clients and give out loans from these savings. The key question is, how safe are the client?s savings when the institutions they financially transact with are not supervised nor monitored by any responsible recognizable body? The question indicates a gap that exists within the Tier 4 institutions that requires bridging.