Leveraging Insights from Uganda’s 2023 FinScope Survey for Product Design

By Anthea Paelo, PhD

Are Uganda’s financial service providers missing out on untapped potential? Recent data suggests they might be. By leveraging data-driven customer segmentation, these institutions can develop products that meet consumer needs and increase profitability. The recent 2023 FinScope Survey revealed interesting insights about the average financial consumer that should be considered for product development and marketing.

First, most Ugandans are young. Adults between the ages of 18 to 34 years of age form 58% of the population. The 18-24 age segment saw the largest growth between 2018 and 2023. They are the most digitally savvy, have boundless energy and are looking for growth opportunities. Despite this, financial products are typically targeted at those over 24 years of age, neglecting a crucial demographic during a critical stage of their financial development. While they may have limited income currently, they are at a pivotal point in their lives where they have increasing access to opportunities and are most likely to require knowledge and resources to partake in the financial sector effectively and sustainably. There lies an opportunity to develop products that take advantage of this age segment’s digital literacy, limited obligations, and curiosity to increase their financial literacy and introduce them to the formal financial sector.

Second, although 52% of the adult population are women, only 62% of them are formally included compared to 75% of men. This gap represents a significant missed opportunity, especially given studies showing women to be loyal customers and good re-payers. Existing financial products and services rarely consider women’s ability to reach access points given restrictions created by household tasks, their limited access to collateral, or priorities in terms of household care duties. Financial providers have an opportunity to tap into increased revenues by creating products and services that consider the specific barriers that women encounter when trying to access financial services, including lack of collateral and limited ability to travel to far-off access points.

Third, most Ugandans are employed in the informal economy, engaged in trading or providing services like hairdressing, boda-bodas (motorcycle transport), etc. More of them are beginning to keep track of their money and aspire to own farms, land, or grow their businesses. How can we design products and services that meet both their current needs as well as their aspirations? For instance, Musa, a 23-year-old boda-boda rider at a popular Wandegeya stage, could benefit from products that allow him to save for his brother’s school fees, build a credit history, and eventually secure a loan for a house. Financial service providers can design products and services that meet his current needs and support his aspirations, earning a long-term loyal customer with increased financial sophistication.

Fourth, while mobile money has done an excellent job opening the door to formal financial services, with 64% of Ugandans reporting the use of digital transfers, there is still a strong preference for local community savings groups, ekibiina, and an even bigger one for keeping cash at home long-term. Up to 44% of Ugandans who save long-term prefer to do so at home with cash. Part of the reason for this is that they are often intimidated and unsure of the services financial institutions provide. They also seek convenience, financial advice, and clear financial services. However, for microenterprises intending to grow, savings groups can only help so much. They are designed more for social purposes and not to help social enterprises or businesses. There is limited access to credit, and many are vulnerable to poor leadership and theft. More established financial service providers have a role in identifying the gaps in their current service provision and tailoring their products accordingly.

In conclusion, while the role of deeper financial inclusion involves regulators and policymakers, financial institutions can seize untapped market opportunities by using research to identify and address the unique needs of different demographic groups. By doing so, you can significantly increase your customer base and profitability.

The insights from the 2023 FinScope Survey highlight the potential for financial service providers to better serve the diverse needs of Uganda’s population. By focusing on youth, women, and those in the informal economy and by addressing the preferences for convenience and personalised relationships, financial institutions can unlock substantial economic value and contribute to broader financial inclusion.