Rapid Assessment of the Feasibility of a National Long-term Savings Scheme

Rapid Assessment of the Feasibility of a National Long-term Savings Scheme

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      Uganda’s informal sector has shown a wealth of unrealised entrepreneurial potential. It ranked the third highest in (Global Entrepreneurship Monitor, 2014) due to 28% of adults owning or co-owning a new business. Though, the study did also reveal that Uganda had some of the highest rates of business discontinuation in the world.

      Mobilizing savings is crucial for the welfare of Uganda’s informal sector workers. It offers advantages like capital accumulation, funding for productive investments in human and business capital, fostering enterprise growth, providing insurance against risks, and enhancing financial stability and livelihoods for households.

      The informal sector in Uganda is not oblivious to the importance of saving. In the 2023 survey, it was uncovered that respondents actively saved for rainy days such as if they become incapacitated from work, face illnesses or other family emergencies that require financial aid. Despite the active saving behaviour and awareness of the importance of saving among individuals in the informal sector, there is still low adoption of long-term/retirement schemes. The National Financial Inclusion Strategy 2023 – 2027 (NFIS II) (NFIS, 2023) highlighted that Uganda’s retirement sector predominantly targets individuals who are formally employed, largely excluding the informal sector. When combined with the fact that they face uncertain employment and income, their exclusion from long-term/retirement schemes makes them more susceptible to poverty.


      FSD Uganda’s engagement with fintechs

      FSD Uganda’s engagement with fintechs

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        FSD Uganda acknowledges that technology presents unique financial inclusion opportunities for the economically disadvantaged. Because technology comes with affordability and efficiency which play a huge role in increasing financial inclusion, FSD Uganda incorporates the use of technology in all programme implementation. Technology makes it affordable to reach the unbanked and under-served in remote rural areas efficiently in addition to smoothening the value and supply chain. Additionally, technology makes it possible to capture data whose insights can be used to design appropriate products.

        To reap these benefits, it was important that the fintech space is formalised. The establishment of the Financial Technologies Service Providers Association (FITSPA) was a key step in this.


        Empowering Micro, Small, and Medium Enterprises: The Influence of Microfinance Group Lending

        Empowering Micro, Small, and Medium Enterprises: The Influence of Microfinance Group Lending

        By the MicroSave Consulting and FSD Uganda teams

        Across the globe, the lack of collateral is a primary barrier that economically excludes individuals notably young people especially women from accessing formal banking services. To get around this obstacle, the underserved population has resorted to establishing informal community-based financial systems to fulfill their financial requirements. These alternative arrangements, such as Village Savings and Loans Associations, Rotating Savings and Credit Associations, and Table Banking, have emerged as a means for the marginalised to access the financial resources they lack from traditional banking institutions. To extend financial services to the underbanked and unbanked, formal financial institutions have emulated and adopted some of the positive practices in the informal financial systems.

        Informal or formal, financial institutions that offer loans use one of two approaches, individual or group lending. This is the same with the Tier III and IV financial institutions that are on-lending under the Mastercard Foundation Micro and Small Enterprises (MSE) Recovery Fund, a five-year program implemented in partnership with the Financial Sector Deepening Uganda. This initiative was launched in February 2022 and is under the Young Africa Works strategy, which seeks to facilitate direct access to finance 50,000 MSEs (at least 40% women, 30% youth). Designed during the aftermath of the COVID-19 pandemic, this revolving fund provides concessional capital to participating financial institutions for onward lending to micro, small, and medium enterprises negatively impacted at a reduced borrowing rate. The participating financial institutions follow their in-house credit processes to assess the enterprises given their needs.

        Group lending vs individual lending

        The Fund is working with both Tier 3 and Tier 4 financial institutions. Based on the data so far, one Tier 3 Microfinance institution has effectively employed the group lending methodology for a broader client outreach. Since the Fund’s commencement (just under two years), over 26,000 MSEs have successfully accessed credit, and 60% of this has been disbursed by the Microfinance, a testament to its distinctive strategy. The Microfinance has disbursed UGX 7 billion to 16,166 majority of them youth and women-led enterprises within 12 months. Conversely, two SACCOs that employ an individual lending approach, have managed to extend credit to 842 and 503 enterprises and disbursed UShs 3.4 billion and UShs 2.25 billion respectively within 12 months.

        For both approaches, the critical difference is in the collateral criteria. With group lending, all that’s needed is a group guarantee, unlike individual lending products that demand traditional collateral. The Microfinance’s group methodology

        explores unique features that have positively impacted young people, especially women, and offers lessons for other financial institutions: Here is what makes this institution’s group lending approach work.

        How the Mircofinance’s group lending approach works

        Central to the approach is that the institution has dealt with the access to finance obstacle created by the need for traditional collateral. To do this, the institution employs the segmented and combined group strategy, coupled with the delegation of credit approval authority to group members.

        To implement this, the Microfinance employs a two-fold group methodology: branch-based and community-based groups. The former gathers at the bank, while the latter convenes locally, delivering tailored flexibility to diverse client needs.

        The institution looks out for people organised in groups and creates sub-groups of six to seven members to whom loans are exclusively accessible. These sub-groups operate like well-coordinated “cabinets,” complete with designated leaders. This structure not only encourages governance but also strengthens bonds among members. The institution’s loan officers play a modest role in the lending process. Group members collectively greenlight loans without the intervention of the bank. This empowers the groups, enabling them to take charge of credit underwriting, member selection, and loan recovery. This proactive approach ensures that disbursed amounts grow, and the quality of loans improves over time.

