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Less Ugandans Have Access to Banks - Report

The high costs of operating an account and the proximity of the bank are the other reasons fronted for not owning a bank account, Dr Sarah Ssewanyana the Executive Director of EPRC says. She however notes that reduced access to formal banking was not entirely surprising.

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The percentage of Uganda’s adult population with access to formal banking services has declined to 20percent from 21percent in 2009. This despite an increase in the number of commercial banks from 20 in 2009 to 24 in 2013.

The Finscope III Survey on Financial Inclusion released by the Economic Policy and Research Center reveals that most adults without a bank account blamed it on the lack of income.

The high costs of operating an account and the proximity of the bank are the other reasons fronted for not owning a bank account, Dr Sarah Ssewanyana the Executive Director of EPRC says.

She however notes that reduced access to formal banking was not entirely surprising.

//Cue in:  This is not surprising…

Cue out: …happening in the commercial banks//

Ugandans who are wealthy, educated and from “better developed” areas in the country led the regions with access of 24percent compared to the 2percent in Nothern Uganda.

Dr Ssewanyana however indicates that more Ugandans were using Savings and Credit Associations, Micro-finance institutions, money transfer services and mobile money transfer services.

In fact, this form of banking, known as non-formal, increased from 20percent in 2009 from 24percent in 2013 due to Mobile Money transactions and usage.

The report does indicate that at least 5.1million Ugandans used mobile money services accounting for more than 90percent of the none-bank formal services.

Justin Bagyenda, the Director Supervision at Bank of Uganda re-emphasized that commercial banks needed to go beyond the traditional means and rather go beyond the urban areas if financial inclusion is going to improve.

//Cue in: We believe that…

Cue out: …where the bottom of the pyramid lies//

The findings appear similar when it comes to savings, of which once again the commercial banks ceded more ground to record a drop from 21percent in 2009 to 19percent in 2013. 

In absolute terms, however, commercial banks have registered a growth in deposits grew to Shs10trillion whereas borrowing expanded to Shs7trillion.

Between 2009 and 2013, the number of people with bank accounts also expanded to 400,000. Mobile money transactions on the other hand since 2009 have grown to Shs13trillion.  

The report indicates a decline in the number of people excluded from financial services from 4.3million adults in 2009 to 2.6million in 2013.

It is on this basis that Bagyenda intimates that financial inclusion in Uganda had improved, however that there is more work needed to be done by policy makers in order to address financial literacy gaps.

//Cue in: We have addressed…

Cue out: …financial inclusion agenda forward//

 

In August 2013, Bank of Uganda released a “Framework for Financial Literacy” in Uganda, part of which includes a countywide approach to getting more people into the banking system and encouraging savings.

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