Ugandans now  borrowing more from mobile money, Saccos

At least 52 percent of adult Ugandans borrowed money in the five years to 2023. Photo / File 

What you need to know:

  • The 2023 FinScope survey indicates that Saccos and mobile money are the two biggest sources of credit

Mobile money and Savings and Credit Cooperative Organisations (Saccos) form the largest sources of formal borrowing for adult Ugandans, according to a survey by Financial Sector Deepening Uganda.

The two, data shows, have a combined share of 32 percent, split into halves of 16 percent, respectively. 

The survey, titled FinScope Uganda 2023, found that 16 percent of adult Ugandans, which translates to 3.9 million, access credit through Saccos, which is the same number as those accessing mobile money. 

In the five years to 2023, the survey, funded by Bank of Uganda, aBi Finance, and the Bill & Melinda Gates Foundation, found that between 2018 and 2023 at least 51 percent or 12.5 million out of the 24.6 million adult Ugandans had borrowed money from different sources, among which included mobile money, Saccos, banks, credit institutions, micro deposit-taking institutions, saving groups and family and friends. 

The borrowing is classified as formal and informal with Saccos, banks, credit institutions, and micro deposit-taking institutions listed as formal channels while saving groups and family and friends are listed under informal. 

Out of the 12.5 million, at least 11.6 million borrowed formally, while just 1.5 million borrowed informally.    

Under formal lending, mobile money and Saccos are the largest sources of credit, with a combined number of 7.8 million adult Ugandans borrowing through the two platforms. 

The two are followed by banks, which provide credit to 8 percent or 1.9 million, while credit institutions and micro-deposit-taking institutions provide 4 percent (or 984,000) and 3 percent (or 738,000), respectively. Just 1 percent or 246,000 of adult Ugandans source their credit from microfinance institutions.     

Under informal borrowing, more than half of the 900,000 adult Ugandans, which stands at 56 percent borrowed from saving groups, while the rest borrowed from family and friends.

However, the report does not indicate the value of credit sourced from different channels.  The survey published last week indicates that more than 3,176 Ugandans were sampled across the country, which is a representation of  24.6 million adult Ugandans. 

The survey also indicates that at least 17.2 million adult Ugandans spend more than they earn, which means that the majority rely on family and friends, personal savings, and borrowing to cover shortages.   

In the five years to 2023, Uganda’s adult population, which the survey puts at 16 years and above, has grown significantly from 18.6 million in 2018 to 24.6 million.