        Once the groups have been formed, members of branch-based groups can access loans up to UShs 5 million per member without the need for collateral. On the other hand, community-based groups can borrow up to UShs 3 million per member, securing approvals at the group level—an embodiment of the Microfinace’s dedication to client empowerment. For more substantial loan amounts, up to UShs 30 million, collateral is a requisite to manage potential risks. This balanced approach ensures that prudent risk mitigation measures are also upheld while empowering clients

        A client’s story

        Emily a 28-year-old tailor in Bukoto whose business was adversely affected by the Covid-19 pandemic is one of the Microfinance’s clients served under the group ledning model. Her faulty manual sewing machine didn’t help matters as it affected her output’s quality, efficiency, and income so much that she could hardly meet her daily basic needs. “Things changed when through my savings group which banks with the Microfinance, I received a loan of UGX 800,000 and bought an electric sewing machine,” she says.

        The tailor is now efficient, and her turnaround time has been reduced from three hours to one hour for some jobs. “This has helped me regain my client’s confidence and also get new clients. I now make at least UGX 15,000 daily and I can meet all my basic needs. This wasn’t the case before when I made no money on many days and had to skip some meals and move in with a relative because I couldn’t afford rent. Because of the increased volume of work, Emily is planning to employ one other person to support her.

        As a result, this dynamic formula has enabled the bank to extend credit to a broader spectrum of customers, especially women and youth who lack conventional collateral. Given that women are more likely to belong to groups, the group lending approach is one that financial institutions from Tier 1 to IV should learn from and integrate in order to reach young people, especially women


        Seven lessons from the academic-industry collaboration pilots in Uganda

        Seven lessons from the academic-industry collaboration pilots in Uganda

        By Jackie Kitiibwa

        “What good is engineering research with no practical relevance?” reads a post on Quora from a seemingly frustrated PhD student. The student laments that a sizable portion of the research conducted at their university seems to have limited or no real-world application. “Many of these papers seem to be published just for the sake of it,” they added. Often, the response to such sentiments is, “You never know when seemingly irrelevant research will become relevant.”

        In the past few years, recognition of the need to make academia more relevant or suited to meet world problems has grown. This has led to increased interest in academic-industry collaboration (AIC). Despite the consensus on the importance of the AIC to firms, academia, and the economy, many institutions are at times reluctant to implement long-term collaborative frameworks. In cases where collaborations happen, the success and outcomes of these partnerships differ significantly.

        There has hardly been research on academia and industry collaborations in Uganda, especially in the financial sector. To gain insights and support knowledge building in this area, FSD Uganda instigated a pilot of research collaborations between universities and industry associations. The initiative was conceptualised following an in-depth capacity needs assessment for financial sector industry associations. The needs assessment identified limited research skills as a significant capacity gap that limits industry associations from performing their advocacy and market facilitation roles effectively. Industry associations are unable to effectively contribute to policy formulation because of a lack of data or fail to convince policymakers towards change because of a lack of convincing evidence. Without sufficient, proven, believable, and triangulated data no headway can be made.

        FSD Uganda recognises the important role that financial sector industry associations play in promoting responsible financial inclusion within their respective environments. To this end, we support the industry associations to build their institutional capacity to support and promote financial inclusion. Our focus has been on building evidence-based advocacy that can help in better policy and decision-making. We also want to empower the associations to be sustainable. This way they will be able to advocate for their members’ interests with limited dependency on donor partners or consultants.

        To achieve this, each industry association was paired with an academic institution to collaborate on a topic of research that would be relevant to their respective sector clients[1]. Academic-industry collaboration is a powerful tool that promises three outcomes:

          • First, a collaboration between associations and academia is a creative and cost-effective approach that ensures that there is sustainable knowledge transfer between practitioners and researchers.
          • Secondly, such partnerships will go a long way to motivate researchers/academia to take all possible steps to collaborate with practitioners to apply what is discovered in research and could get researchers into new and interesting areas.
          • Thirdly, this approach could reorient the incentives for academicians and help achieve a better balance between conducting research and ensuring that it positively changes practice and resource allocation. This would allow academia to increase its relevance in developing solutions that can be used to solve real-world problems.

        Lessons from the pilot project

        1. Include AIC in the organisation’s overall strategy – AICs are resource-intensive and need significant commitment from management and staff in terms of time, funding, and human resources. Most of the projects were significantly delayed because team members were not readily available due to other commitments at work. This was common in the early stages of the projects. Staff from the different institutions were still expected to perform their daily duties while also committed to the project. Concerted efforts from the FSD Uganda team were needed to convince the institution management of the importance of the pilot and to avail resources for the teams to work effectively. It is important that such activities are included in the strategy with earmarked work plans, and sufficient funding attached to them.
        2. Develop a research agenda – As would have been expected, institutions that had a structured and well-defined research agenda moved faster. Some institutions did not proceed with the research because of a lack of funds, or no operational structures to advance the work. For institutions that did not have clear research plans, considerable time and multiple back-and-forth was needed to get partners aligned on the research topics or objectives. Sometimes these had to be changed or tweaked following governance changes within an organisation. Once the funding was available, these were quick to move ahead. Market facilitators and funders should consider supporting institutions to put in place a robust research agenda before such partnerships are formed.
        3. Pre-collaboration preparation and training – For AIC partnerships, the need for rigorous preparation and training is crucial. While the inception of the project included training on research skills it became evident during the implementation of the project that training on other softer skills like how to handle partnerships, negotiation skills, communication, and project management were equally and, in some cases, more essential. On the flip side, while some teams found the inception research training basic, teams that were relatively new to research struggled to comprehend the concepts. A pre-training needs assessment is therefore imperative to understand gaps and customise the training accordingly.
        4. Choosing the right partner – Expectedly, partners who had worked together before were able to move faster than those with no partnership history. Surprisingly, in one of the collaborations, project activities progressed well even without prior collaboration amongst the team largely due to the strong engagement of the project leader and good team composition. Having a strong project leader with great stakeholder management skills was the key success driver for such collaborations.
        5. Funding – Outlining and emphasising the purpose of the funding for the research was important for both industry and academic teams. There was a notion that the funding was intended as professional fees for a consultancy. This brought about misalignment in expectations with some teams dissatisfied with the meagre stipend provided for the research activities. As a facilitator, FSD Uganda envisaged that the payout was meant to offset some of the costs and facilitate smaller expenses for the research. The expectation was that participant institutions would provide additional funding to support the project. However, it is important to note that most institutions had not budgeted for this project, and it was, justifiably, challenging to mobilise the funds. FSD Uganda also wanted to test if such collaborations would help limit the need for local industry players to hire expensive consultants.
        6. Roles and responsibilities – It is critical to articulate the roles and responsibilities of the institutions and the team members. For each of the partnerships, the roles and responsibilities were different. Some viewed the academic and industry as equal partners. But while they worked together to develop the instruments and define the scope of work and research sample – each undertook the survey work independently. Other collaborations involved the academic teams conducting the research while the association reviewed the tools and reports and provided comments. These two approaches were not considered ideal as we realised it limited knowledge transfer for academia to learn from industry and vice versa. A better model was the academic team working closely with the industry, handholding them where necessary through the process. This collaboration resulted in marked knowledge transfer and there was a lot of growth evidenced by the team members.
        7. Collaboration Agreements – Each collaboration had different partnership arrangements. This was caused by many factors some of which included – the institution’s internal policies and processes, and whether there was an existing collaboration arrangement between the two institutions. FSD Uganda’s internal agreements also played a part in providing a framework from which these agreements were drawn. For collaborations that existed before, the partners decided on how the research funds would be split amongst themselves. Despite such arrangements, there were some disagreements in cost-sharing among some partners.

