Technology Enables Access. Trust Sustains Adoption.

By Janani Luwum

Digital platforms are helping farmers access credit, savings, payments, markets, extension services and insurance products. They promise to make financial services more accessible, reduce transaction costs and connect underserved farmers to formal finance at scale.

Yet evidence from agricultural digitisation initiatives suggests that expanding access alone does not guarantee sustained adoption.

Since late 2022, FSD Uganda has been implementing a platform strategy approach, leveraging technology and a value chain approach to build scalable, sustainable and inclusive financial solutions. Working with Ensibuuko Tech Ltd, Emata Uganda Ltd, Quest Digital Finance and clinicPesa Ltd, the strategy has focused on strengthening institutional capacity, enhancing business models, improving products and services, and building partnerships across the digital ecosystem.

Across these platforms, one insight consistently emerged. Technology made digital financial services more accessible to farmers and they continued using them only when they trusted them.

This raises an important question not only for Uganda but for digital financial services more broadly: what does it take for digital platforms to achieve sustained adoption among underserved farmers?

Trust begins with relevance

Farmers do not adopt digital tools because they are digital. They adopt them because the services respond to real needs and improve their everyday lives.
Across the different platforms, farmers engaged with digital services when they addressed immediate challenges such as accessing credit, receiving payments, managing savings, obtaining market information and improving record keeping. Cooperative and VSLA administrators also found value in digitisation because it improved operational efficiency.

This finding aligns with broader evidence on technology adoption in agriculture. Farmers adopt digital tools when they reduce costs, improve convenience, increase income opportunities or help manage risk. Successful digital platforms therefore begin with farmer problems rather than technology solutions.

But solving real problems is only the beginning. Farmers must also have confidence in the people and institutions delivering these services. Without that confidence, even useful products struggle to achieve sustained adoption.

Trust is built through people

A common misconception is that digitisation eliminates the need for human interaction. Implementation consistently suggested the opposite.

Experiences from Emata, Quest Digital Finance and Ensibuuko showed that trusted intermediaries remained central to adoption. SACCO leaders, cooperative managers, extension workers and Digital Community Entrepreneurs played a critical role in explaining products, resolving concerns and supporting farmers through the onboarding process. Community outreach, peer testimonials, radio programmes and continuous field support all helped farmers understand and confidently use digital financial services. Rather than replacing relationships, effective digitisation strengthened them by making services more efficient while preserving trusted channels of engagement.

Trust is reinforced through reliable experiences

Initial confidence alone is not enough to sustain adoption.

Farmers continue using digital services when those services consistently deliver on their promise. They need clear information about costs, repayment terms, eligibility criteria, benefits and risks. When products are poorly explained or outcomes differ from expectations, confidence quickly erodes. Likewise, farmers remember whether payments arrive on time, whether loan applications are processed efficiently and whether support is available when problems arise.

Repeated positive experiences strengthen trust. Repeated failures weaken it.

For digital platform providers, reliability is therefore not simply an operational issue. It is fundamental to building long-term confidence in digital financial services.

Trust expands opportunities for financial inclusion

As farmers continue using digital services, they generate transaction histories, payment records and other digital footprints that make them more visible to financial institutions.

These records help reduce information gaps that have traditionally limited access to agricultural finance. More importantly, they are created through continued use. Without sustained adoption, the data needed to expand financial services simply does not exist.

Trust therefore delivers benefits that extend beyond platform usage. It creates the conditions for broader and more inclusive access to formal financial services.

The next challenge is scaling trust

The experience of Uganda’s digital agriculture ecosystem demonstrates that trust is not a by-product of digitisation. It is the foundation of sustained adoption.

Trust is not built through technology alone. It is earned when digital services solve real problems, are delivered through trusted relationships and consistently keep their promises.

For governments, development partners, financial institutions and digital platform providers, this means that investments in technology should be matched by investments in trusted delivery channels, customer protection, digital literacy and reliable service delivery.

The experience also points to a broader challenge for the sector. Building trust requires continued investment in people, partnerships and customer support. As digital platforms seek to reach more underserved communities, the next phase of innovation will not be defined by technology alone, but by finding more sustainable ways to build and maintain trust at scale.

