Financial inclusion is vital to end Uganda’s poverty

By Jacqueline Musiitwa,
Former Executive Director, Financial Sector Deepening Uganda

The poverty level in Uganda is shockingly high.  According to the Uganda Bureau of Statistics in the 2016/17 Household Survey, about 27% or 10 million people are poor. Although there are many ways to climb out of poverty, access to and usage of financial inclusion is one of the critical.  The Survey also found that about 33% of Ugandans keep money at home or a secret place.  That is the most common way people save money.  This is followed by Village Savings and Loans Associations at 16%.  With such a high number of people excluded from formal financial services, it is hard for them graduate from one income level to another.

As such, the launch of the Uganda National Financial Inclusion Strategy on October 26, 2017 is not only critical, but timely.  The Strategy uses the following definition, “Financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings and investments, credit and insurance – delivered in a responsible and sustainable way”.  That said, financial inclusion critical for Uganda’s development as a means to reduce poverty, improve financial services competitiveness and increase public and private collaboration to achieve this common goal.

Poverty reduction

The launch of the Strategy by the Bank of Uganda and the Ministry of Finance is a clear commitment by the government of its prioritization of financial inclusion.  The Strategy’s vision is that “All Ugandans have access to and use broad range of quality and affordable financial services which helps ensure their financial security.” The 2013 FinScope Survey showed that the number of adults accessing formal financial institutions increased from 28 percent in 2009 to 54 percent.  Needless to say, this number needs to increase for us to realize the effects nationally.  That said, Uganda is well on its way.  The adoption of a national identification card is essential for financial institutions to register clients and for the government to pay citizens who rely on government payments. Poverty will reduce when people will be able to use multiple financial products such as savings to prepare difficult times, borrow to grow businesses, be insured against man made and natural disasters, easily and affordably receive and make payments and so on.  In addition to achieving universal access, financial inclusion is about the change in behaviors that leads people to improved financial health, that is reduced vulnerability and improved economic independence, that results from the adoption of financial services.


Whilst the list of development challenges is long, it is important for us to prioritize areas we can cause systemic change.  Financial services is one such area.  To improve competitiveness of the financial sector, it is critical to ensure that Uganda increases its rankings against other countries in the World Economic Forum’s Global Competitiveness Report, the World Bank’s Doing Business Report amongst others.  One the one hand, policy makers can create an enabling environment that not only includes more consumers and attracts investment, but one that also fosters innovation.  On the other hand, industry can create products that are suited to client needs based on their own research and adaptation to different market segments.  That means coopetition, a combination of cooperation and competition, is essential!  Financial services companies should compete with telecommunications companies and financial technology companies so that they are pushed to provide a diverse array of services at the best prices for customers with consumer protection principles embedded.   With a more competitive market, Uganda can distinguish itself and attact more investment in the industry.


The Strategy provides us a path to follow, but it is market actors that have the job to implement it.  To achieve financial inclusion a Ugandan community of practice that pushes all relevant players to action and forces us to think outside the box and make commitments to embed financial inclusion in development plans is needed.  Collaboration with global partners to achieve aligned global goals is also key.  Beyond the working groups that are in the Strategy, it is important to create action plans on how to incorporate achieving financial inclusion goals to the Sustainable Development Goals and Uganda’s various development targets.  Using Goal 17, “Strengthening the means of implementation and revitalize the global partnership for sustainable development” is important.  To this end, Financial Sector Deepening Uganda together with various partners is using Financial Inclusion week (October 30- November 2, 2017) organized by the Center for Financial Inclusion at Accion, an annual event to virtually connect activities across the globe to set the stage for how we can collaborate to achieve development goals.


Uganda has the foundational tools needed to address the financial needs of the poor to help them escape poverty.  There are, however, some critical actions besides the ones above needed to achieve universal financial inclusion

1. Faster action towards policy change.  For instance, the National Payment Systems Act (including updating the Mobile Money Guidelines), the Data Protection and Privacy Bill and Competition and Consumer Protection Bill.

2.  Increase access and affordability of the internet and telecommunications in general so as to increase the adoption of mobile services and e-commerce.  Greater mobile phone uptake combined with relevant financial services products will be a boon to reach the unbanked.

3.  “Clientcentricity” in product development.  It is imperative to put the client first.  Human centered design offers an approach to help product developers fully understand the customers needs and wants, and how best to design products they will use.  In the words of Winnie Byanyima, the Executive Director of Oxfam International, “What is growth for if not to help ordinary people thrive?”

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