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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    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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        Rebuilding livelihoods in displacement Endline Report – March 2022

        Rebuilding livelihoods in displacement Endline Report – March 2022

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          Little has been known about the financial strategies employed by refugees over time to build their livelihoods and manage their finances. This report provides an in-depth analysis of a baseline survey undertaken in January 2020 and an endline in November 2021. The sample included refugees and their host communities in the settlements of Nakivale, Bidi Bidi, Palorinya and in the capital Kampala. An endline study was conducted to understand the evolved financial behavior of refugees, get feedback on financial products offered by the implementing partners and assess how new financial products were used by the refugees. The COVID-19 pandemic occurred during the study period and offered the opportunity to track how households coped with the situation.

          The Financial Inclusion for Refugees (FI4R) project was launched in 2019 by FSD Uganda and FSD Africa to support financial service providers (FSPs) to offer financial services to refugees and host communities. The project is supporting three financial service providers (FSPs) Equity Bank Uganda Limited (EBUL), Vision Fund Uganda (VFU) and Rural Finance Initiative (RUFI) to offer financial services to refugees and host communities.

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          Financial Inclusion for Refugees Case Study in Uganda

          Financial Inclusion for Refugees Case Study in Uganda

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            To credit Henry J. Leir Institute – The Fletcher School of Law and Diplomacy

            During a year that most of the world has spent locked indoors, we should remember that 1% of the world’s population has been forced to flee their homes due to conflict or persecution. This is roughly 79.5 million people. 26 million are refugees, and almost half are under the age of eighteen. Nearly three-quarters of displaced persons are hosted by neighboring countries, which often are in need of help themselves.

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            FI4R Diaries Round I Insights: Linking Refugees to Formal Financial Services

            FI4R Diaries Round I Insights: Linking Refugees to Formal Financial Services

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              By The Financial Inclusion for Refugees (FI4R) team

              Financial services are an important avenue for refugees to save money, access loans, and manage life shocks. However, many of them struggle to access finance because of legal barriers, lack of identity documentation, lack of credit history in their new locations, or collateral as security. Despite the challenges they face in accessing formal finance, refugees have found ways around financial exclusion. They save in savings groups, borrow informally, and receive remittances. As part of a financial diaries[1] study started in September 2020 by BFA, we spoke to 48 refugee households in Uganda to understand their financial lives over the course of a year. This blog shares the initial insights from the financial diaries research in Nakivale and West Nile refugee settlements.

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              FI4R Diaries Round II Insights: How Refugees Perceive and Cope with Risk

              FI4R Diaries Round II Insights: How Refugees Perceive and Cope with Risk

              By The Financial Inclusion for Refugees (FI4R) team

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                This is part two 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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                Reimagining settlement communities: responding to the growing financial needs of Uganda’s refugees and their hosts

                Reimagining settlement communities: responding to the growing financial needs of Uganda’s refugees and their hosts

                By David Darkwa & Fred Ndiwalana.

                Mama Nicole is what most academics would call a ‘Forcibly Displaced Person’ – a refugee. Three years ago, she fled her village in Northern Kivu in the Democratic Republic of Congo when fighting broke out between two armed groups. Upon arriving in Uganda, she chose to settle in Kampala where she felt safer mingling in the city and being proximate to good schools and reliable health care for her four children. Settling in, however, has not been easy. Today, she rents a two-room house in Katanga, one of the sprawling slums of Kampala.  Two of her children go to nearby schools and the other two have dropped out.

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                Empowering refugees and host communities through financial inclusion

                Empowering refugees and host communities through financial inclusion

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                  Background: Financial Inclusion for Refugees (FI4R) project

                  Uganda hosts one of the largest refugee populations in the world with approximately 1.1 million refugees settled in urban centres and 28 refugee settlements across the country. And while the number of adult Ugandans accessing formal financial services continues to grow, primarily driven by mobile money services, the figures are much lower in refugee settlement communities. According to FinScope 2018, overall financial inclusion stood at 78% for adult men and 77% for adult females in Uganda. In contrast, only 13% of refugees surveyed in Bidi Bidi Refugee Settlement recently were able to access formal credit, with most of them depending on informal groups, which have their limitations, to meet their financial needs.

