KAMPALA – The recent release of the financial inclusion report, FinScopeUganda2018, shows that Uganda is moving steadily towards universal financial services coverage driven by the increased uptake of mobile money services.
Financial inclusion is a useful metric to track because it points to savings mobilisation and access to affordable credit, both critical to domestically driven development.
According to the report 78 percent of Ugandans have access to and use financial services, both informal and formal. While this figure was unchanged from the last report released in 2013 there has been a marked shift towards the use of formal and away from informal financial services.
In the previous report 52 percent used formal financial services versus 26 percent for informal financial services which has now changed to 58 percent and 22 percent respectively.
Even more commendable is that financial inclusion has increased from 57 percent when the survey was first done in 2006. And use of formal institutions has experienced an exponential leap from the 28 percent low figure registered in the first year the survey was done.
It is not hard to see why.
"The leap from 28 percent in formal financial inclusion in 2009 to 52 percent in 2013 coincides with the launch of mobile money services in 2009 and its dramatic uptake subsequently...
In the latest report it shows that the uptake of mobile money services across localities, gender or age groups are miles ahead of commercial banks, Savings & Credit Cooperative Schemes (SACCOS), MFIs or any other formal financial institutions.
It goes further. In the rural areas 18 percent of the population have access to mobile money agents a low figure which shows up favourably when seen against zero percent for banks, standalone ATMs and Micro-finance institutions.
A similar pattern is repeated in the urban areas where 54 percent of the population are within easy reach of mobile money agent as compared to two percent for banks, standalone ATMs. What was interesting is that in urban areas more than four times as many people at nine percent have access to their SACCOS than to the banks.
In 2016 sh44 trillion worth of transactions were registered on all mobile money platforms a figure that grew to sh54trillio, up by almost 25 percent in 2017.
The greatest impediment to this growth is the cost of a hand set.
However mobile money platforms are largely used for money transfers a trend which should change with the recent introduction of savings, credit and insurance products.
Also something to watch out for is that financial inclusion is skewed towards adult, urban males.
So the challenge for policy makers, entrepreneurs and the financial service providers is how do we lower the cost, expand the availability and tailor make products for these populations that are excluded?
It will be interesting to see too how the recent one percent tax slapped on all mobile money transactions will affect the uptake of the services. The tax comes into effect on 1st July 2018.
Uganda still lags behind sit neighbours but not by much.
Compared to Uganda’s 78 percent of the population with access to financial services Kenya has 82 percent, Rwanda has 89 percent and Tanzania has 72 percent.