        Academic–industry collaborations present a cost-effective and practical approach that strengthens the growth of knowledge and provides for practical relevance to real – world problems.  More such collaborations should be encouraged and supported.

        [1] Links to the three studies
        Agent Banking Services in Western Uganda,
        Effect of Covid-19 on saving groups,
        Microinsurance needs for informal traders.


        What does it take to make digital credit gender inclusive?

        What does it take to make digital credit gender inclusive?

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          Digital lending is expanding rapidly across markets with significant mobile money or mobile banking penetration. And as with all financial services, access and utilization patterns differ by gender. Some digital lending may have the potential to overcome gender biases. For example, borrowers can request a loan from anywhere, avoiding some transaction costs that are particularly burdensome for women. It can standardize processes to avoid the human biases of loan officers. Lenders can work around gender biases stemming from the use of titled land as collateral by assessing creditworthiness on alternative data sources such as cash flows.

          But digital lending can still suffer from inequities. Women may have less access to smart phones, run smaller businesses deemed ‘unworthy’ by some lender, or lack certain forms of KYC required for applications. They may be more likely to struggle navigating a smartphone app on their own. And if the product itself wasn’t designed with women in mind, it may be a poor fit for their borrowing needs.

          How can digital lenders be conscious of the range of gender issues that might be at work and adapt their practices to be attractive and useful for women? FSD Uganda and the FSD Network Gender Collaborative Programme explored these issues through a partnership with a digital lender in Uganda from 2021-2023. FSD Uganda was simultaneously working with this lender to expand the pool of capital available to women borrowers in the aftermath of Covid and the Ebola outbreak by providing the lender a US$100,000 returnable grant specifically earmarked for on-lending to women’s businesses. We supplemented this with a targeted piece of research that involved reviewing existing gender data and interviewing male and female customers to identify where there might be opportunities for this lender to be more gender inclusive.

          The results point to both specific things this firm is doing right and where they might improve, while also providing a framework for how other firms might review their own data and practices in an effort to be more gender intentional.


          Savings and Investments by the Low Income Segment in Capital Markets: A Case Of XENO

          Savings and Investments by the Low Income Segment in Capital Markets: A Case Of XENO

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            This report shares findings from a pilot intervention on savings and investments by the low income segment in capital markets. In this pilot, FSD Uganda focused on testing the viability of leveraging mobile phone and mobile telecommunications technology to increase access to investment products by the low income investor market segment. The intervention ran for two years and sought to address the problem of limited and or no access to financial investment products such as collective investment schemes (CIS) among the low income market segment.

            For this pilot, we partnered with XENO a licensed fund manager and collective investment schemes manager regulated by the Capital Markets Authority (CMA) and the Uganda Retirement Benefits Regulatory Authority.

            Three major drivers of this limited access to financial investment products were identified at the intervention design stage; low levels of income, cumbersome Know-Your-Customer processes at the time of on-boarding of the customer, and the limited accessibility of the customer engagement points.

            XENO sought to address this problem by leveraging the mobile phone to increase accessibility and designing a more appropriate product that would make it easier for the low-income market segment to actively participate in the CIS market.


            Refugees and financial freedom: Not yet uhuru

            Refugees and financial freedom: Not yet uhuru

            By Joseph Sanjula Lutwama and Brenda Banura

            The state of refugee’s financial inclusion
            This year’s World Refugee Day theme is finding freedom. An enormous aspect of freedom is financial independence. Access to formal financial services goes a long way in facilitating financial independence given its potential in supporting one to generate more income.

            But it is not yet uhuru, for refugee communities in Uganda going by the recent findings from a survey of refugee communities in Uganda commissioned by the Financial Sector Deepening Uganda (FSD Uganda). According to this survey, six out of every ten refugees keep their money at home. About half of the refugee community saves with informal savings groups. Less than two out of every ten refugees save with either a formal bank or Savings and Credit Cooperative Organisation (SACCO). This informality among the refugee communities not only puts their financial investments at risk but also limits their ability to maximise their potential to tap into economic opportunities.

