Fostering Inclusivity: Mainstreaming Gender in Uganda’s National Financial Inclusion Strategy (2023-2028)

By Anthea Paelo, Ph.D.

The 2021 Global Findex Study places the gender gap in financial inclusion in Uganda at only two percentage points. The gap is even smaller for mobile money at only one percentage point. Uganda is, in fact, one of the few countries in sub-Saharan Africa where the gender gap is below five percentage points.1 Additionally, a comparative analysis of the Findex surveys between 2011 and 2021 for East Africa reveals that Uganda has the smallest gap in terms of active usage, at 5%, compared to Kenya’s 10% and Tanzania’s 31%. By these measures, Uganda’s financial sector is performing incredibly well in its gender mainstreaming targets.

But has Uganda solved the gender gap in financial inclusion? To answer this question, we need to look further into the available data. In April 2023, FSD Uganda commissioned a study that sought to comprehensively assess women’s financial inclusion in Uganda to inform the development of the National Financial Inclusion Strategy (2023-2028) (NFIS II). The study found that a closer examination of available financial sector data revealed a persistent gender gap in access and usage of financial services. For instance, if we exclude mobile money accounts, only 34% of women own an account at a bank or a non-bank financial institution.

In terms of usage, women are more inclined to use informal savings options such as savings clubs. These savings clubs are often unregulated and are prone to security issues over and above the lack of privacy associated with their usage. Similarly, women are less likely to borrow from banks and other formal financial services, leaving them vulnerable to theft and scams in the community. In terms of women-owned businesses, the Uganda Bankers’ Association reports that only 24.4% of the industry loan book is extended to women’s initiatives and enterprises. The pattern is replicated in the insurance industry, where 57% of the informally insured and 52% of the uninsured are women.

Undoubtedly, Uganda has made significant headway in closing the gap in some areas of financial inclusion, particularly in enabling women to access financial services through a bank or mobile money. However, some barriers still hinder their ability to use and enjoy quality financial services. Social and economic barriers such as discrimination, limited access to education and training, lack of collateral, little legal protection, weak financial infrastructure, and limited digital literacy are some of the few examples recognised and raised in NFIS II.

Why does Women’s Financial Inclusion matter?

The goal of Uganda’s National Development Plan III (2021/21 – 2024/5) is to increase average household incomes and improve the quality of life of Ugandans. Financial inclusion is an essential enabler for achieving the NDP III by improving cashflow management, increasing resilience in the face of shocks and enabling the growth of businesses that increase income and create jobs.

Women’s financial inclusion matters because it reduces the exposure of poor and rural households to income shocks, supports growth and increases household resilience. It can contribute to increased investment in health, education and human capital. The focus on Women’s Financial Inclusion, including its accurate measurement, matters because it creates a route to reduced poverty and increased well-being of all Ugandans.

What is being done?

The National Financial Inclusion Strategy (2023 – 2028) (NFIS II) has as one of its key pillars, the objective to promote gender-inclusive finance. In the private sector, the Uganda Bankers Association in October 2023 launched its Women Economic Empowerment Initiative to address the challenges that hinder women’s progress in the banking sector and businesses. It appears that public and private stakeholders believe that more needs to be done to support women in the financial sector.

To address the social and economic challenges, NFIS II proposes three key initiatives. The first initiative involves the provision of gender-inclusive financial and digital literacy. While a Financial Literacy Strategy already exists alongside various programmes, the strategy advocates that women be mainly targeted and that these programmes recognise barriers that affect women, such as lack of confidence, remote locations, and preference for peer learning, such as through savings groups. A recent study by the FSD Network, in partnership with FSD Uganda, found that women are more likely to take up new digital credit products if their peers recommend them rather than through agents. Another study by FSD Uganda found that women were more likely to take up a savings offering following numerous sessions with a sales agent to understand the product.

The second initiative is to increase and improve the access and affordability of gender-responsive financial services. Previous studies have cited the high cost of financial services as a barrier to increased account usage. The barrier is usually higher for women who often have lower incomes.

A third initiative revolves around creating a supportive social context and regulatory environment. High on the agenda for this initiative is to mobilise financial institutions to collect sex-disaggregated data to enhance gender-inclusive policy and decision-making. The value of sex-disaggregated data is that it would provide a clearer, more accurate picture of women’s financial inclusion, enable regulators to accurately track the changes over time and support the development of appropriate products and services. To support this initiative, FSD Uganda commissioned Altai Consulting to develop a toolkit to support the industry in collecting, analysing, and measuring gender-inclusive financial inclusion indicators.

The Value of Gender Inclusive Data

While the goal of increasing women’s financial inclusion is irrefutable, the path can be challenging to define. A quick win is for stakeholders, including regulators, supervisors, financial service providers, and fintechs, to take up the call to ensure that sex-disaggregated information and data are collected. Understanding the status quo and measuring progress is a crucial first step to increasing access to and usage of financial services for women. It is for this reason that FSD Uganda developed a Gender Mainstreaming Toolkit for financial inclusion indicators. In accomplishing this, we can hopefully achieve the vision set out by NFIS II of universal access and usage of a broad range of quality and affordable formal financial products and services for Ugandans, delivered responsibly and sustainably.

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