New app to deepen financial inclusion

Nov 02, 2016

Damulira said the new application is suitable for Saccos and church based organizations, as well as village groups and individuals interested in saving part of their income.

According to statistics, Uganda's saving to GDP ratio currently stands at 16%, behind Kenya‘s 25% and Tanzania's 17%.

This, according to Makerere University economics lecturer, Augustus Nuwagaba, is because approximately 68.9% of the population lives outside the formal cash economy, making it hard to trap and record statistics.

However, to counter the figures, a Ugandan digital startup has created a mobile application that will enable cell phone users to access banks for savings and loan services.

"The innovation does not need a smart phone to operate, bearing in mind that the most financially excluded people live in rural settings where smart phones are rare," Henry Damulira, the Air save chief executive told new vision last week.

Damulira said the new application is suitable for Saccos and church based organizations, as well as village groups and individuals interested in saving part of their income.

According to statistics from bank of Uganda, there are only 5 million Ugandans with formal bank accounts, while millions, especially in the hard to reach areas, use informal methods to save money.

"The banking sector has been looking at ways of reducing the unbanked population in Uganda through financial inclusion drives, and certainly, it seems, this will bring on board as many people as possible," said Damulira. This was on the sidelines of the launch at the Eco bank head offices.

He said Uganda's economy has been resilient in the past, growing at least 5% every year, yet the growth has not been realised by the ordinary people because of savings and financing gaps in the economy.

"Although the banking industry has experienced significant transformation over the past three years, statistics indicate that 62% of Ugandans still have no access to financial services. This is what products like this will change," he said.

Available statistics from the World Bank indicate that there are at least two billion people across the world that are still financially excluded, with Uganda contributing at least  two million, one hundred and seventy six thousand people.

During an earlier interview with Makerere university economics lecturer, Fred Muhumuza, he noted that Uganda's economy has been resilient in the past, growing at least 5% every year, although the growth has not been realised by the ordinary people because of savings and financing gaps in the economy.

"If you compare people's incomes to GDP, you will see that it is very little. However,  if you compare the velocity of money in the economy, Uganda is ranked among countries with the highest velocity in the world, which means the money just needs a platform to be saved," he said.

How it works

Damulira said the product will ride on the mobile money platform, which currently has more than 10 million users transacting on a daily basis.

"Users will be required to dial a number, which will automatically link them to the bank, where an account will be opened for them in real time. This will enable them to save any amount of money, as well as access loans to grow or start their own businesses," he said.

He noted that customers will also be able to withdraw from the account at their pleasure at the various mobile money points of sale in the country, when the money is required.

"The interesting thing with this platform is that it enables customer to even open fixed deposit accounts in the bank, without ever stepping there," he said.

 

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