            FSD Uganda’s endline report for the Financial Inclusion for Refugees (FI4R) project reports that not more than two out of every ten refugees have access to formal financial services. The rest either keep their money at home or with village saving groups. It also reports that about a third of the refugees (29%) use mobile money.

            While the village loans and savings groups are convenient and easily accessible, they are not regulated, putting their hard-earned savings at great risk of theft and all manner of misconduct.

            A case for formality
            Since they are regulated, formal financial institutions provide more customer safeguards, and their deeper pools of capital enable businesses, and individual customers to create a path for steady growth and development.

            Unlike community-based informal savings and loan groups which are largely socially driven, and heavily reliant on informal social community networks, formal financial institutions are not constrained by capital, and human capabilities to support their customers on their journey of growth. There are more opportunities for growing to scale for customers of formal financial institutions as they can leverage the different networks and the diverse product portfolios these institutions provide.

            A path to formal identification
            It is therefore critical to support the refugee communities to chart a path towards formality to enable them to tap into the immense opportunities the formal sector provides. This starts with acquiring a secure, verifiable, and recognised identification. For a long time, the refugee community has struggled with the challenge of identification with no standardised form of identification for a refugee. Identification is the first entry point into the formal sector as formal institutions are only comfortable dealing with people they can identify and hold accountable. Considering that refugees are always on the move, the identity risk becomes even more critical as one is not certain that the person, they are dealing with will not have moved to another location the next day.

            The office of the prime minister and the United Nations High Commission for Refugees who are responsible for the welfare of the refugee community in Uganda, have since zeroed down on a uniform identification for refugees in Uganda. They have gone further to provide formal financial institutions with access to the database of refugees in Uganda making it easier to verify and authenticate the identities of refugee customers. This has greatly enhanced the opportunities for accessing formal financial services in the refugee community.

            Digitisation to unlock formal financing opportunities
            Technology will also play a critical role in the formalisation of refugee communities. The high levels of access to mobile phones provide an immense opportunity to leverage the mobile telecommunications infrastructure to link the informal savings and loan groups to formal financial institutions. This creates a link to the formal financial system whilst maintaining the social fabric of the community groups.

            As part of the Financial Inclusion for Refugees intervention, FSD Uganda and FSD Africa partnered with Rural Finance Initiative (RUFI) to digitise informal community savings groups. This enabled the savings groups to not only guarantee the safety of members’ savings on a more secure mobile digital platform than the metal boxes previously used but also increased access to formal financial savings through the group account with Centenary Bank.

            Over the three-year partnership with RUFI, over 100 community savings and credit groups were digitised, and close to 2,000 members were able to receive formal credit.

            Agent banking: bringing formal financial services closer to the refugees
            Previously, refugees had to travel long distances to access financial services from formal financial institution branches, usually located far from the refugee settlements. However, the emergence of agency banking has made it possible to bring the services of formal financial institutions closer to the refugee communities.

            While implementing the intervention, FSD Uganda and FSD Africa were able to test the efficacy of rolling out bank agents within the refugee communities and their impact on access to formal financial services. This was in partnership with Equity Bank which set up over 200 bank agents within the refugee communities. Over the three-year period of the partnership, Equity Bank enrolled a total of 108,391 refugee households on the Agency Banking Platform.

            Over the same period, the bank made over 1 million digital payments to these households to a tune of over Ushs 120 million (USD 32,000). Much more headway was made with digital merchant payments reporting over Ushs 3 billion (USD 800,000) transacted through the Equity Bank digital platform.

            Not Yet uhuru
            Despite a clear demonstration of a need for formal financial services within the refugee communities, a lot more has to be done for the refugees to maximise the opportunities that come with formal financial services.

            The agency banking points are largely utilised to receive cash transfers from the World Food Programme (WFP), which is not sustainable because development assistance is unpredictable. This was demonstrated by a reduction in the amount of cash transfers WFP was advancing the refugees in 2020, the amount could be reduced further.

            The refugee communities need to be supported to engage in more formal economic activities that will generate more sustainable employment opportunities and income streams which will ultimately translate into higher levels of effective demand for a diversity of financial services from savings, credit, investments, and insurance to name but a few.

            Further, digitisation continues to be a challenge due to the high levels of digital illiteracy among the refugee communities which lengthens the duration of the adoption of digital products. The cost of digitisation and digital transactions remains high which is further worsened by irregular network connectivity in the rural areas where refugees predominately reside.


            Women’s financial inclusion and the tomato value chain

            Women’s financial inclusion and the tomato value chain

            By Anthea Paelo, Ph.D

            Despite the proliferation of supermarkets and delivery apps intended to increase convenience whilst shopping, I refuse to give up my relationship with my market lady, Maureen. Maureen and I have an understanding. I buy fresh fruits and vegetables from only her, and she, in turn, provides me with the best produce available. She procures the right size of produce, at the correct level of ripeness, and at a price we are both comfortable with. I am also a frequent beneficiary of the odd pawpaw, watermelon, or jackfruit at no charge, earning Maureen my unwavering loyalty.

            Many fresh produce shoppers in Uganda have a market lady. Aside from the produce, they provide additional customer care that makes them irreplaceable. Unsurprisingly, women have become the face of the fresh produce market everywhere. But are these women earning proportionate financial compensation from their role in the agricultural value chain?

            In 2022, FSD Uganda, with support from the FSD Network’s Gender Corpro, commissioned a rapid gender assessment of Uganda’s tomato value chain. The study sought to identify opportunities and understand women’s roles in this value chain.

            The assessment found that women were more visible in two areas of the tomato value chain: production and retail, i.e., farming and sale to the final consumer. Men were more involved in tasks requiring additional capital and labour investment. Their visibility was prevalent as aggregators and middlemen in the tomato supply chain.

