Financial Sector Deepening Uganda’s Deal Flow Facility Partners with Asoko Insight as its Online Platform Provider

Financial Sector Deepening Uganda’s Deal Flow Facility Partners with Asoko Insight as its Online Platform Provider

Nairobi – Uganda’s leading financial inclusion think-and-do-tank, Financial Sector Deepening (FSD) Uganda and Asoko Insight, Africa’s go-to provider of business intelligence and digital engagement platforms, are pleased to announce a five-year partnership to facilitate deal flow in Uganda via the Deal Flow Facility (DFF).

Funded by the European Union in collaboration with the Capital Markets Authority and incubated at FSD Uganda, the DFF is a technical assistance and match-making initiative designed to address the persistent gap in accessing growth capital for Ugandan businesses.

By utilising digital technologies, the DFF creates a one-stop shop where businesses can access capacity-building support and capital, and investors can find a pipeline of investable opportunities.

FSD Uganda aims to support over 220 Ugandan businesses to become investment-ready and close at least 40 debt / equity deals in the next five years via the platform, stimulating private sector growth and enabling direct and indirect job creation.

Asoko Insight has been contracted to build the digital platform for DFF to support matchmaking between global investors and local businesses. Over the last two years, Asoko has created a vibrant opportunity marketplace on its Digital Engagement Platform, facilitating connections between African businesses and global and regional stakeholders offering financing and business support services.

FSD Uganda will tap the same proprietary technology to build an online ecosystem of investors, companies, and transaction advisors to enhance private capital inflows to Ugandan businesses, joining a range of global Development Finance Institutions, multilaterals, development banks and private investors that have partnered with Asoko in pioneering digital technologies to connect with Africa’s private sector.

“The DFF online platform is a key component of FSD Uganda’s mission to facilitate a conducive business environment for financial inclusion. By addressing structural barriers to private capital inflows and strengthening access to non-bank financing for Uganda’s private sector, the platform is expected to have a wide-ranging impact on the economy and support the nation’s strategic development plan,” Norah Koigi, Director of the Deal Flow Facility at FSD Uganda, said.

“Our experience of digitising deal-making is illustrative of the transformative potential of technology to enable business growth across Africa. We’re excited to bring our expertise in creating digital platforms to bear with FSD Uganda, whose work makes an unparalleled impact on financial inclusion as a route to economic development,” Rob Withagen, co-founder, and Chief Executive Officer of Asoko Insight, said of the partnership.

The DFF is sector agnostic and focuses on established companies with financing needs of $500K and above. Women and youth-led businesses that meet the criteria are especially encouraged to apply. Companies meeting the above criteria can express their interest here.


About Asoko Insight
Asoko Insight is Africa’s leading corporate data and engagement platform, providing global investors, multinationals, and development institutions the most effective route to discover, shortlist and engage their target universe of African companies.

About FSD Uganda
FSD Uganda is an independent, non-profit organisation that supports innovation, conducts research, and helps to promote and improve policy, laws and regulations that shape the financial sector towards a more inclusive financial sector with a focus on low-income individuals.

For more information, contact
Jennie Forcier Patterson
Content Director, Asoko Insight
jennie.forcierpatterson@asokoinsight.com

Brenda Amony
Portfolio Relationship Manager DFF, FSD Uganda
bamony@fsduganda.or.ug

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Mitigating the Impact of Covid on Gains in Financial Inclusion

Mitigating the Impact of Covid on Gains in Financial Inclusion

By Jackie Kitiibwa

COVID-19 has been a significant setback for the development plans of many countries. The global recession that has been developing alongside the ongoing health crisis has not only intensified existing inequalities but also threatens to set back decades of economic growth and poverty reduction in emerging and developing economies.

The widespread lockdowns and social distancing controls employed as a necessary response to the pandemic led to massive disruptions that threatened to erode the gains made in financial inclusion. As a result, many segments of the population, households, and businesses experienced a significant loss of revenue and struggled to maintain their lifestyles or operations. According to the World Bank, 90 million people fell into extreme poverty globally in 2020. This is especially true for those at the bottom of the economic pyramid who were always a hospital bill, or fire away from falling into poverty and for whom the lockdown and resulting economic slowdown meant less income and increasing debt.

An initial FSDU analysis of the impact of the Covid-19 pandemic on households showed that more than half of the adults in Uganda were unable to sustain their lifestyle during the lockdown, 28% had no coping mechanism, and almost a quarter would lose 100% of their income by the end of the lockdown1.

The impact of the pandemic was felt excessively by women. Evidence from Uganda indicates that violence against women and girls intensified during the pandemic. Sexual violence, teenage pregnancy, and early marriages were seen to increase. In addition, a study by McKinsey2 suggests that women were almost twice as likely as men to have lost a job during the pandemic. This is due to many reasons, some of which include the over-representation of women in some of the sectors that were hardest hit like the retail industry, but also cultural and societal norms that necessitated women to stay at home whilst children were out of school.