Technology may open the door to financial inclusion. Sustained adoption depends on trust. The next frontier for digital financial services is finding scalable ways to build and maintain that trust.

When risk management creates exclusion: Rethinking digital credit for vulnerable borrowers

By Andrew Kasujja

Digital credit has transformed financial inclusion across Uganda. For millions of people, access to formal credit no longer requires visiting a bank branch, completing lengthy paperwork or providing traditional collateral. A mobile phone has become the gateway to financial services that were once inaccessible to much of the population.

Yet an important paradox is beginning to emerge.

Can a system designed to promote financial inclusion unintentionally create a new form of financial exclusion?

Digital lenders have legitimate reasons to manage credit risk. Automated lending decisions rely on repayment behaviour to determine future borrowing limits, pricing and eligibility. Borrowers who repay on time are rewarded with larger loan limits and improved access to credit. Those who default may face reduced borrowing limits, higher charges or negative credit reporting. These mechanisms are fundamental to maintaining portfolio quality and protecting lenders from excessive losses.

When temporary shocks become financial exclusion

The difficulty arises when digital systems cannot distinguish between borrowers who will not repay and borrowers who simply could not earn income temporarily.

Consider a trader whose sales collapse after several days of heavy rain, or a boda boda rider whose income falls because of temporary transport restrictions. Their repayment behaviour reflects a short-term liquidity shock rather than permanent financial distress. Yet algorithmic credit models often treat both situations identically.

The consequences can be severe.

Reduced borrowing limits, negative credit records and restricted future access to credit may leave otherwise responsible borrowers unable to finance inventory, purchase agricultural inputs or continue operating their businesses. What begins as a temporary income interruption can evolve into prolonged financial exclusion.

Ironically, the very tools designed to manage lending risk may increase economic vulnerability.

What other markets are doing differently

This challenge is not unique to Uganda. In Kenya, several digital lenders have progressively moved beyond purely repayment-based credit scoring by incorporating broader mobile money transaction histories, merchant payments and customer behaviour into lending decisions. These richer datasets provide a more comprehensive understanding of borrowers’ financial capacity than missed repayments alone.

In India, digital lending innovation increasingly leverages the country’s digital public infrastructure, including identity, payments and consent-based data-sharing, to assess borrowers using multiple data sources rather than relying exclusively on historical defaults. The emerging account aggregator framework enables borrowers to securely share financial information from different institutions, allowing lenders to make more informed lending decisions and reducing unnecessary exclusion for customers with limited traditional credit histories.

These examples demonstrate an important principle: better information produces better risk management.

What could change in Uganda?

Uganda can adopt similar approaches while tailoring them to local realities.

First, lenders should increasingly incorporate real-time cash-flow information rather than relying predominantly on repayment history. Mobile money transactions, merchant payment activity, utility payments and digital savings patterns can provide valuable insight into whether repayment difficulties reflect temporary disruption or long-term financial deterioration.

Second, digital credit products should better match borrower income cycles. Farmers should not be expected to repay according to the same schedule as salaried workers. Traders with seasonal income require different repayment structures from daily transport operators.

Third, digital savings and emergency liquidity products should accompany digital lending. Borrowers with small precautionary savings are significantly better positioned to absorb temporary income disruptions without falling into default.

Fourth, lenders should adopt graduated recovery mechanisms before imposing severe penalties. Short repayment extensions, restructuring options or temporary repayment holidays following verifiable external shocks can preserve both customer relationships and portfolio quality.

Fifth, regulators may wish to review whether existing digital credit reporting frameworks adequately differentiate temporary liquidity events from persistent default. Credit information systems should support responsible lending while avoiding unnecessary exclusion of otherwise creditworthy borrowers.

From access to resilient inclusion

The broader lesson is that digital finance should not simply automate traditional lending processes. It should improve them.

Technology enables lenders to collect more data, analyse borrower behaviour more intelligently and develop products that reflect how people earn incomes. Used effectively, artificial intelligence and alternative data can strengthen both financial inclusion and risk management simultaneously.

Uganda has made remarkable progress in expanding digital access to finance. The next frontier is ensuring that digital credit systems are sufficiently sophisticated to distinguish temporary hardship from genuine credit risk.