            Women’s visibility and presence in the production and retail segments are due to structural and social factors. First, women have limited ownership of land and other key assets. This limits their ability to access credit to purchase inputs and machinery to improve production outputs.

            Second, women often lack the knowledge, experience, and networks to participate at the trading level as middlemen.

            An additional challenge limiting women’s ability to participate in other, more lucrative segments of the supply chain lies in the limited time resources to engage in these activities at a commercial level. Women, on average, spend about 5.2 hours a day on unpaid domestic and care work compared to the 1.2 hours a day that men spend.

            The benefit of market vending is that the capital requirement is small compared to the value chain’s input supply, production, and trading segments. Through their local Village Savings and Loan Associations (VSLAs), women can save and borrow small amounts of capital to put up stalls to earn small amounts of income. Additionally, they can still perform domestic tasks, such as childcare, because they are stationed in one place. Due to the highly competitive nature of the marketplace, women often focus on providing quality customer care to attract and keep customers.

            While it may be some time before social norms that limit women’s ability to participate and earn from the whole value chain are overcome, some wins are possible regarding access to financial services. A key route is strengthening the VSLAs and Saving and Credit Cooperatives (SACCOs) through which many women access financial services. In January 2023, Uganda Microfinance Regulatory Authority (UMRA) Operational Guidelines for Self-Help Groups (SHGs) took effect. The guidelines aim to provide structure, promote fair and equitable practices, and provide financial stabilisation mechanisms to even small self-help groups.

            A second opportunity arises in the growth of digital financial services. VSLAs and SACCOs can digitise their transactions and based on this information, develop credit scores that could be used for loans. Rather than depending on physical collateral or being limited by the resources of the savings group, women can borrow more significant amounts of cash for use in agricultural activities based on their behaviour and spending patterns.

            With the developments in the legal framework and the uptake of technology for financial services, we may find increased visibility and participation of women such as Maureen in the tomato supply chain and other agricultural segments. Increased involvement of women across these segments increases their potential income and contributes to a more sustainable economic livelihood.



            Entrepreneurial support organisations hold discussions on how to enhance their capacity to provide better quality business development services in Uganda

            Entrepreneurial support organisations hold discussions on how to enhance their capacity to provide better quality business development services in Uganda

            Entrepreneurial support organisations (ESOs) are critical entrepreneurship catalyzers and require specific support and guidance to act as impact multipliers for businesses. ESOs are faced with numerous challenges that hinder them from delivering quality support services.

            It is on this basis that the Deal Flow Facility and Startup Uganda held a dialogue to validate the challenges faced by selected ESOs based on existing literature and co-create a capacity building intervention with participating ESOs. This event was attended by over 15 ESOs.

            From the discussions, it was agreed that the challenges faced by ESOs differ based on the stage of growth of the business being supported. The cross cutting challenges raised revolve around the areas of skill/experience, failure to adapt to the ever-changing environment, and financial capacity.

            A more detailed report on this dialogue covering the challenges and proposed solutions is being generated and will inform future interventions on how the ESOs can be best supported to deliver quality work.


            The Role of Financial Inclusion in Bridging the Gender Gap

            The Role of Financial Inclusion in Bridging the Gender Gap

            By Caroline Agaba

            The government of Uganda has made efforts to address gender issues for example through the development of a National Gender Policy in 1997. The policy provides a framework for addressing gender imbalances. Unfortunately, this policy was last reviewed in 2007 which demonstrates that more must be done to close the gender gap.

            The gender gap manifests in different ways. One such way is that women have a lower social status than men. This means they have less power to make decisions, get an education, obtain a profitable job, and be independent.

            What the data says

            According to the 2022 World Bank Gender Statistics, in Uganda, the labour force participation rate is 67.6% and 72% among females and males respectively. The Sub Sahara Africa average of labour participation for women is 60.4%. Adult literacy in Uganda is lower among women at 74% compared to men at 84%. 25.1% of girls in Uganda complete lower secondary education compared to the Sub-Saharan Africa average of 43%. In terms of decision making only 51.1% of women participated in making major decisions in the household as of 2016 data. For asset ownership, 62% of women did not own a house compared to 44% of men.

            This shows that gender inequality in Uganda revolves around education, asset ownership, and participation in the workforce. To close the gender gap, strategies to address these three key issues need to be developed.

            One way gender inequalities can be addressed is through the economic empowerment of women through financial inclusion. Financial inclusion in and of itself may not be the sole solution to all the gender inequality issues in Uganda since many of them are rooted in social norms and beliefs about women and their role in society. However, there is evidence from various studies about how access to financial services can help close the gender gap in education, asset ownership, and labour participation.

            How savings accounts can help.

            In 2013, Silvia Prina conducted a study on banking of the poor via savings accounts in Nepal. In this study access to a simple, liquid bank account—with no opening, maintenance, or withdrawal fees—was randomly offered to a sample of 1,118 female household heads in 19 slums in Nepal. Through this experiment, the impact of access to the bank account on household saving behaviour, asset accumulation, expenditures, and income was assessed.

            The study found that being offered access to a savings account strongly increased household investment in health and education, and the investment in human capital in the form of textbooks and school uniforms rose by more than 50%.

            Education is a fundamental pathway toward social and economic progress. The study findings demonstrate that access to financial services empowers women to tap into the transformative potential of education for their children and themselves. This is done by using their savings to cover school fees, educational materials, and additional learning opportunities. Enabling women to invest in education through financial inclusion initiatives can help them break the cycle of poverty and create brighter futures for themselves and their communities.

            Other findings from the study showed that access to the savings account increased monetary assets by more than 50%. In addition, total assets, which include monetary and non-monetary assets (consumer durables and livestock), grew by 16%. This suggests access to financial services can play a key role in helping women invest in their future and build up their assets thus closing the asset ownership gap.

            Mobile money helps women.