Also, Micro, Small and Medium Enterprises (MSMEs) were severely affected. Many enterprises downscaled to reduce operating expenses while others closed entirely. Consequently, there was a significant rise in unemployment. Furthermore, because the majority of paid workers are employed in the informal sector with no formal contracts or social security, most layoffs were done without terminal benefits.

Even with the impressive adoption of technology seen during the pandemic, only a tiny fraction of the working population in the formal sector could successfully transition to remote work. Informal sector employees such as waiters, security guards, and drivers were unable to work from home. Additionally, the stimulus package established by Government to support households and firms was disproportionately urban-focused.

To recover and build resilience after the COVID-19 pandemic, and to achieve greater financial inclusion, Government and the private sector need to:

1. Promote the use of digital technologies

The importance of digital access and digital skills for social inclusion has been evident to most over the past decade. However, a global pandemic has reinforced the need to examine gaps in our policies and the ground reality. New technologies have proven effective in increasing the use of regulated digital channels, but more needs to be done to improve access and use, particularly in rural areas where they are most important. The role of the private sector is critical in this global effort to expand opportunities and provide more options for millions of people.
Since the pandemic, more people are managing their finances online; buying and selling on e-commerce platforms and social media; and finding work through the gig platform. Fintech and agritech companies offer highly targeted and customized products to different segments of the informal economy. They also create the building blocks of e-commerce and value chain eco-systems which do not currently exist or are highly inefficient and manual.

For example, we have seen financial service providers offer digital micro-lending to small businesses within the value chains of large suppliers. Also, Fintechs are digitizing the agriculture value chain using cloud-based technologies to help cooperatives efficiently manage recordkeeping and their day-to-day operations and use these digital trails to offer credit to thousands of farmers.

Obviously, all this should be supported by robust digital ID systems, mobile communications, and digital payment systems. In India, because the government had previously heavily invested in a universal ID programme – the government was able to quickly and safely send much needed social payments to hundreds of millions of Indians across the country during the pandemic.

2. Effective deployment of capital

Some of the measures Government instituted to minimise the adverse effects of the crisis to economic activity included expanding the lending capacity of key financial institutions like the Uganda Development Bank (UDB) and providing exceptional liquidity assistance to supervised financial institutions that were in distress. However, these financial institutions are never well-placed and do not have the incentives to serve the informal sector which comprises 87 per cent of the urban working population. As such, relief funds channelled through these large financial institutions did not reach low-income households or small businesses.

To this end, Financial Sector Deepening (FSD) Uganda has partnered with the MasterCard Foundation to set up a Covid-19 recovery Fund out of which small businesses – primarily women and youth-owned or led – will access loans at concessional rates through Tier III and Tier IV financial institutions. The Fund not only aims to sustain small enterprises and protect jobs but also provide a more sustainable economic recovery way beyond the crisis.

3. Leveraging cooperatives and other business collective groups as an inclusive economic platform

Many cooperatives are engaged in agro-processing and value addition activities at different levels of the value chain. Most of these activities have significant backward and forward linkages to the informal sector. By leveraging the power of technology platforms, government, the private sector and development partners can bring together different players to enhance the productivity and incomes for smallholder farmers and Micro, Small and Medium Enterprises (MSMEs).

These technology platforms have the potential to create economies of scale and scope resulting from cost savings and increase in aggregated production and increase in diversity of goods and services provided on the platform. Beyond providing agricultural inputs and business stock these platforms can provide small holder farmers and MSMEs with a wider range of services including education, healthcare, and digital merchant payments.

Conclusion
Policy makers, regulators, development partners and financial sector players need to act fast in designing responses that are focused and make the most of available resources. In the right setting, supported by with an enabling environment – policy and regulation, solid and effective institutions, and appropriate consumer protection frameworks and empowered customers – these initiatives will help build back better from the economic devastation of the Pandemic while laying stronger foundations for future resilience and sustainability.


REFERENCES

  1. FSD Uganda (2020) Assessing the Resilience of Ugandan Households Before Covid-19. – https://fsduganda.or.ug/assessing-the-economic-resilience-of-ugandan-households-during-covid/ 
  2. McKinsey (2020) COVID-19 and gender equality: Countering the regressive effects.

— This article was first published in the Financial Services Limited magazine —

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The Shared Agent Banking Platform is Increasing Financial Inclusion in Uganda

The Shared Agent Banking Platform is Increasing Financial Inclusion in Uganda

By Brenda Banura-Ssekalo

Fast; there are hardly any queues. Convenient; agents are within the neighbourhood and open for longer hours than bank… These are some of the phrases customers use to describe agent banking. This is where bank customers can carry out transactions at contracted retail outlets known as bank agents. “I no longer have to spend money on transport to access the bank branch. My community now has an agent,” a customer in Eastern Uganda says. Thanks to shared agent banking, customers of one bank can make cash deposits and withdrawals at agents established and shared with another bank.

