Financial literacy or financial inclusion? Which is which?

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OPINION

By David Wasike

Uganda’s Vision 2040 is bold: a tenfold increase in economic output, driven by industrialisation, innovation, and inclusion. But behind the macroeconomic dreams lies a simple truth—transforming an economy begins with transforming its people. And no transformation is complete without financial empowerment. Two terms dominate this conversation: financial literacy and financial inclusion. Often used interchangeably, they are fundamentally different and dangerously incomplete when pursued in isolation.

Financial inclusion refers to access—having a bank account, mobile wallet, credit product, or insurance. It’s about availability and infrastructure. On the other hand, financial literacy is about the ability—to understand interest rates, budgeting, debt management, and saving for the future. It’s the know-how that turns access into meaningful use. Access without understanding leads to misuse. Knowledge without tools leads to frustration.

Together, however, they create financial empowerment, the true driver of sustainable growth. Uganda has made impressive gains in inclusion: mobile money penetration exceeds 60%, and SACCOs, agency banking, and digital credit platforms are expanding rapidly. But surveys show a worrying gap in financial literacy. Many Ugandans cannot distinguish between saving and investment, calculate interest, or budget effectively. The result? High default rates, debt traps, underutilised accounts, and stunted productivity.

Consider this: a boda boda rider gets a mobile loan without understanding repayment terms. A market vendor joins a SACCO but lacks record-keeping skills. A youth receives a startup grant but spends it on consumption. The tool was available. The knowledge was missing. And the opportunity was lost. Uganda’s development programs—Emyooga, the Parish Development Model, youth funds—risk falling into the same trap if they emphasise disbursement over capacity-building. It’s not enough to give people money. We must teach them how to manage, multiply, and safeguard it.

If Uganda is to meet its Vision 2040 goal, we must urgently shift from financial access to financial agency. That means embedding financial education across the national fabric. First, start with schools. Financial literacy should be taught from primary level, tested at key national exams, and linked to real-life simulations. Students should graduate not just knowing trigonometry, but also how to budget, save, and plan.

Second, government programs must integrate financial training. Every beneficiary of a cash transfer, loan, or grant should undergo structured financial coaching—before and after receiving the money. Monitoring shouldn’t only track disbursement but also behavioural change.

Third, banks and fintechs must design for inclusion. Simplify terms. Use local languages. Deliver orientation content with every new account. Partner with community leaders and agents to deliver ongoing education.

Fourth, media and civil society should launch mass campaigns. Use radio, TikTok, churches, market days, and drama to teach savings, debt management, and fraud prevention. Normalise money conversations. Celebrate financial discipline as much as we celebrate consumption.

Fifth, data and research must guide interventions. Which communities have the lowest literacy? What barriers exist for women, youth, or refugees? What products work best? Uganda needs an annual Financial Empowerment Scorecard to track progress. And finally, all this must be coordinated under a revised national strategy, with clear targets for both access and literacy. Let’s not just count accounts opened or loans issued. Let’s count households budgeting monthly, businesses keeping books, and youth saving consistently.

But there are risks. Financial literacy programs can become superficial. Predatory lenders or scammers can abuse Inclusion efforts. Digital services may exclude the elderly or low-literate. Urban areas may be overserved, while rural ones fall behind. That’s why regulation, consumer protection, and localised design are critical.

At its heart, this isn’t just about banks and budgets. It’s about dignity and agency. A financially empowered citizen is more resilient, productive, and likely to invest in health, education, and enterprise. Multiply that by 40 million Ugandans, and the road to 2040 becomes not only visible but achievable.

So instead of asking, “Which is more important—literacy or inclusion?” the answer is simple: Both. Now. For all.

Let us build a Uganda where every child knows how to manage money, every farmer can plan a harvest, and every entrepreneur understands growth. Let us unlock the real wealth of nations—not oil or minerals, but the financially empowered citizen.

The writer is a Lecturer Faculty of Business and Management (FBM), International University of East Africa (IUEA), PhD Fellow, Uganda Martyrs University, Kampala (UMU). Strategy & Institutional Development (SID) Consultant, Foundation Leads Limited (FLL)-Kampala, Uganda