Financial inclusion should not end with the first missed repayment. The real measure of success is whether borrowers who experience temporary setbacks can recover, rebuild and continue participating in the formal financial system. That is the transition Uganda’s digital credit ecosystem must now make, from expanding access to building resilient inclusion.

Financial inclusion starts with visibility: What Uganda’s MSE Recovery Fund reveals about kYC and data

By the MicroSave Consulting Team

Financial inclusion starts with visibility. Before entrepreneurs can access credit, insurance, savings, or business support, they must first be recognised by the systems designed to serve them. Yet across much of Sub-Saharan Africa, millions of Micro and Small Enterprises (MSEs) remain invisible to formal financial institutions not because they lack viable businesses, but because the systems used to identify and assess them fail to capture their realities.

Know Your Customer (KYC) processes sit at the centre of this challenge. While designed to verify identity and manage risk, KYC systems also determine what financial institutions know about their customers and what they do not. When these systems are rigid, manual, or designed primarily for compliance, exclusion becomes embedded in the financial system itself.

Weak customer data systems contribute to exclusion in three ways:

• Invisibility: Entrepreneurs who do not fit standard categories remain unrecognised.
• Inefficiency: Manual processes slow approvals, increase costs, and introduce errors.
• Poor targeting: Without meaningful and disaggregated customer data, institutions struggle to design products that respond to different needs and circumstances.

The result is fewer customers served, weaker trust, and missed opportunities for both financial institutions and the entrepreneurs they seek to support.

The cost of invisibility

The human impact of weak customer data systems is visible in the lives of entrepreneurs across Uganda. In Seguku, John, a 38-year-old entrepreneur who has sustained 18 jobs for nearly two decades, risked being reduced to a single label because of his disability status, despite running a thriving business. In Nakivale Refugee Settlement, a young mother operating a tailoring business could easily have been excluded from financial services if her refugee documentation had been treated as invalid. In rural Kiwanga, Namirembe’s piggery and poultry enterprise was assessed using repayment assumptions better suited to retail businesses than seasonal agricultural enterprises.

These examples reveal a broader challenge. Financial exclusion is not always driven by a lack of capital or deliberate policy choices. Often, it begins with the information institutions collect, the categories they use, and the assumptions built into their systems.

The MSE Recovery Fund, implemented by a consortium led by FSD Uganda in partnership with the Mastercard Foundation, conducts regular Data Quality Assessments to verify the accuracy, completeness, and reliability of information reported by participating financial institutions. The assessments examine how institutions capture, manage, and report key indicators, particularly those relating to women, youth, refugees, and persons with disabilities.

The Fund’s 2025 Data Quality Assessment highlighted both progress and persistent challenges:

• Only 5 percent of participating financial institutions are fully digitised end-to-end, while 24 percent are partially digitised and 71 percent continue to rely largely on manual processes.
• The first Recovery Fund-supported financial institution to formally lend to refugees has opened the door for wider adoption, with another SACCO in the final stages of licensing with the Office of the Prime Minister.
• Persons with disabilities remain significantly underrepresented, accounting for just 0.77 percent of borrowers against a three percent target. While some institutions have piloted disability facilitators, many still do not systematically capture or apply disability data in lending decisions.
• Agricultural borrowers continue to face repayment structures that do not adequately reflect seasonal production cycles and income patterns.

The findings suggest that Uganda’s financial sector is moving in the right direction. However, progress remains fragile where customer information is incomplete, disconnected, or underutilised.

Why data architecture matters

Financial inclusion is often discussed in terms of products, capital, or distribution channels. Yet one of the most overlooked drivers of inclusion is data architecture the systems, processes, and information flows that determine how customers are identified, understood, and served.

One of the less visible but more significant contributions of the MSE Recovery Fund has been its influence on customer data systems.

Beyond providing capital, the Fund required participating financial institutions to strengthen their customer onboarding and reporting processes. Loan application forms were revised to capture information on disability status, refugee identity, gender, employee numbers, and sector-specific business characteristics. Institutions were encouraged to digitise onboarding processes, improving data quality and reducing administrative bottlenecks.

This seemingly simple change had important implications. It enabled participating financial institutions to make previously overlooked customer segments visible within their systems. Visibility, in turn, created opportunities for more informed lending decisions, improved reporting, and stronger accountability for inclusion outcomes.