Over four years since the first steps to create a shared agent banking platform, Financial Sector Deepening (FSD) Uganda is proud to report that as of 2022, 22 out of Uganda’s 25 commercial banks (Tier I) are part of the shared agent banking platform. This is in addition to one regulated financial institution in Tier II which category includes credit and finance companies.

The journey to establishing a shared agent banking platform started in January 2016 when Uganda’s Parliament passed the Financial Institutions (Amendment) Act, 2016 which enabled banks to use agents to deliver their services across the country.

In 2017, BoU released the agent banking regulations that provided a regulatory framework for agent banking services. The guidelines did not explicitly allow for a shared agent banking platform prompting the Uganda Bankers’ Association (UBA) to come up with the concept of a shared agent network within the existing agent banking framework, which concept BoU approved.

UBA then approached FSD Uganda to bring the idea to fruition. Recognising the potential of this industry-driven initiative – the impact it would have on formal financial inclusion, customer choice and market competition, FSD Uganda was quick to come on board along with Consultative Group to Assist the Poor (CGAP), a think tank within the World Bank. The possibility of extending the reach of
the financial services to the underserved, underbanked, and unbanked in rural, remote, and frontier markets made this worthwhile for FSD Uganda.

FSD Uganda’s role in making the platform operational
To get the process started, FSD Uganda brought together several banks interested in joining the platform, working with the industry to create a robust governance and participation framework, technical standards, and business model.

In addition to providing technical assistance, FSD Uganda supported the initial set-up personnel required to establish the Agent Banking Company and the platform. FSD Uganda provided grants that helped to hire the project manager, oversee the project, develop the training curriculum that set the standards for agent recruitment and management for all banks, and train bank staff in deployment of the solution.

Our initial support and the credibility of the agency helped crowd-in the support of multiple development partners and secure financial commitments towards providing further technical assistance to the initiative.

On 25 April 2018, UBA launched the shared agent banking network with only two banks. The increase in the number of participants to 22 by 2022, saw 20,463 agents join the shared agent banking network. The platform has cumulatively processed 4.6 million transactions valued at UGX 5.14 trillion (USD 1.4 billion). 533,532 customers with bank accounts were served between January
2020 and December 2020.

Impact of the shared agent banking platform
These numbers show that a shared agent banking network has significantly contributed to deepening access and enhancing the use and uptake of financial services even in rural areas, a key outcome for FSD Uganda. For example, an FSD Uganda study in collaboration with UBA and Uganda Christian University shows that between October 2019 and December 2020, the total number of agents in Hoima and Mbarara grew by 90%, and active agents by 69%.

Through this network, competing banks ride on a shared technology platform and rather than competing on the reach of their agent networks, these banks compete on price, products, and agent and customer satisfaction. Agents on the platform provide various services such as cash deposits and withdrawals, inter-bank transfers, utility payments, and statutory payments among others. The reduced cost of service delivery enables banks increase their reach, a win for enhancement of financial inclusion. Ease of operation also broadens customer choice and shifts market competition from reach to quality of service.

Varghese Thambi, CEO of Diamond Trust Bank (DTB) considers the platform advantageous because it significantly reduced the cost of reaching DTB account holders and general customers in  the banking sector.

This innovation has helped banks to serve under-served populations better by facilitating Ugandans to open accounts with participating banks from their neighbourhoods. This is especially so in the urban and peri-urban areas where 95% of the agents are based.

In the rural areas, the shared agent banking network has enabled the proximity of access points to women who are less likely to be financially included than men and created income opportunities for youth and rural populations to serve as agents.

The future of the shared banking agent platform
At the time of establishing the shared platform, Uganda’s mobile money had matured so much that the mobile money agents outnumbered bank branch and Automated Teller Machine access points by nearly 100 times.

A go-ahead to establish the shared platform gave financial institutions an opportunity to level up to the telecommunication companies. To achieve this, several things must happen. Connectivity infrastructure needs to be improved, and pricing models and stakeholder compensation need to be integrated, among others. The participating financial and non-financial institutions and agents being
on-boarded also need to increase.

A few banks reported closing some of their branches which are more expensive to operate to focus on enhancing financial access through the platform. As more agents sign on to the shared agent banking platform, the program will work to deploy at least 615 agents or more for every 100,000 people.

The shared agent banking network still has a long way to go, especially in rural and remote areas where most that are financially excluded reside. But the journey has begun and by the look of things, it will only go forward.

For more information, read FSD Uganda’s ‘Making elephants dance’ – The pioneering journey of Uganda’s shared agent banking network.