            Another study in Kenya titled The Long-run Poverty and Gender Impacts of Mobile Money by Suri T & W. Jack, showed that the impact of the introduction of mobile money in moving households out of poverty was particularly pronounced for female-headed households. The study estimated that the spread of mobile money helped raise at least 194,000 households out of extreme poverty and induced 185,000 women to switch to business or retail as their main occupation. The study suggested that the more pronounced impacts on female households, appeared to be driven by changes in financial behaviour—in particular, increased financial resilience and saving—and labour market outcomes, such as occupational choice, especially for women, who moved out of agriculture and into business. The results from these studies have important implications for policymakers and development organisations.

            Financial inclusion plays a vital role in closing the gender gap and empowering women. By providing women with access to formal financial services, such as savings accounts, credit, and insurance, financial inclusion enables them to secure their economic futures, invest in education and healthcare, and start and grow businesses. It not only enhances their financial well-being but also fosters gender equality by breaking down barriers, challenging traditional norms, and promoting women’s economic independence.


            The 2023 FinScope survey to get insights into the demand, access, and use of financial services is underway

            The 2023 FinScope survey to get insights into the demand, access, and use of financial services is underway

            The Bank of Uganda, in partnership with the Financial Sector Deepening Uganda, aBi Finance, and the Uganda Bureau of Statistics, is implementing the 2023 FinScope survey this July. A FinScope survey is a nationally representative survey that measures changes in the demand, access, and use of financial services.

            The FinScope survey is being conducted in line with the forthcoming National Financial Inclusion Strategy (2023-2028) and intends to provide an indication of the state of financial inclusion in Uganda. It will also provide insights into attitudes and perceptions regarding money management, financial products, and services across demographics for adults 16 years or older.

            The findings will guide government, regulators, and development partners as they implement aspects of critical financial sector frameworks including the National Development Plan III, the financial inclusion pillar of the Parish Development Model (PDM), and other sector strategies. It is also an avenue for financial service providers to understand their consumer base and innovate in response to current needs.

            The 2023 survey includes a module on green financing aimed at understanding the agribusiness financial landscape and how the financial sector is adapting to concerns brought about by climate change.

            Preparations for the survey have been concluded with a 6-day training for the enumerators. Fieldwork is scheduled to start on July 10, 2023, for 22 days. The survey will cover a representative sample of about 3,210 respondents all over the country. In addition, special interest groups such as People with Disabilities (PWDs) and Forcibly Displaced Persons (FDPs) or refugees will be covered.

            At the end of the survey, a report will be compiled, and its findings will be shared with key stakeholders and the public to guide planning and discussion on issues related to the demand, access, and use of financial services.


            Climate Adaptation Financing Practice: A Case Study of Bidhaa Sasa

            Climate Adaptation Financing Practice: A Case Study of Bidhaa Sasa

            By Joseph Lutwama and Douglas Karugonjo

            The Climate Challenge
            Uganda is among the world’s most vulnerable and least adapted to climate change countries scoring 166 out of 181 countries on the ND-GAIN Vulnerability Index in 2018[1]. Its vulnerability has been attributed to the huge dependency on natural resources provided by primary sectors such as agriculture, water, energy, and fisheries which are highly vulnerable to impacts of climate change. Historically, Uganda was mostly dominated by a tropical climate with a single rainy season in the north and two rainy seasons in the south. The effects of climate change are affecting the seasons with the country experiencing shorter or longer rains and harsher droughts – especially in the eastern and north-eastern regions[2].

            Uganda’s most pressing agricultural risks are directly related to climate change: droughts, floods, crop/ livestock pests and diseases, post-harvest loss, hailstorms and thunderstorms, and other natural risks such as landslides. The lack of ownership and control over land and resources, and their disproportionate burden of unpaid care work, restricts access to finance, extension services, and technological innovation, especially for Ugandan women involved in farming.

            These women predominantly prefer Village Savings and Loan Associations (VSLAs) to formal financial institutions for savings and credit. The high usage of informal services results in less consumer protection, fewer opportunities for women to build credit histories, and less access to structured services such as seasonal loans[3]. To enhance opportunities for women, an efficient strategy for climate adaptation is needed.

            Bidhaa Sasa Building a Case for Climate Adaptation Finance
            In 2021, FSD Uganda partnered with Bidhaa Sasa, to pilot a unique business model that leverages mobile money technology and group lending to enable women to access credit for energy saving household equipment and climate adaptation tools. Bidhaa Sasa is a Kenyan last-mile distribution and finance company operating in Uganda since 2019. It offers a range of household goods that improve the quality of life of rural families such as technologies for clean lighting, clean cooking, and climate smart farming.

            Integration of mobile money technology
            Bihdaa Sasa’s entire credit process hinges on mobile money technology, thereby opening a door for rural buyers to develop their digital financial footprint and potentially engage in formal financial service, often for the first time. Bidhaa Sasa’s exclusive use of mobile money coupled with its digital literacy training of clients helps it to get more rural households into the digital financial services ecosystem and increase their likelihood of accessing other financial services.

            Tailored credit approach
            The Bidhaa Sasa business model is built around rural women’s needs. It offers a tailored credit approach that makes relevant technologies for households and farming more accessible and affordable. Low-income rural women, who form the majority of Bidhaa Sasa’s customers, are typically unbanked and lack their own collateral. With the use of the group liability model, they can acquire both life improvement products and agricultural tools via payment plans for goods that typically save time or money (solar saves kerosene, LPG gas saves time, stoves save wood or charcoal, and the quality of indoor air and health of a family improves when using both technologies) while keeping credit risks low.

            The model does not require collateral (the products act as collateral) and there are no credit checks conducted because most clients, particularly women, tend not to have credit histories. However, the social capital of clients that exists in villages is leveraged to ensure timely repayment. Clients are typically organised in groups of at least five and share the liability since all act as cross-guarantors. This group liability model is well understood by women who are already very active in several self-help or socially-minded groups.

