Don’t play Nokia or Kodak in today’s microfinance industry

— Paul’s Diaries Microfinance Series — Part I

On January 4th, 2026, I will be marking ten years of nonstop practice in Uganda’s microfinance industry. One of the mentors whose thinking I give ardent heed once said something that permanently shaped how I understand careers and professional maturity: it takes ten years of consistent learning, progress, and growth at doing something before one can confidently say they have a career in it. Anything below that threshold is not yet a career gained, but rather a career under construction. You don’t say you are a career lawyer if you have practiced for six or even nine years; you say you are building your career in law, even at 9.9 years.

It is also widely believed that once a person has invested ten years of real progress, not stagnation, in a profession, it would take ridiculous reinvention for them to abandon that path entirely, whether it is marriage, business, or vocation. Deep roots resist shallow exits. It is upon this background that I have gathered the courage to write the first of many articles on microfinance from my lens, informed by what I have learned over time while working at the very bottom of the economic pyramid, where repayment discipline is shaped by weather, school fees calendars, market days, sickness, funerals, and the unpredictable rhythms of informal income.

The title of this article is deliberate. The stories of Nokia and Kodak are now global business parables. These were not small, confused companies; they were dominant, well-capitalised, admired giants. Yet they bled from the nose when technology disrupted their industries, not because they lacked resources, but because they failed to evolve fast enough. They mistook market leadership for permanence and historical success for future relevance. Microfinance players in Uganda today would be dangerously mistaken to believe they are immune to the same fate.

For many years, Uganda’s microfinance industry grew in an environment that was loosely regulated, with minimal barriers to entry. Almost anyone with some capital, a small office, and loan officers willing to walk or ride bodas into trading centres could start lending. Recently, however, a degree of strictness has entered the space through lending regulations, interest caps set at 2.8 percent per month, and institutional restructuring that placed microfinance regulation under the Ministry of Finance. These interventions were necessary, but the way they were rolled out exposed a serious gap between regulation and reality.

The loud outcry from lender associations over interest caps revealed more than resistance to change; it revealed limited stakeholder engagement and a regulator that appears detached from the lived realities of micro-credit at Tier 4 level. The cost of servicing a boda boda rider in Kalerwe, a market vendor in Owino, or a village savings group in Nakaseke is not theoretical, it is fuel, airtime, staff time, fraud risk, and repayment uncertainty. Most concerning is that little or no clear regulatory direction has been offered for digital lending, yet technology is evolving faster than regulation, not only in microfinance but across all business sectors. The market is already moving, whether policy keeps pace or not.

Today, Uganda’s microfinance market is clearly split into two borrower realities that coexist in the same communities. There is the slower-adopting segment, borrowers who are comfortable with human-enabled approvals, physical forms, passbooks, guarantor signatures, and waiting until morning for disbursement. These are often older traders, rural borrowers, parish-based groups, or customers whose phones are primarily for calls and mobile money withdrawals. Then there is a fast-paced, tech-enabled segment, largely younger, urban or peri-urban, digitally confident, operating small but agile businesses, boda riders using apps, shop attendants, salon operators, and online traders who expect credit in real time and want to borrow and repay at any hour with a few taps or a USSD code.

The quiet truth is that the exodus has already begun. Reliable borrowers are leaving traditional microfinance not with noise, but with silence. When a trusted customer is caught in an emergency at eight in the evening, maybe stock has run out, a child is sick, or an opportunity has appeared that cannot wait until morning, the choice is brutally simple: dial a USSD code or open a lending app and receive money instantly, or wait for office hours for a loan officer to process a manual transaction after the moment has passed. Every time we fail that moment, we push a good customer closer to a digital alternative. That is exactly how Nokia lost ground, not in one dramatic collapse, but through many small delays and missed adaptations.

For years, physical forms, manual signatures, and face-to-face assessments have served a purpose in Uganda’s Tier 4 microfinance environment. They helped institutions understand borrowers, monitor behaviour, and manage entry risk in communities where formal data was absent. A loan officer who walks into a borrower’s home, sees stock levels, family dynamics, and living conditions, gains insights no algorithm can fully replicate. However, lenders who are still entirely dependent on paper in a market that increasingly runs on mobile money and digital records are being outpaced by evolution. Paper is slow, paper does not scale, and paper does not operate at night or on Sundays. The future belongs to hybrid intelligence, where human judgment is supported, not replaced, by systems that remember, analyse, and act faster than people can.

Self-service lending is no longer optional. The winning strategy is not to eliminate human systems, but to use them intelligently. New borrowers, average payers, and high-risk customers still benefit from human oversight, physical verification, and close follow-up. But a borrower who has paid faithfully for three, four, or five cycles should not be subjected to the same friction as a first-time client. A top-rating customer should not have to call a loan officer, wait for approval, and explain urgency repeatedly. The system should already trust them. Without this transition, even institutions with relatively good turnaround times will steadily lose their best customers to digital lenders and telco-powered loan platforms that never sleep.

One of the most persistent weaknesses in Uganda’s microfinance sector is the absence of a strong, practical credit reference framework that truly reflects Tier 4 borrower behaviour. In its absence, high-risk borrowers rotate from one lender to another, taking advantage of information gaps, while disciplined borrowers receive no meaningful reward for consistency. Until a mature, sector-wide solution emerges, each lender must take responsibility for building internal credit intelligence. This means investing in proper databases, tracking repayment behaviour over time, scoring customers based on their own historical performance, and adjusting limits, pricing, and access accordingly. This is impossible without technology. A lender that does not digitise its data will forever lend with one eye closed.

Yes, Uganda’s microfinance market is still wide, and demand for credit remains strong, from market stalls to boda stages to village savings groups. But market size is not protection from disruption. Nokia also had a massive market. Kodak owned photography. Delay is the most expensive mistake an institution can make. The microfinance players who evolve, even gradually but intentionally, will dominate the next phase of the industry. Those who cling to nostalgia, manual comfort, and the illusion that “our customers are different” will quietly bleed relevance until one day they realise the market moved on without them.

Microfinance is not just about money. It is about speed, dignity, trust, and timing. Technology does not eliminate human judgment; it amplifies it. Evolve with the market, or the market will evolve past you. Don’t play Nokia. Don’t play Kodak.

Written by

Paul Kasobya

Founder, Paul’s Diaries (literary production house)

Head of Operations, Afriqapital Ventures Ltd

(Tier 4 Microfinance Institution, Uganda)

Email: [email protected]

+256 751 545 331