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Highlights on Agent Banking Services in Western Uganda (Mbarara and Hoima Districts)

Highlights on Agent Banking Services in Western Uganda (Mbarara and Hoima Districts)

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    This report assesses uptake and usage of agent banking and the effect of COVID-19 on shared banking services in two districts, Mbarara and Hoima. The research was conducted by Uganda Christian University in partnership with Uganda Bankers’ Association (UBA) and the Agent Banking Company (ABC) Uganda Ltd.

    Through this initiative, Financial Sector Deepening (FSD) Uganda is facilitating collaboration between local industry associations and universities to promote contextually relevant research. The study is part of FSD Uganda’s industry capacity building programs reinforcing that industry associations play a critical role in advancing and developing inclusive financial markets.

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    Executive Announcement: Meet FSD Uganda’s new Executive Director

    Executive Announcement: Meet FSD Uganda’s new Executive Director

    We are pleased to announce that Financial Sector Deepening (FSD) Uganda has filled its open position on the leadership team. Patrick Oketa joins us as the Executive Director – he will lead the development and oversee the delivery of FSD Uganda’s key programmatic initiatives.

    Patrick is a seasoned banker, economist, and finance professional with experience in debt investing, private equity, development banking and advisory. He has over 20 years of experience working to deploy capital to businesses which have the potential to positively change the livelihoods of Uganda’s most vulnerable communities.

    Patrick most recently worked as Managing Director at Aval Capital. His experience includes roles with Development Banks such as: the African Development Bank, East African Development Bank, and the Uganda Development Bank. He has also in the past worked for Actis, Acumen and Pearl Capital as Director and partner.

    He brings a wealth of experience in the management of capital flow across the entire ecosystem. He has worked with diverse multinational teams and has earned deep credibility as a trusted advisor and partner with a myriad of stakeholders in both private and public sector.

    Patrick is passionate about financial inclusion and impact investing. He is an ardent advocate for the increase in the role of the financial sector as a contributor to the national GDP of Uganda with a belief that this could exponentially improve the livelihood of millions of Ugandans which fits in well with FSD Uganda’s vision and mission.

    He holds a Bachelors’ Degree in Economics, Masters in Banking and Finance and an MBA.

    We are excited to have him on the team and look forward to the work we are going to accomplish together.

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    UK Government Hands Over the Financial Sector Deepening Uganda Anchor Donor Role to the Gates Foundation

    UK Government Hands Over the Financial Sector Deepening Uganda Anchor Donor Role to the Gates Foundation

    Since 2015 the UK Government has invested UGX 85 billion (£17m) to establish and support Financial Sector Deepening Uganda (FSD Uganda), giving over 600,000 individuals and 4,000 micro, small and medium enterprises increased access to and utilisation of formal financial services.

    Over this period, FSD Uganda has evolved from an overseas development assistance programme into an independent not-for-profit Ugandan organisation. Now, the next stage of evolution kicks off with the Bill and Melinda Gates Foundation becoming the new anchor donor as the UK steps down from its current funding role. Bringing the Bill and Melinda Gates foundation on board will ensure FSD continues its operations, supporting Uganda to grow its economy sustainably.

    FSD Uganda is the only think-tank that provides direct policy and regulatory advice to all financial sector regulators in Uganda. The organisation has supported key policy and regulatory shifts through advice and input into a number of financial sector policies, bills, and regulations. This includes a number of key successes supporting:

      • the Uganda Central Bank in the development and implementation of the National Financial Inclusion Strategy (NFIS);
      • Uganda’s first Financial Sector Development Strategy (with the World Bank), which the Ministry of Finance Planning and Economic Development is now implementing;
      • the development of the National Payment Systems (NPS) Act and subsequent regulations;
      • the Insurance Regulatory Authority (IRA) when developing a regulatory sandbox;
      • the Uganda Bankers Association in conducting a comprehensive review of all laws and regulations in Uganda to identify areas where reforms would be required to improve the banking sector’s operating environment.

    Andrew Ockenden, Development Director, British High Commission Uganda at Foreign Commonwealth and Development Office, says:

    “I am proud of the work that the UK has achieved through FSD Uganda. Together we have enabled over 600,000 individuals to access finance, and supported over 4,000 micro, small and medium enterprises. This support has focussed on the most marginalised in society. The UK is proud of the institution we have established and excited about the new expertise and focus that the Gates Foundation will bring. It is a huge mark of success that FSD Uganda has attracted the wider donor support that has enabled FSD Uganda to succeed independently of the founding donor. The UK remains fully committed to FSD Uganda and the results we know it will continue to deliver”.

    Jason Lamb, Deputy Director at the Gates Foundation says:

    “The Gates Foundation recognizes FSD Uganda’s focus on marginalized and excluded citizens and micro/small enterprises and the positive impact on their lives. We are delighted to fund the next stage of their work. We would also like to recognize the UK government for its vision as the founding donor.”