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                  New lives, new tools: The financial lives of refugee communities

                  New lives, new tools: The financial lives of refugee communities

                  Observations by BFA Global based on initial field research 

                  Access to financial services and a steady source of income are key concerns for displaced populations when they begin to settle in camps. Understanding how refugees cope as they grow their livelihoods, incomes and adopt both formal and informal financial tools can provide insights on what financial services they need to strengthen their resilience.

                  In August 2019, The Financial Inclusion for Refugees Project (FI4R) was launched by FSD Uganda and FSD Africa in collaboration with BFA Global to conduct refugee financial diaries in Uganda and provide insights into the financial strategies employed by refugees over time to build their livelihoods and manage their finances. The project will also support financial service providers (FSPs) to offer financial services to refugees and host communities. This is the first Financial Diaries project with refugees that will provide a detailed picture, over the course of a year, about the incomes, expenditures and financial flows of refugee households. The project will also reflect on how financial service providers engage with these households.

                  The FI4R project kicked off with extensive focus group discussions and individual interviews across Kampala, Nakivale, Bidibidi and Palorinya camps. Several observations stood out from this initial field research.

                  Financial and human capital determines how refugees are able to support themselves

                  The financial and human capital that refugees arrived with in Uganda was a factor in determining their ability to support themselves, their families and grow their assets and income sources. These findings are similar to observations made during our research in Rwanda on Refugees and Their Money.

                  Access to any financial services is key

                  Refugees have significantly expanded their use of formal financial instruments since they came to Uganda – particularly mobile money and savings groups. However, these tools were not without risk. Many refugees did not have strong enough livelihoods to keep up with savings group contributions. In addition to this, the risk of sim cards being shut-off  left refugees unsure of whether they would lose money saved in their mobile wallets, a common savings strategy. Several respondents, especially those who operate businesses, narrated how they had tried to access formal financial institutions but had their requests rejected because of the stringent government policy not to accept refugee IDs or other non-approved forms of identification for the (Know Your Customer) KYC process.

                  Refugees leave home with little or nothing

                  The eagerness to take up financial products would have been hard to believe when these refugees first came to Uganda. Most respondents came into the country with close to nothing, perhaps only in possession of a small phone that was likely broken or even stolen by the time they reached Uganda. Many left their home countries very quickly as a result of violence or threats, which afforded them very little time to prepare. Most of the refugees walked long distances, or at least part of the way, and relied heavily on strangers to get to either Kampala or the camps.

                  Small amounts can make a difference in how quickly refugees can get on their feet

                  Jack* came from Congo in 2015 with CDF 500,000 ($295) in his pocket, which he changed for 1 million UGX ($270) at the border at Bunagana*. He spent 400,000 UGX ($100) on food and a bus to Nakivale refugee settlement. This left him with 600,000 UGX ($160) to start a business – just enough for him and his wife to start making and selling local sorghum-based drinks. He estimates that they now make a profit of about 10,000 UGX ($2.7) per day which supports the couple and their seven children. Jack was able to save enough from these profits to buy a motorcycle. Leah’s* story follows a similar path. She lives in Bidibidi refugee camp with her five children. She left Juba, where she was a restaurant manager and came to Uganda in 2016 with only a small phone and two cooking pots. When UNHCR gave her two cooking pots, she was able to sell them and used the proceeds to start a business selling sugar and salt – pots are given to all incoming refugees. Leah has since graduated to selling charcoal, and has been able to buy five goats and six local-breed chickens.

