The financial inclusion commitment is based on four pillars which included financial literacy, financial consumer protection, financial innovations and improving financial services data and measurement
By Rachel Mindra Katoroogo
The Maya Declaration is a commitment intended to unravel some of the country’s economic and social potential especially of those unbanked through improving their participation in the formal financial system.
A while back in 2011, Uganda’s Central Bank (BoU) along with other developing economies in Africa, Asian-Pacific and Latin America made a commitment under the Maya Declaration to develop and implement financial inclusion strategies.
These strategies were meant to reduce financial inclusion while improving financial prosperity for all in line with BoU’s strategic plan 2012-2017, Government of Uganda National Development Plan 2010/11 -2014/15 as well as government’s Vision 2040.
The financial inclusion commitment was based on four pillars which included financial literacy, financial consumer protection, financial innovations and improving financial services data and measurement.
In this regard, BoU’s specific action since then has been focused on supporting enhancement of financial knowledge and skills development especially within the school curriculum, fast tracking and recently implementing agent banking, supporting innovative technology especially mobile money aspect to increase access, reducing barriers account opening and trying to enhance trust and transparency between clients and financial institutions, which is still lacking among other efforts.
Consequently in September, 2013, in Kuala Lampur, Bank of Uganda made new commitments under the Sasana Accord to increase the percentage even further from 54 percent to 70 percent by 2017 (which is next year, political meddling remaining constant).
This change of mind and excitement was due to the Finscope survey 2013 which had produced shockingly awesome results regarding the access and use of financial services at individual level. I must say there has been significant effort though not as extant as expected especially when we compare the statistics with the reality.
We shall give credit where it is due however, the flaws have to be highlighted in order to steadily improve those efforts as we pat the stakeholders on the back for a partial job well done!
In this article I bring forth my concerns regarding what I actually saw and data collected from the wider parts of the slums and rural locations of Uganda. I am still in awe and my heart bleeds to this day as I write in dismay.
The Uganda, 2013 Finscope survey findings, the only recognized available financial inclusion data available (monopoly at play) under the theme ‘Unlocking barriers to financial inclusion’ provided by EPRC are far from the reality.
The findings indicate that 74% of Uganda’s population (Mutually exclusive Formal -20% and non-bank formal, 54%) and conclude that these statistics show that almost all Ugandan adults are embedded within the formal banking system.
Looking back at our experience, this is a misrepresentation of a larger segment of Ugandans who are predominantly poor, living in long-forgotten highly rural locations of Northern and Eastern Uganda plus the slum areas or townships of the urban areas.
In regard to the Maya Declaration, I continue to ask whether these long forgotten areas are considered as part of such commitments or achievements since our actual focus and attention has stealthfully been diverted away from the 20% who are the only mutually exclusive ‘formal’ participants in the proper definition and dimensions of financial system.
Such guidelines are provided by the core set of financial inclusion indicators by the Alliance of Financial Inclusion which coordinates the Maya Declaration policy strategies (AFI, 2010). BoU takes pride in saying we have embedded everyone into the non-bank formal also known as mobile money services.
When we look at the definition and criteria of financial inclusion being considered for such commitment, it means that 70 percent of all Ugandans should be able to access and actively use the whole range of savings, credit, insurance and remittances to unlock the economic and social potential.
I still think we are far from that reality!
The definition and outlook of financial inclusion does not simply mean access to financial services but most importantly the availability, usage and quality of the formal financial system for all income segments of the economy both urban and rural alike with dignity.
There is need for BOU to reflect on these findings irrespective of the fact that the deadline of 2017 is round the corner as you continue to strive towards complete financial inclusion by 2017 as pledged in the Maya Declaration.
Yes, the financial inclusion statistics look great show we are on track but the reality needs to be considered in such efforts in order to have a clearer conscience at the end of the day.
If government has pledged to advocate and support financial deepening by bringing people together to represent a dynamic and growing movement by involving the poorer segments of the rural community, the reality needs to be faced with dignity.
The writer is a lecturer at the Department of Finance of Makerere University Business School