            This intervention enables rural households to improve their productivity at home and in their farms through ownership and use of relevant technologies. For example, an improved cookstove uses less than half the charcoal the user would normally use saving them up to $200 per year. In addition, the use of solar technology and improved cookstoves reduces or eliminates the use of non-sustainable fuels like kerosene and charcoal.

            The quality of indoor air and health of the family improves when using solar for lighting and improved cookstoves for cooking. In rural Uganda for example, a single efficient charcoal stove can avoid 3 tonnes of CO2 emissions each year when continuously used.

            From a climate adaptation perspective, Bidhaa Sasa also provides Purdue Improved Crop Storage (PICS) bags also known as hematic bags as part of their product portfolio. Hematic bags are an affordable and effective approach to minimising post-harvest losses for farmers. Hermetic storage is airtight and works by restricting organisms such as insects and microorganisms that can damage stored commodities from thriving in its internal atmosphere by keeping its oxygen levels low. Hermetic storage is also flood-proof.

            The Impact
            Over a two-year period, Bidhaa Sasa has been able to support 2,206 low-income customers access energy saving equipment and climate adaptation agricultural tools. Canvases and hematic bags accounted for the biggest proportion (42 percent) of the goods sold. Over 50 percent of Bidha Sasa’s customers have been women. The overall loan payment performance over the period stood at an average of 10.6 percent PAR >30 with the female slightly lower at 7.2 percent PAR >30.

            It is clear from the case of Bidhaa Sasa that social networks within rural communities once integrated with mobile money technology can deliver positive climate adaptation and mitigation solutions for both rural households and their farms.


            [1] The index summarizes a country vulnerability to climate change and other challenges in combination with its readiness to improve resilience.
            [2] The International Organization for Migration (IOM), 2021
            [3] Financial Protection Forum, 2019. VSLA: Village Savings and Loan Associations.


            How to narrow the gender gap in digital agricultural platforms

            How to narrow the gender gap in digital agricultural platforms

            By Geoffrey Okidi
            While digital agricultural platforms can boost farmer productivity, they also risk entrenching gender inequalities if not gender intentional. Research shows that only 25% of Sub-Saharan Africa digital agricultural platform users are women, and they are not served sufficiently.

            Based on the best practices framework for incorporating gender into digital agricultural platforms developed by ISF Advisors and Value for Women (VfW) with support from Consultative Group to Assist the Poor (CGAP) (December 2022), this blog identifies four key opportunities to create shared value for platforms and the women that engage with them.

            1. Embedding gender into the organisational strategy: To become gender intentional, a good place to start is for the platform to develop a holistic gender strategy, with clear objectives and targets defined using their data. This will enable the platform to unlock new market opportunities, improve organisational performance, and reach scale more quickly. The gender strategy should include key performance indicators to assess progress towards targets, and measure success (e.g., active usage, disaggregated by sex, measured quarterly; percentage of women in leadership, measured annually).With the gender strategy in hand, the platform should then develop a gender action plan, outlining specific actions that need to be implemented to reach the gender goals outlined in the strategy (with roles/ responsibilities, allocated resources/ budget, and the timeline for completion of each action).
            2. Leveraging sex-disaggregated data for better decision-making: The collection and analysis of sex-disaggregated data is the typical starting point for increasing gender inclusion inside a company and through its products and services. Data can tell how many women a platform is serving, how well it is serving women, and the value being generated by women as customers and/or agents. Therefore, a systematic approach to data collection and data-driven decision-making can help platforms leverage their data for commercial and gender outcomes. Platforms can start to do this through the following:a) Target setting and prioritisation: Once a platform has defined their gender strategy and associated key performance indicators, they should establish a strategy-priorities-targets-measurement system centered around data. This will enable action on priorities.
              b) Understanding customer patterns: An important step is for platforms to sex-disaggregate existing data– such as customer ratings or satisfaction scores –to understand satisfaction levels for different sub-segments of women (and other users, such as men and youth). Platforms can also collect data through publicly available datasets, focus groups, and feedback pop-ups on the platform.
              c) Designing products: Insight into customer patterns from the preceding action can then be leveraged in the product design process. This could result in finding ‘quick wins’ (i.e., shifting land requirements from individual names to family names given barriers for women to access land) or more robust product shifts (i.e., designing products specifically for women
            3. Experimenting with women-focused innovations: Platforms can leverage their own data and industry leading practices to continuously innovate. A good place to start is by looking at the current platform offering with a gender lens to determine if there are any “quick wins” that can be achieved. Collecting user feedback on the offerings available and sex-disaggregating these findings could be helpful. Based on the context and platform model, there are promising platform innovations that provide inspiration. For example
              i. Use of in-person agents to increase registration for digital marketplaces (e.g., DigiFarm Village Advisors)
              ii. Use of interactive features, such as Interactive Voice Response technology, to make digital tools easier to use by digitally illiterate customers and to deliver capacity building and advisory to customers (e.g., Opportunity International Uganda)
              iii. Offering preferential terms to users earning income on the platform (e.g., zero registration fees, referral bonuses) as an incentive to onboard rural women customers (e.g., Jumia’s Women & Youth Empowerment Program)
              iv. Providing tailored training and services to increase the income-generating potential of women platform users (e.g., Copia’s asset financing product)Rural women should be embedded throughout the product and service design process. Concretely, this means including a representative sample of both men and women customers in market research efforts, testing prototypes with women, and collecting sex-disaggregated feedback.
            4. Increasing income generating opportunities for women as service providers: Evidence shows that women tend to be successful field agents. An IFC study of agent transactions in the Democratic Republic of Congo (May 2016) found that women were significantly more successful than male agents in terms of volume and value of transactions. The abundance of platform field-based positions provides a unique opportunity for women to integrate into more formalised labour, expand their earning potential, and pursue a career that works with their household responsibilities and personal aspirations.Of note is that capacity building is key to supporting women who earn an income on the platform. Tailored support could include:
              i) Providing digital literacy training,
              ii) Training on how to use the platform,
              iii) Value-added financial services (e.g., credit, insurance, or savings products),
              iv) Providing assets necessary for livelihoods earned on the platform (e.g., smartphones,
              v) Access to support networks within the platform ecosystem