The lesson is clear: the data institutions choose to collect shapes who becomes visible in the financial system, which risks can be assessed, and which opportunities can be financed.

Visibility creates opportunity

When customer data reflects reality, financial institutions are better positioned to serve diverse entrepreneurs.

For entrepreneurs like John, being assessed on the strength of a business rather than a label can unlock access to larger and more appropriate financing. For refugee entrepreneurs, recognition of refugee documentation as legitimate identification can open pathways to savings, credit, and business growth. For agricultural borrowers such as Namirembe, a better understanding of seasonal cash flows can support loan products that align with production cycles rather than undermine them.

Inclusive customer data systems also create broader benefits. They enable institutions to identify underserved groups, design more responsive products, strengthen risk management, and build trust with customers. Digital and interoperable KYC systems can reduce duplication, improve efficiency, and support stronger links with national identification systems, credit bureaus, and other trusted data sources. Importantly, stronger customer data does not simply improve reporting. It improves decision-making.

Building the Foundations for Inclusive Finance

For Uganda’s financial ecosystem to fully realise the benefits of inclusive customer data systems, four priorities stand out:

• Invest in interoperable digital systems: Financial institutions need platforms that can connect with national identification systems, credit bureaus, and other trusted data sources to support efficient and secure onboarding.
• Strengthen staff capacity: Frontline staff need the skills and awareness required to understand and respond to the realities of women, youth, refugees, persons with disabilities, and other underserved groups.
• Create incentives for inclusive innovation: Regulators and development partners can accelerate adoption by linking support mechanisms, guarantees, and innovation programmes to practices that strengthen inclusion.
• Use data to inform decisions: Customer information must move beyond compliance and reporting to influence product design, credit assessment, and risk management.

Inclusion starts with visibility

The future of financial inclusion will depend not only on how much capital reaches underserved entrepreneurs, but also on whether financial systems are designed to recognise them in the first place.

KYC remains an important part of that journey, but the broader lesson is about visibility. The information financial institutions collect determines who becomes visible, how risk is assessed, and ultimately who gains access to opportunity.

For Uganda’s financial sector, investing in inclusive and digital customer data systems is not simply an operational upgrade. It is foundational to building a more inclusive, resilient, and responsive financial ecosystem.

Connected But Not Included: Is Owning a Mobile Phone Enough to Enter the Digital Economy?

By Andrew Tugume

In Arua town, a young produce trader scrolls through her smartphone between customers. She uses WhatsApp to coordinate deliveries from farmers and receives mobile money payments from Kampala buyers. Increasingly, she is also part of a growing wave of informal digital entrepreneurs using TikTok and other social media platforms to market their products. Through short videos sometimes even dancing while showcasing fresh produce she attracts customers, builds visibility, and differentiates herself in a competitive market.

This shift signals a deeper transition: mobile phones are no longer just tools for communication and transactions, but powerful platforms for marketing, creativity, and income generation in Uganda’s evolving digital economy.

She owns a smartphone. She has a mobile money wallet. She even makes digital payments. But she has never saved formally. She has never accessed digital credit. She has no insurance. She has no digital financial history that can unlock larger opportunities.

She is connected but not fully included.

Across Uganda, this is the definingparadox of digital transformation: mobile phone ownership is rising, yet meaningful participation in the digital economy remains uneven.

The Promise of Mobile Ownership

According to the Global Findex 2025 report, Connectivity and Financial Inclusion in the Digital Economy, 86 percent of adults globally now own a mobile phone. This marks a significant milestone in the expansion of digital access worldwide. In Uganda, the trajectory is similarly encouraging. 79 percent of adults own a mobile phone, and 73 percent have a financial account. At face value, these figures suggest that digital and financial inclusion are steadily advancing.

Mobile phones have become the primary gateway to the digital economy. They enable mobile money transactions, government transfers, merchant payments, cross-border remittances, online commerce, savings, and access to information opening up markets and opportunities that were once physically out of reach.

For millions, the first formal financial account was not opened in a banking hall but activated through a SIM card. Mobile phones have  lowered the entry barriers to the formal financial system, expanding access beyond traditional brick-and-mortar institutions. But ownership alone does not guarantee transformation.

