46% of adults do not save - survey

Tuesday July 10 2018

Notes in a wallet

Notes in a wallet. Savings are low because many people do not have high levels of income. FILE PHOTO  

By Dorothy Nakaweesi

According to the FinScope 2018 survey, less than half of Uganda’s adults – 46 per cent – do not save because they hardly have any money left after covering costs. Ms Jacqueline Muna Musiitwa, the executive director of Financial Sector Deepening Uganda, in an interview with Prosper Magazine’s Dorothy Nakaweesi explains the trends of Ugandans using financial services. Below are the excerpts:-

How important is the FinScope survey to the economy?
Finscope is important for Uganda for many reasons;
The data from the report gives us more up to date and accurate data on the nuances of financial inclusion that can help policy makers, financial services providers, donors to create policies and products for more Ugandans.

Data-driven decision making is important for Uganda because it gives us the opportunity to accurately identify gaps and solve the related problems. Data driven decision making will make government more effective, hold them accountable and encourage transparency in the support to delivery of a strong business environment.

What are some of the key issues that emerged from the FinScope survey?
In the survey, we found that 78 percent of Ugandans are financially included. This is a remarkable progress and we plan to continue until there is universal inclusion.

The report also shows that at least 54 per cent (10 million) of Ugandan adults report to save or put money away with the intention to keep doing so to ensure that the amount increases over time. About 63 per cent (6.3 million) are saving for consumption purposes; that is making sure they can cover day-to-day and unexpected expenses during low-income periods.
A total of 3.7 million of savers are saving to cover regular expenses during low-income periods – living expenses and education or education-related costs, 2.6 million of savers are mainly saving to cover unexpected expenses – mainly medical costs and to a significantly lesser extent, funeral costs.

The findings also show that 46 per cent of Ugandan adults do not save – mainly because they have no money left after covering expenses.
Much as we are committed to implementing the National Financial Inclusion Strategy, there is still a lot of work to be done to include the rural populations.


As such we are working with the Uganda Bankers’ Association to ensure agent banking reaches all corners of the country. We are also working with mobile network operators to ensure their agent networks are effective, efficient and safe for consumer use.
While the numbers for financial inclusion are increasing, women are still being left behind. We are committed to doing more. We are finalising our gender strategy which weaves gender into all our pillars. We have already started engaging with our partners on aspects of gender to ensure that they mainstream gender sensitivity into their programming.

Although the statistics on Inclusion are improving, there is a dire need for all players in the sector to move beyond financial inclusion to push for financial health. We need to ensure that a farmer, for instance, moves from getting paid by mobile money for her crops and her taking that money out as cash to the same farmer being able to use her money to pay for her child’s school fees, to borrow, access insurance and save all with ease, at an affordable price and with the intention of those financial services making her less vulnerable to shocks.

One of the reasons why many Ugandans have been excluded is because of the expensive financial services particularly in rural areas. Does the FinScope recommend how this gap is going to be reduced and what are those recommendations?
The cost of financial services can be burdensome to both rural and urban populations. By recommending innovative and collaborative interventions between the public and private sector, I hope the cost of services will reduce. Financial services providers now have increased competition from financial technology services firms. Fintechs are pushing the status quo on price, variety of services and underserved market segments.

According to the FinScope report, 22 per cent of Ugandans are excluded. What are some of those barriers behind this situation?
People in rural areas have lower access than people in urban areas. That is because points of service tend to be located in towns rather than remote villages. With agent banking now in place, banks have the opportunity to reach remote areas. The cost of financial services can also be prohibitive.

The report shows that there are low levels of savings. Of the 18 million adult population, 47 per cent do not save. Why is it so?
People need to understand the value of formal financial services and how they can use such services to achieve financial health. There are some difficulties related to the capture of data about savings. For instance, savings also need to be understood in a cultural context.
People save in village savings and loans associations as well as in their homes. It is therefore, very difficult to quantify how much they save. Also, savings are low because many people do not have high levels of income and it becomes difficult to put it away in anticipation of a future event.

Many reports have been done but the challenge has been implementing the recommendations. Who is supposed to implement these recommendations?
It is well claimed that the most important commodity of the future will be data.
At FSDU, we have observed that as companies understand the value to data in their decision making processes, the more willing they are to adopt recommendations from reports. Regarding Finscope, it is used by financial institutions to help formulate their products and strategies.
For government, it is used to help shape decision making about how best to ensure access. For the donor community, it is used to identify gaps where they can collaborate with both government and the private sector to support the achievement of various goals.