            Supporting refugees to find freedom by expanding access to finance

            Supporting refugees to find freedom by expanding access to finance

            “Independence”, “having the power or right”, and “liberty”, are some of the phrases that describe freedom. This year’s World Refugee Day theme is ‘finding freedom’ and access to financial services is a key component to achieving that once refugees resettle so that they become self-reliant and economically independent.

            Though important, little has been known about the financial strategies employed by refugees over time to build their livelihoods and manage their finances.

            To learn more, the Financial Sector Deepening (FSD) Uganda and FSD Africa commissioned the Financial Inclusion for Refugees (FI4R) project. The project aimed at deepening and broadening access to and usage of formal financial services among refugee and host communities in Uganda, with a focus on the West Nile and South-West regions. The project also had a learning and research component to assess refugees’ incomes and expenses to inform the development of financial products and services offered to them in Uganda.

            Consequently, the project supported three financial institutions; Rural Finance Initiative (RUFI), VisionFund Uganda, and Equity Bank Uganda Limited to rectify this grim situation by enabling them to offer a variety of savings and credit products as well as financial literacy programmes to refugee groups in the target areas.

            Florence is one of many refugees who benefited from the Financial Inclusion for Refugees project by getting a RUFI loan through her savings group. The single mother of two who lives in the Palorinya refugee settlement in Moyo district arrived in the settlement five years ago from South Sudan. She is a tailor belonging to three saving groups where she saves Ushs 4,000 (1.04USD) and Ushs 20,000 (5.2USD) weekly in each group.

            She used the loan as capital for her business and continued to save money together with her group so that she can later purchase stock.

            Over a period of 12 months, Florence has increased her contributions to the savings group as she has realised saving diligently is essential to growing her business.

            Through its implementation, the project addressed some of the key barriers to increasing access to financial services for refugees including, low-risk appetite among the financial service providers highlighted by the limited appreciation of refugees as a potential market and underdeveloped ecosystems where there is high reliance on saving groups and limited adoption of formal financial services.

            In addition to evaluating the impact of financial services on refugee livelihoods in Uganda, the learning and research component also provided insights for financial institutions on how to improve access to financial services in the refugee settlements.

            The project endline study reports that Ushs 7.6 bn was disbursed in loans by the three financial institutions to savings groups. Additionally, over Ushs 12 bn was deposited in savings accounts with three financial institutions.

            Florence’s experience and the endline report numbers demonstrate that refugees are a viable market segment. For that to be fully exploited, respondents’ reasons for hesitation to use formal financial services must be tackled.

            Interested commercial banks and micro-financial institutions should therefore improve access by deploying more agents in the different villages of the settlement. This is in place of having a few agents in the major trading centers which are far away from the settlements.

            Additionally, information regarding details of products and services offered including interest rates, fees, and prerequisites should be availed and simplified even when services are offered digitally.

            Further, the high transactional costs of using mobile money should be revised as these were sighted as a reason for limited or avoidance of usage.

            When these adjustments are made, financial service providers will register transactions worth more than the recorded Ushs 7.6 bn and Ushs 12 bn in loans and deposits/savings respectively in the two years of the Financial Inclusion for Refugees project’s implementation. This will make financial inclusion for refugees and host communities a win-win for financial service providers whose decisions are profit based as well as the target market segment.


            Women and Girls’ Access to Education and Health Services, and finance in Uganda

            Women and Girls’ Access to Education and Health Services, and finance in Uganda

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              In line with Financial Sector Deepening’s 2.0 strategy, FSD Uganda aims to move beyond a predominant focus on financial inclusion to also impact the real economy.

              The objective of this assignment was to develop a more comprehensive understanding of the health and education markets and identify opportunities to improve access and outcomes for women and girls through financial sector intervention. This report therefore:

              • Assesses women and girls’ access to and use of health and education services with financial services as a key enabler in meeting those needs.
              • Provides recommendations to FSDU on how they might intervene to improve outcomes for women and girls. This will include recommendations about possible intervention options as well as potential partners.

              MSE Recovery Fund at One Report

              MSE Recovery Fund at One Report

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                The Micro and Small Enterprises (MSE) Recovery Fund was launched on February 24, 2022. The fund aims to facilitate access to finance directly to 50,000 MSEs (at least 40% women and 30% youth). This is with an objective to shorten the recovery trajectory of youth and women-owned and operated businesses from the COVID-19 pandemic effects, by providing their businesses with much-needed capital injections. In turn, this is expected to jumpstart the economic livelihoods of entrepreneurs to secure and create job opportunities for young women and men in Uganda.

                Six microfinance institutions and SACCOs (Tier III and Tier IV financial institutions) have received funds to on-lend to small and medium enterprises recovering from the effects of the Covid-19 pandemic.
                These are; Pride Microfinance Limited, FINCA Uganda, Lyamujungu Cooperative Financial Services, Mushanga SACCO Limited, Hofokam Limited, and UGAFODE Microfinance Limited, operating across the country.
                Jointly, the institutions have on-lent UGX 13.42bn to 10,832 MSEs at an average interest rate of 16.0%. So far, the funds have been disbursed to 40% of youth and 55% of women. The average ticket size borrowed is UGX 950,000.


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