The Hidden Gaps Behind High Ownership

Despite high levels of mobile phone penetration, 1.3 billion adults globally remain unbanked. Many of them already own mobile phones, possess national identification, and have registered SIM cards. The issue, therefore, is not connectivity but conversion; turning access into meaningful financial participation.

Owning a phone does not automatically translate into access to affordable digital credit, secure formal savings, a verifiable financial history, consumer protection, or the ability to scale a business. Access to a device is only the first step; the surrounding ecosystem determines whether it becomes opportunity.

In many rural and peri-urban areas of Uganda, mobile phones are primarily used for receiving money, withdrawing cash, and purchasing airtime. While these functions are important, they represent only the surface layer of digital finance. The deeper layers such as savings, insurance, merchant services, credit scoring, and e-commerce integration remain significantly underutilised.

The Cost of Ownership: More Than Just a Handset

Mobile phone ownership involves more than the initial purchase of a device. It carries ongoing costs, including handset replacement, SIM registration, data bundles, transaction fees, and even charging expenses particularly in off-grid or rural communities. These recurring costs shape how individuals  use their phones over time.

For low-income households, such expenses determine whether a phone remains merely a communication tool or evolves into a genuine economic platform. A feature phone may enable basic mobile money transactions, but a smartphone unlocks access to digital marketplaces, lending applications, e-commerce platforms, and a broader range of online services.

The quality of ownership matters as much as ownership itself. When affordability constraints limit consistent access to data and digital services, participation in the wider digital economy remains shallow, reinforcing the very gaps that connectivity was meant to close.

From Connectivity to Capability
The  transition is not  from phone ownership to financial inclusion;but a progression:

Connectivity alone does not produce inclusion; meaningful participation requires sustained engagement, trust, and the ability to use digital tools productively.

Many Ugandans today have mobile wallets but engage in limited digital activity. They receive funds, withdraw cash, and exit the digital system almost immediately. While this reflects access, it does not reflect depth of use. Such usage patterns limit the creation of transaction histories, digital credit profiles, formal savings records, and insurance coverage elements that are essential for building long-term financial resilience.

Without supportive infrastructure such as interoperable payment systems, consumer protection and affordable credit, mobile phones risk becoming endpoints rather than gateways. The challenge, therefore, is not just expanding connectivity, but converting it into sustained capability and economic empowerment.

The Digital Economy Beyond Payments

The digital economy extends far beyond mobile money transactions. While digital payments are often the first point of entry, they represent only one layer of a broader ecosystem. The digital economy includes digital agriculture platforms, e-commerce marketplaces, gig and remote work opportunities, merchant QR systems, cross-border trade facilitation, and pay-as-you-go energy solutions. These platforms create avenues for income, productivity gains, and market access previously out of reach for  many households and small businesses.

For a mobile phone to become a true entry point into this ecosystem, it must connect users not only to payments but to opportunity. That transition requires more than access: it depends on digital literacy, product design tailored to low-income users, interoperability across platforms, and regulatory environments that foster trust and protect consumers. Without these enabling conditions, connectivity may expand, but meaningful participation in the digital economy will remain limited.

Turning Phones into Pathways

If mobile ownership is the doorway to the digital economy, the critical question is what turns that doorway into a meaningful pathway. Access alone is insufficient. Converting connectivity into opportunity requires affordable smartphones,reliable data , strong consumer protection  and sustained digital literacy . It also depends on interoperable payment systems, tailored digital financial products designed for informal workers and SMEs, and gender-sensitive approaches that address disparities in phone access and control.

The next frontier of financial inclusion is not  distributing more SIM cards. It is the deepening of usage and the deliberate building of digital capability ensuring that phone ownership translates into resilience, productivity, and long-term economic empowerment.

Conclusion: Connected Is Not Enough

Uganda has made significant strides in expanding digital access. Mobile phones have democratised access to financial services, lowered geographic barriers, and brought millions closer to the formal financial system.

Yet ownership is only the beginning. True participation in the digital economy depends on systems that convert connectivity into capability and capability into economic empowerment. Without the right infrastructure, products, protections, and skills, access risks remaining superficial.

The question is no longer whether mobile phones can enable inclusionbut whether our financial, regulatory, and innovation ecosystems are strong enough to ensure that every phone owner can fully participate.

Being connected is powerful, but being included is transformative.