    For more information, contact

    Tina Wamala: Communications Officer British High Commission Tina.Wamala@fcdo.gov.uk

    Patrick Oketa, Executive Director, FSD Uganda, poketa@fsduganda.or.ug

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    How the blockchain technology can secure your mobile phone transactions

    How the blockchain technology can secure your mobile phone transactions

    The blockchain technology will act as a ‘second eye’ looking at the SIM card registration database on behalf of the regulator, ensuring the users are legitimate and consolidating the data

    By Noah Baalessanvu, Cryptosavannah Limited Uganda and George Muga, Digital Finance Expert, Nairobi

    Twenty years ago, communication between persons across distances and services like sending money had a heavy reliance on physical channels, such as landlines, the post office and public service vehicles. The advent of mobile telephony came with the benefit of easy, reliable, and affordable communication nationally and across borders.

    This evolution has birthed benefits and in same breath risks that have propagated crime, fraud and other related illegal activities. Fraudulence has also penetrated products and services delivered through the mobile phone for example mobile banking.

    To stem these challenges, UCC has taken a bold step to adopt blockchain technology for new SIM card registrations. Blockchain is a register of decentralised data that is securely shared1. It enables a collective group of select participants to share data. Data is broken up into shared blocks that are chained together with unique identifiers known as cryptographic hashes, which cannot be altered without the permission of a quorum of the parties who participate in the blockchain.
    It additionally, provides data integrity given that all parties use the same data thereby eliminating data duplication and increasing security.
    The development of the blockchain for SIM card registration is a first in the region and is spearheaded by Cryptosavannah a technology company in Uganda with requisite expertise. The initiative is financed by Financial Sector Deepening, (FSD) Uganda to help develop, efficient financial market infrastructure and processes, that will bring to life sharing of data (interoperability) amongst actors of the same ecosystem.

    According to Finscope 20182, mobile money contributed about 20% to financial inclusion, which stands at 78%. It is therefore crucial that telecom operators and other players who rely on the mobile phone as a channel for their products, ensure safety of their customers’ data.

    Benefits of SIM registration blockchain to Uganda
    The blockchain technology will offer a single registry that consolidates data in real time. It is expected that for every newly registered SIM card by an operator, details of National Identification Number (NIN) would be captured and automatically searched across the other registered SIM cards the NIN is registered against. This will eliminate the need for manual intervention searches which is onerous and inefficient. Additionally, this will also address the illegal registrations as exhibited in the past, hence stem fraud and other identity theft related activities.

    This technology is time saving since telecom operators do not have to share their SIM card registration data with UCC regularly. Because of it, customers will have secure access to relevant products and services offered through the mobile phone such as mobile banking.

    Additionally, other actors within the private and public sector can utilise this technology when they disburse cash benefits through mobile money.

    The blockchain will act as a ‘second eye’ looking at the database on behalf of the regulator, by ensuring the users are legitimate and consolidating the data. It will enhance security by tracking any inconsistencies and illegal SIM cards being registered in the black market.

    The blockchain will also allow users to verify the number of SIM cards registered under their NIN, ultimately enforcing compliance to the law on SIM card holding limits.

    In line with Uganda’s National Development Plan (NDP III)3 vision of enabling a truly digital economy, this platform will play a pivotal role in driving the digital economy agenda, where majority of digital products and services are offered and fulfilled via the mobile phone.

    Telecom operators are currently testing this technology in conjunction with UCC with a plan to operationalise it by year end.

    Before the blockchain technology

    Prior to the introduction of the blockchain technology, the government of Uganda put in place several interventions aimed at preventing fraudulence in the telecommunication sector.

    In 2010, the Regulation of Interception of Communications Act4 was passed. It prescribed a maximum of 10 SIM cards per customer across all networks regulated by the Uganda Communications Commission (UCC). In 2016, the government of Uganda made it mandatory for an individual to present valid identification to telecommunication operators in order to obtain a sim card. The card would be activated upon verification via a shared system enabling a customer access to various services as offered by the operator.

    While the provisions of the law are being implemented, they are largely inefficient, given several reported incidences of SIM card fraud. The lack of standardised know your customer records, a regulation by the Ugandan government2 across the industry also led to complexities in SIM registration data reconciliations. This presented a challenge in enforcing the SIM card limits as the operators would not have visibility to the other operators’ SIM registration database to determine the number of SIM cards registered to everyone.

    These gaps posed a risk not only to customers’ identities being abused and used for fraud but also to undertake criminal activities. Criminals would illegally register SIM cards using other individuals’ identity documents, commit crimes and discard the same2. The blockchain technology comes in to fill these gaps.


