The fourth industrial revolution and financial inclusion: Is Uganda there yet?

 

 

The fourth industrial revolution is right here with us knocking on our doors. We can only let our doors open and let the revolution take over. Keeping our doors shut is not an option. History is littered with victims of people and nations that never heeded to the calls of revolutions gone by.

 

The first industrial revolution ushered in steam power replacing horsepower, then the second revolution brought in the age of electricity that took over from steam. It was not long before the third industrial revolution set in with the age of Information Communication Technology (ICT) and the internet.

 

In the third revolution that is taking root in the Ugandan economy, the computer is at the centre of almost every activity we do in our day to day lives. The computers have also evolved from supercomputers reserved from huge warehouses to handheld smartphones and tablets.

 

Now the fourth industrial revolution that is yet to gain a foothold in Uganda is threatening to disrupt everything we have ever known about technology. It is a fusion of ICT with human intelligence creating a third force man is yet to fully grasp and comprehend.

 

It is becoming commonplace in the developed world for computers to take on tasks previously reserved for humans like driving, legal research and customer care to name but a few.

 

All this courtesy of artificial intelligence, machine learning, internet of things and robotics.

 

What does all this mean for financial inclusion in a country like Uganda where just about three out of every 10 adults have access to a bank account in a regulated commercial bank and seven out of even 10 commercial bank branches or automated teller machines (ATMs) are found in the three largest cities.

 

In a world where technology king, physical barriers like proximity of bank branches and ATMs or even physical customer interactions are increasingly becoming a thing of the past.

 

With a handheld technology device like a mobile smartphone, one does not need to leave their home or workplace to enjoy banking services.

 

With artificial intelligence and machine learning one can enjoy the services previously provided by their bank relationship manager in the comfort of their homes. A computer-aided by complex algorithms can comfortably attend to all your customer service queries just like a human being could do. 

 

Therefore, one of the biggest benefits of the fourth industrial revolution is bringing financial services closer to the customer.

 

One will no longer need to walk distances to the nearest bank branch to receive a financial service. This will also make financial services more affordable as banks will be able to serve more customers without the expenses of more staff and more capital investments in bank branches.

 

The other benefit the fourth industrial revolution will bring is transparency within the financial system as technology makes it possible to track all the transactions one makes with any financial institution.

 

It will, therefore, become increasingly difficult for purveyors of illicit financial transactions to operate without being at risk of being caught. A more transparent financial system provides more confidence to Ugandans to participate in the financial markets.

 

On the other hand, the trail of one's financial transactions can be transformed into an asset they can leverage to access finance. This track record in most cases provides a far much better measure of one's creditworthiness than their physical property because it represents a more accurate representation of their economic potential.

 

Therefore, in a country like Uganda where only one out of every ten adults have titled land, more Ugandans would be eligible to access credit from formal financial institutions. Today titled property is the most widely accepted form of collateral if one is to access credit from a formal financial institution.

 

The question then begs, is Uganda ready to ride on the fourth industrial revolution? One would argue that Uganda is on the brink of the fourth industrial revolution. They could cite the emergence of mobile telecommunications technology over the last 20 years as evidence.

 

Findings from the 2018 Finscope survey also show that five out of every ten adults in Uganda own a mobile phone and also have access to mobile money.

 

No doubt the mobile phone has revolutionized Uganda's financial landscape making it possible for close to 5 million Ugandans previously unreached by banks, accessing bank savings and credit over their mobile phones. I would argue that Uganda is on the starting blocks but yet to take off.

 

If Uganda is to takeoff and tap into the gains of the fourth industrial revolution, there must be massive investments in ICT infrastructure. While government efforts to layout the optical fiber cable across the country is laudable, there are still many areas without access to the internet and where it is accessible, it is reliable in not many places.

 

More so less than two out of every ten adults in Uganda have access to the internet let alone owning a smartphone both of which are very critical to Uganda's tapping into the benefits that come with the fourth industrial revolution.

 

Even where this infrastructure exists and the smartphones are easily accessible, not many Ugandans are digitally literate.

 

Not many Ugandans have the knowledge, skills, and behaviors to enable them effectively to use digital devices such as smartphones, tablets, laptops and desktop Personal Computers (PCs) for purposes of communication, expression, collaboration, and advocacy.

 

The recently commissioned fourth industrial revolution taskforce is a good place to start. This task force provides Uganda an opportunity to shape her future and position her to reap the most from the fourth industrial revolution. The journey has just begun but there a clear end in sight.