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Whereas the number of Ugandans who borrow from financial institutions is still low, Ministry of Finance permanent secretary Ramathan Ggoobi, says it doubles the average for sub-Saharan African countries, which stands at 10 percent
Only 19 percent of Ugandans borrow from formal financial institutions, according to Ministry of Finance permanent secretary Ramathan Ggoobi.
Speaking during the Financial Inclusion and Financial Literacy Forum in Kampala last week, Mr Ggoobi said that whereas the number of Ugandans who borrow from formal financial institutions was still low, it almost doubles that of sub-Saharan Africa, which stands at 10 percent, and far above some countries such as Tanzania - 4 percent.
Therefore, he said, there is need to improve financial inclusion, which will result in an increase in uptake of formal financial services, noting that while the poor have made progress, they still lag behind the rich while, according to the Uganda National Household Survey, the level of education remains a key determinant in financial literacy and inclusion.
For instance, the survey indicates 65 percent of Ugandans without a primary level education have no access to financial accounts, compared to just 23 percent of those with a secondary level education.
Mr Ggoobi also noted that, according to the World Bank’s Findex database, the share of Ugandans with access to a financial account - either with a formal institution or a mobile money provider - has risen from 59 percent in 2017 to 66 percent in 2021, although it remains below Kenya’s 79 percent.
“Our target is to increase this number to 80 percent by 2027. We must redouble our efforts to ensure all Ugandans have access to essential financial services and the skills they need to use them,” he said.
Digital innovations and technology have become central to financial inclusion, allowing at least 61 percent of Ugandans, according to Bank of Uganda, to use digital payments, up from 51 percent in 2017. Out of these, at least 47 percent use mobile phones or internet to access a financial account, which is more than double the average sub Saharan Africa of 21 percent.
The progress has been achieved through different interventions such as Profira - the Project for Financial Inclusion in Rural Areas - which, as of June 30, according to Mr Ggoobi, had supported establishment of 15,000 community savings and credit groups and strengthened 3,000 existing groups, 76 percent of which are composed of women.
Speaking at the same event, Finance Minister Matia Kasaija said to drive financial inclusion, financial services must be established at the lowest level of society with at least every parish forming a Sacco.
“Every parish must form a village Sacco. We shall be having small banks in every parish in this country in the next five years,” he said.
The Financial Inclusion and Financial Literacy Forum, themed Enhancing Financial Inclusion through Digital Financial Literacy, is jointly undertaken by Bank of Uganda, Ministry of Finance and other stakeholders.