    REFERENCES

    1. https://www.oracle.com/ke/blockchain/what-is-blockchain/#:~:text=What%20is%20Blockchain%3F-,Blockchain%20defined,collected%2C%20integrated%2C%20and%20shared.
    2. https://fsduganda.or.ug/our-work/foundational-work/finscope-uganda-2018-survey/
    3. http://www.npa.go.ug/wp-content/uploads/2020/08/NDPIII-Finale_Compressed.pdf
    4. https://old.ulii.org/system/files/legislation/act/2010/18/Regulations%20of%20Interception%20of%20Communications%20Act%2C%202010.pdf
    5. https://www.ucc.co.ug/wp-content/uploads/2020/12/All-Telecoms.Operational-Guidelines-on-simcard-registration..pdf
    6. https://www.monitor.co.ug/uganda/news/national/scam-rocks-sim-card-registration-1852002

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    FI4R Diaries Round IV Insights: Gender

    FI4R Diaries Round IV Insights: Gender

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      This is the final(part four) of an ongoing series of insights from a financial diaries study undertaken with refugees in Uganda, focused on their ability to cope with risks. The respondents are drawn from customers served by three financial service providers: Equity Bank Uganda, VisionFund Uganda, and the Rural Finance Initiative.

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      FI4R Diaries Round III Insights: Digitization of Saving Groups

      FI4R Diaries Round III Insights: Digitization of Saving Groups

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        This is part three of an ongoing series of insights from a financial diaries study undertaken with refugees in Uganda, focused on their ability to cope with risks. The respondents are drawn from customers served by three financial service providers: Equity Bank Uganda, VisionFund Uganda, and the Rural Finance Initiative.

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        Behavioral Biases and Nudges A/B Testing Report

        Behavioral Biases and Nudges A/B Testing Report

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          Findings from the behavioral nudges A/B testing on biases that hinder uptake of personal financial investment and wealth management solutions.

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          Informal Cross-Border Trading In Uganda Study Report

          Informal Cross-Border Trading In Uganda Study Report

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            COVID-19 continues to impact individuals, families, and economies, lowering household income and decreasing resilience. The pandemic has been felt on cross-border traders, especially on their livelihood activities. While the government has eased COVID-19 related restrictions, business recovery, public and private transport have been affected, impacting border districts that rely heavily on trade.

            Many enterprises, both formal and informal, are regarded to be underperforming or on the verge of collapsing, leaving cross-border trader and informal traders susceptible and at risk of falling further into poverty.

            FSD Uganda desires to design an intervention to support women engaged in cross-border trade to access financial support, arises from the need to respond to impact of COVID-19 on livelihoods of women engaged in informal cross-border trade in Uganda.

            FSD Uganda aims to develop interventions to support women whose livelihoods depend on affected cross-border trade.

            FSD Uganda seeks to provide financial support through a carefully designed financial instrument in order to build livelihoods and enable resilience of the affected women who derive livelihoods from their participation in cross-border trade.

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            FSD Uganda and EAVCA sign MoU to Bridge Gap in Private Capital Access in Uganda

            FSD Uganda and EAVCA sign MoU to Bridge Gap in Private Capital Access in Uganda

            Kampala Tuesday, 04 April 2022: Financial Sector Deepening (FSD) Uganda today signed a Memorandum of Understanding (MoU) with the East African Private Equity and Venture Capital Association (EAVCA), Uganda Chapter, under the Deal Flow Facility (DFF) to bridge the existing gap between the supply and demand side of private capital in Uganda.

            The DFF, which is funded by the European Union, in collaboration with the Capital Markets Authority and incubated at FSD Uganda, is helping Ugandan companies to become investment ready by actively supporting them with technical assistance and matching them to long term investment capital that will allow businesses to focus on growth.

            Under the MoU, the DFF applicants and EAVCA members will have opportunities to access a pool of investors, gain access to quality investment opportunities and have a networking platform for growth-stage companies seeking long-term investment capital to grow their companies.

            During the signing ceremony, the DFF Director at FSD Uganda, Norah Koigi Ngare, said: The DFF and EAVCA share a common vision to promote and create a favourable business environment to position Uganda as a private capital destination of choice. We are confident that through collaboration with EAVCA, we will share learnings, support in increasing awareness in the market and create an opportunity for EAVCA’s members to access deal pipeline, and for Ugandan enterprises to access non-bank funding.

            The EAVCA Chairperson , Steering Committee, Jarl Heijstee said, “This MoU will set the pace for us to work together to improve the business environment for investment promotion. We will jointly identify and unlock any impending policies that incentivise the deployment of private capital and co-design a networking event for the DFF’s investor pool and EAVCA members.”

            FSD Uganda is an independent, non-profit organization that supports innovation, conducts research, and helps to promote and improve policy, laws and regulations that shape the financial sector. Apart from increasing capital inflows, the accelerated growth of medium to large companies through the DFF will result in direct and indirect job creation, with a multiplier effect on household income and financial inclusion.