                  Savings groups are beneficial

                  Leah has immensely benefited from her membership in savings groups in the Bidibidi settlement. Initially Leah participated in a rotating savings group with other women selling charcoal (her mechanism to buy the goats), and then from the Accumulating Saving & Credit Association (ASCA) that the rotating savings group morphed into. Currently, she contributes 5,000 UGX ($1.30) per week and has been able to borrow up to 200,000 UGX ($54), paying it back within two months. Early in 2019, she joined a different group of 36 members based in the same area of the settlement camp. This group is sponsored by an NGO which provided them with seeds to grow eggplants and onions. When they sold their produce for 400,000 UGX ($100), the NGO gave the group a grinding mill, encouraging them to start a savings group with the 400,000 UGX. The grinding mill makes a profit of about 30,000 UGX ($8) per month, which goes into the savings group to increase the loan sizes it is able to offer members. However, it must be said that Leah is an exemplary example of a savings group participant. Other women we interviewed had not yet contributed anything to their savings groups or were lagging in their weekly contributions. Challenges that have contributed to the delay in remitting contributions include the lack of adequate income-generating activities within the settlements. Some refugees relied on working for NGOs to either sell them goods or perform small services such as fetching water. This work can prove temporary when projects are complete, and institutions leave.

                  Livelihood assets are key for settling down

                  The livelihoods refugees create from the human capital they bring from their home countries determines how they settle down. We found a keen “livelihood agility” among some people who had worked in a diverse number of jobs in their home countries – one man in Nakivale farmed, then operated a Boda Boda taxi, finally taking a job as a cleaner in a Vodacom shop. Leah, above, had never sold charcoal, but she understood the basic concepts of running a business from her time as a restaurant manager in Juba.

                  This “livelihood agility” is less present with Amara*, a 35-year-old woman from Eritrea who doesn’t write (even Arabic) or speak English or any Ugandan dialect. Amara was married in 1998 to a soldier and she had seven children with him – four are still alive and three died. She was a full-time mother and housewife. She came with her four children to Kampala at the beginning of 2019. Luckily, her husband had built networks with a number of journalist friends while he was in South Sudan. One of them was based in Kampala, and he was able to reach out to the network of Amara’s husband’s friends to support her. In all, Amara received about 11 payments from them through a woman in Kampala, totaling about USD 2,000 (7 million UGX). With this capital, she set up a small shop where she sells powdered and liquid soap, sugar and fresh bread and makes tea and coffee. However, the shop is doing badly and the funds from her husband’s network have stopped. She is behind on rent, even after the landlord decreased it from 480,000 UGX ($130) per month to 380,000 UGX ($103), and she does not have enough money to send the children to school. She is now considering going to one of the settlement camps.

                  Stigma and fear are constraints to livelihoods

                  Even the refugees who are doing relatively well face huge risks and their livelihoods tend to be constrained, especially in Kampala. They live in constant fear of threats from people back in their home country while also being harassed and stigmatized by the locals.  This makes it difficult to grow a small business and getting a job is almost impossible. When refugees do get jobs, they are often cheated out of their pay or are sexually harassed.   Because many refugees don’t speak or read the language, they are persistently cheated by landlords, business owners, and mobile money agents.

                  Access to financial services is still limited

                  In addition to the everyday risks that refugees experience, they also face challenges from service providers. The most significant example which currently exists is the unexpected de-registration of their mobile money wallets. There have been instances of fake identity documents presented at the points of registration and financial service providers are now concerned that this does not allow them to undertake a valid KYC process. Sim cards have been shut off with refugees losing money in the process. The refugees we spoke to said they often save in their mobile money accounts – the bank was for larger amounts money, which they never seemed to have. One person we spoke with lost 150,000 UGX ($40) after their sim card was deregistered. Without a proper ID, it is very difficult to recover the money or get the sim card turned back on. Additionally, mobile literacy remains a big challenge.  Refugees usually handover their phones to the mobile money agents to transact for them and are constantly taken advantage of because they don’t understand how to use their phones.

                  In the coming months, we will be tracking the financial flows of refugee households in Kampala and the camps of Nakivale, Bidi Bidi and Palorinya in the West Nile region. As we do, we will learn about the income, expenditure and financial flows of refugee households in Uganda, and share these learning with local stakeholders and the global community.

