Kampala. The high cost of financial services is partly to blame for financially excluded Ugandans.
According to a 2018 Finscope survey titled: “Status of women and youth financial inclusion in Uganda”, 29 per cent of excluded females believe that the cost of financial services is high compared to their male counterparts at 27 per cent.
Mr Jimmy Ebong, a research specialist at FSD Uganda, said yesterday formal financial inclusion has nearly doubled from 28 per cent in 2006 to 58 per cent in 2018.
However, the gains made in improving financial inclusion have been challenged by mobile money tax such as the 0.5 per cent charge and the 15 per cent Excise Duty.
Members of Parliament recently approved the 0.5 per cent tax on mobile money which is considered the key driver of financial inclusion.
Ms Madina Buloba, an economist at the Economic Policy Research Centre, said the tax will affect the village people more, adding that “If we want them to be included, it is better to do away with it”.
Currently, there is a 9 percentage gender gap in formal financial inclusion. The report shows that 63 per cent of men are financially included compared to 54 per cent of women.
The gap, according to Ms Ann Nakawunde, the Finance Trust Bank managing director, could be a result of costs on transactions that mostly put off women.
“Anything that brings a cost to a saving is a deterrent. People do not want to be charged anything for banking their money. That cost must be well-communicated to the customer to understand why they should bank their money,” she said.
Mr Henry Mbaguta, the assistant commissioner - financial services at the Ministry of Finance, said, “because banks find it more costly to extend services to rural areas”, it has over time affected the level of financial inclusion.
No source of income
The report also notes that close to 40 per cent of financially excluded women have no source of income. Surprisingly, nearly half of that number – 22 per cent – of excluded men have no source of income.