            EAVCA was founded in 2013 to represent East Africa’s private equity and venture capital industry and provide a voice for industry players to raise awareness and engage on regional policy matters. The industry body is the primary industry association for East Africa’s private equity and venture capital ecosystem. Its operational jurisdiction within East Africa includes Kenya, Uganda, Tanzania, Rwanda and Ethiopia. With a membership comprising primarily of fund managers, limited partners, and private capital industry service providers, the core business of EAVCA is the provision of services in pursuance of the interests of actors within its membership base. EAVCA launched their Ugandan chapter in 2021 to promote Uganda as a private sector capital destination while ensuring a favourable environment for trade and investment in the local Ugandan private business sector.

            The Ag. Executive Director, Joseph Lutwama, acknowledged the support of the European Union and the Capital Markets for their role in creating the DFF Flow facility which, he said, its not just about matching companies, but also develop the whole capital and investment ecosystem.

            Mr Richard Mugera, the Vice Chairperson, Steering Committee said the DFF and EAVCA have a shared vision of addressing the gaps in accessing growth capital for emerging Ugandan businesses. The MoU is the first step towards achieving this goal.

            For more Information contact:

            Brenda Amony
            FSD Uganda – DFF Portfolio Relationship Manager
            bamony@fsduganda.or.ug
            +256 782 379611

            EAVCA Contact
            EAVCA Uganda Chapter – Country Co-ordinator
            doris@eavca.org
            +256 779587540

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            Study on Uganda’s Climate Change Adaptation Ecosystem Diagnostic Analysis

            Study on Uganda’s Climate Change Adaptation Ecosystem Diagnostic Analysis

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              The most pressing agricultural risks in Uganda are directly related to climate change (CC):  droughts, floods, crop/ livestock pest 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 to Ugandan women. They predominantly prefer VSLAs to formal financial institutions for savings and credit. Enhancing opportunities for women constitutes an efficient strategy for climate adaptation

              The bulk of the climate change adaptation funding to Uganda is funded via bilaterals 87 with only 8 via multilaterals, and 4 via climate change funds. This suggests an unmet opportunity for Uganda to access a larger proportion of international climate finance through climate funds

                • Lack of knowledge of the ecosystem across different actors and how to apply for funds were commonly cited as reasons that explain the gap

              So far, the commercial financial sector has had a limited scope in enhancing climate change adaptation due to persistent challenges that also explain the lack of financial inclusion:

                • The majority of farmers depend on rainfed agriculture with minimal use of irrigation. Most have poor access to information, high risk, low bankability and are located in areas that are not well connected areas,
                  poor access to information, high risk, low bankability
                • Farmers rely heavily on local materials with minimum use of external inputs (improved seed, inorganic fertilizers and agrochemicals) to improve crop production.
                • There is a lack of awareness and knowledge of CC risks and information both for farmers and commercial sector end.
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              Covid – 19 Market Diagnostics and Options for Long-Term Recovery (Supply – Side Report)

              Covid – 19 Market Diagnostics and Options for Long-Term Recovery (Supply – Side Report)

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                The overall objective of the study was to develop practical solutions for preserving and building relevant elements of the financial system to support the survival, recovery, and growth of micro and small enterprises (MSEs) in Uganda. The core of the market analysis was to understand how the supply of finance to the MSE sector in Uganda had been affected by the COVID-19 crisis and what options were available to build on ready measures to mitigate the impact. This analysis identified both threats and opportunities for inclusive finance service providers (IFSPs) to meet the financing needs of MSEs.

                With the support of the Association of Microfinance Institutions of Uganda (AMFIU) and with some direct provision of information by IFSPs, the study team had detailed operational and financial information on 30 SACCOs and 11 MFIs. Due to confidentiality/nondisclosure policies, AMFIU provided anonymous data, stating only the region in which the entity operates and its institutional form.

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                Covid – 19 Market Diagnostics and Options for Long-Term Recovery (Demand- Side Report)

                Covid – 19 Market Diagnostics and Options for Long-Term Recovery (Demand- Side Report)

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                  The COVID-19 pandemic has had significant impact on the Ugandan economy especially hitting the micro- and small enterprises (MSEs) in the informal sector. MSEs have been facing unprecedented income losses and uncertainties about their future because of business disruptions due to the outbreak of COVID-19.

                  FSD Uganda commissioned a demand side market diagnostic study to assess the impact of COVID-19 on micro and small enterprises in Uganda. The overall objective was to develop practical solutions to preserve and build relevant elements of the financial system to support the survival, recovery and growth of micro and small enterprises in Uganda.

                  From the research, only 3% MSEs reported to be completely recovered. 71% of the surveyed MSEs are yet to return to normal pre-COVID-19 operations timing. Several factors such as reduced hours of operation, disruptions in movement, and general low customer turnout have impacted the businesses severely.
                  MSE owners hope to bounce back, however, some issues continue to plague the recovery of enterprises. These include, on an average 50% of reduction in household income due to low revenue from the business, job losses in the family, or depletion of other income sources hit by the pandemic.