                  * Jack is likely to have gotten short-changed as the exchange rate in 2015 was 2.80 and he should have received about 1.4 million UGX.

                  Real names have been changed.


                  By Observations from the Financial Inclusion for Refugees (FI4R) team

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                  From Ideas to Field Tests in 4 Days: A Design Sprint for Refugee-Centered Financial Services

                  From Ideas to Field Tests in 4 Days: A Design Sprint for Refugee-Centered Financial Services

                  By John Won*, Consulting Associate (BFA) and Peter Kawumi, Former Manager Competitive Strategies (FSD Uganda)


                  In June 2018, BFA, a global consulting firm led a four-day design sprint for financial service providers (FSPs) to develop and test solutions tailored to over 1.3 million forcibly displaced people (FDPs) in Uganda. This was the latest engagement in a multi-phase program by FSD Uganda and FSD Africa to increase awareness and create financial services for forcibly displaced people. It was the second refugee-focused design sprint in the FSD Network, the first having been held in Rwanda.  Preceding activities included a roundtable discussion with financial service providers in Uganda in December 2017 and a series of customer journey-mapping workshops in Uganda in April 2018. Through these engagements, a number of major FSPs in each market are gaining a better understanding of the needs and capabilities of refugees and identifying pathways to improving financial products and services for refugees as new customers.

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                  Mapping the Financial-access Journey of the Refugee

                  Mapping the Financial-access Journey of the Refugee

                  Applying UX design to help financial service providers in Uganda better serve forcibly displaced people

                  By John Won, Consulting Associate, BFA


                  Applying UX design to help financial service providers in Uganda better serve forcibly displaced people

                  In April 2018, BFA facilitated a series of workshops for six banks – Diamond Trust Bank, Equity Bank, FINCA, Opportunity International, Post Bank, Ugafode – and a mobile network operator – Africell, in partnership with FSD Uganda. We shared research and statistics about the over 1.3 million forcibly displaced people (FDPs) living in the country, based on recent UNHCR data. And we invited the participants to imagine their life not as an employee of a large financial service provider (FSP) in Uganda, but rather to imagine their life as if they were a forcibly displaced person. “Step into the shoes of a refugee,” we instructed them:

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                  Notes from the Frontier: Could Refugee Populations Be Ripe For Financial Inclusion?

                  Notes from the Frontier: Could Refugee Populations Be Ripe For Financial Inclusion?

                  As we approached the Kiryandongo Refugee Settlement area, we were met with a calm sense of normalcy. People went about their business as usual, men and women tilling farms, children running around playing in school grounds and traders displaying their products at small designated shopping centres within the settlement.

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                  Financial Inclusion for Refugees: Laying the Foundation for a Business Case for Financial Industry Players in Uganda

                  Financial Inclusion for Refugees: Laying the Foundation for a Business Case for Financial Industry Players in Uganda

                  On Friday 8th December, FSD Uganda held a roundtable event in Kampala to provide a platform for stakeholders to discuss Financial Inclusion for Refugees in Uganda. Representatives from financial service providers (FSPs), development partners, donors, and non-governmental organizations (NGOs) shared their experiences in providing refugees with access to formal financial services. Stakeholders also discussed the opportunities and challenges in delivering financial services to refugee settlements.

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                  Notes from the Frontier: Spurring Refugee Economic Inclusion in Rwanda through Inclusive Financial Products

                  Notes from the Frontier: Spurring Refugee Economic Inclusion in Rwanda through Inclusive Financial Products

                  Note to reader: For the safety of the refugees and following guidance from UNHCR, no names or pictures have been used in this piece.

                  Thursday 2nd November 2017 was the start of a two-day immersion in the Gihembe Refugee camp in Northern Rwanda. Our task – to develop financial services products that are relevant, affordable and accessible to the over 85,000 adult refugees in the country. For many in our party, which included representatives from six leading financial services providers (FSPs) in Rwanda, this was a first visit to a refugee camp. While the previous day’s briefing and clear instructions at the entrance provided some guidance, we really did not know what to expect.

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