                  Women-led enterprises have suffered a greater average loss in income (50%) compared to men-owned MSEs (33%) from the pre-pandemic level of income. Also, while MSEs in urban areas have been able to attain 57% of the pre-pandemic income level, MSEs in rural areas have recovered up to 50% of the pre-pandemic income level.

                  As per the estimates of the World Bank, the COVID-19 crisis has pushed around 2.6 million Ugandans into poverty. With longest closure of schools in Uganda, not only the education sector but many other businesses providing services in the ecosystem suffer a great deal in their bid to recovery to pre-pandemic level.

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                  Executive Announcement – Ms. Rashmi Pillai

                  Executive Announcement – Ms. Rashmi Pillai

                  The Board and staff of FSD Uganda, with mixed feelings of sadness and gratitude, announce the exit of Ms. Rashmi Pillai as the Executive Director – FSD Uganda, effective 8th March 2022.

                  Rashmi joined FSD Uganda as the Director of Programmes in 2018 and was appointed to the role of Executive Director in 2019. Over the last four years, she has spearheaded FSD Uganda’s vision on systemic change for a more inclusive financial sector. A sector that proactively catered to the marginalized like women, youth, smallholder farmers, refugees, and small businesses.

                  Under her stewardship and strategic steer, FSD Uganda has grown to become the country’s leading ‘think and do tank’ on financial inclusion.

                  The organisation has nurtured strong partnerships with key government ministries and agencies, the private sector, development partners and industry associations to help shape the operating environment of the financial industry in the country. The alliances enabled us to inform policies, regulations and digitally driven and evidence-backed approaches that have led to the development of tailor-made products benefiting many more Ugandans. The forward-thinking approach for relevant studies like the Covid -19 Wave series, has informed government initiatives, such as the recovery programmes being implemented by the government of Uganda.

                  Over the last four years, the organisation has championed innovative ideas that continue to challenge the status quo to meet the needs of ‘risk groups’ and strengthen the digital space to improve efficiencies and increase the reach of financial services. Some notable innovations include the Shared Agent Banking Network, the Electronic Know Your customer project impacting 15 million bank accounts, refugee finance directly impacting 200,000 households, digitisation of SAGE elderly payments, among others.

                  Rashmi leaves at a time when she has championed the development of a bold new strategy, “FSD Uganda 2.0,” to support the development of a financial sector that will increase the take-home income of people and businesses and contribute to the real economy.

                  This new direction, flexibility of approach and strategic alignment led FSD Uganda to onboard new partners –  the Mastercard Foundation for a $25MN Recovery Fund targeting micro and small businesses , and the $3.25 MN European Union led technical assistance  Deal Flow Facility targeting non-bank financing into mature Ugandan businesses. Thus, contributing to the national development goals of economic transformation.

                  The outgoing Executive Director, Rashmi Pillai, said:

                  “I feel honoured to have been given the opportunity to contribute to Uganda’s national financial inclusion goals for the past four years. As the FSD Uganda team, we made incredible strides. We have influenced policies that have changed the financial sector landscape, collaborated with partners to develop innovative products that have benefitted most Ugandans, and we have rightly earned our place as the thought leaders in the financial sector. The new alliances we have onboarded have enabled the team to be more agile, efficient, and purposeful in what they do. I thank our donors – the UK Government’s Foreign, Commonwealth and Development Office, The Bill & Melinda Gates Foundation, The Mastercard Foundation, and the European Union for believing in us.

                  I want to thank the FSD Uganda team for their unprecedented resilience, especially in the face of the Covid-19 pandemic. We were tested, but we came out stronger. I’m confident that with the clear strategic direction we have put in place and a good team, the organisation is in a much stronger position and has a defined legacy that will thrive for years to come.”

                  The FSD Uganda Board Chair, Ms. Amani M’Bale said:

                   “On behalf of the Board and our staff of FSD Uganda, I would like to thank Rashmi for her passion, commitment and contribution to the financial inclusion ecosystem in Uganda. Her stewardship has sustained our position as a leading and relevant organisation that has facilitated and triggered sustainable changes in the market. This will continue to drive growth and access to finance. Rashmi has steered FSD Uganda in a solid position for continued growth. We thank her for her contribution and leadership that has seen over 700,000 Ugandans get included in the Financial Sector through innovations, improvement of the business environment, progressive policies and regulations that will continue to impact Ugandans’ lives positively. We wish her success in her next assignment”.

                  Joseph Lutwama
                  Joseph Lutwama

                  In the interim, the Board has appointed Mr Joseph Lutwama, the current Director of Programmes, as the Ag. Executive Director. Joseph has a wealth of experience in the financial sector and has been part of the growth witnessed at FSD Uganda over the years.

                  We trust that you, our partners will provide him the usual support as we transition into new management.

                  If you have questions about the transition or the organisations do not hesitate to reach out to Joseph Lutwama on jlutwama@fsduganda.or.ug.

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