Two million Ugandans use mobile internet – Finscope report 

By Samuel Sanya

The Finscope survey found that the breadth of access to financial services is quite wide in Uganda, with 78% of Ugandan adults having access to some form of financial service from the formal or informal sectors, more than double the number in 2006.

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PIC: Dr. Louis Kasekende, the deputy governor of the Bank of Uganda said the report provided vital information for sound public policy decisions
 
 
FINANCIAL INCLUSION
 
Out of a population of nearly 40 million Ugandans, only 9.7 million have mobile phones; of these only 1.9 million have access to the internet and can be reached digitally by financial service providers, the most recent Finscope Uganda survey indicates. 
 
The Finscope Uganda 2018 report also indicates that adult Ugandans, those above 18 years living in rural areas are significantly less likely to have mobile phones and access to internet than adults living in urban areas, making it less likely to be financially included.
 
According to the World Bank, financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way.
 
While commenting on the state of financial inclusion in Uganda, Rachel Sebudde, a senior economist at the World Bank Uganda office, pointed out that greater financial inclusion is the key to unlocking rapid growth. 
 
The Finscope survey found that the breadth of access to financial services is quite wide in Uganda, with 78% of Ugandan adults having access to some form of financial service from the formal or informal sectors, more than double the number in 2006. 
 
However, formal sector financial inclusion is dominated by the use of mobile money, which provides only a limited range of financial services, largely payments and the opportunity to save money on the mobile phone.
 
Only 11% of the adult population uses a commercial bank or micro deposit taking financial institution and only 3% of the adult population who borrow money do so from a commercial bank. 
 
The Finscope survey noted that only 1% of all Ugandans have access to formal insurance, the bulk (40%) access some form of informal insurance service. The rest are uncovered and are running their luck. 
 
This information was derived from surveys based on a representative sample of the population comprising approximately 3,000 adults.
 
Dr. Louis Kasekende, the deputy governor of the Bank of Uganda noted at the launch of the report at the Serena Hotel that the Finscope report provided vital information for sound public policy decisions. 
 
“In most sectors of the economy, financial services are an important input into business, which facilitate business enterprises to purchase raw materials and intermediate inputs, to invest in new capital stock, to extend trade credit to customers and to insure against risks to the business,” Kasekende said. 
 
“By facilitating trade in a wide range of markets, financial services also enable scarce resources 4 in the economy to be allocated more efficiently, which in turn raises productivity and returns to factors of production, including labour,” he added. 
 
According to the 2016/17 Uganda National Household Survey, the structure of the Ugandan economy is such that it is dominated by household enterprises, with approximately three quarters of the working population being self-employed.
 
Kasekende noted that if the people who own and work in the household enterprises have no access to financial services, their capacities to engage in business will be stifled. 
 
He pointed out that if the promotion of financial inclusion can strengthen the access to financial services of the household enterprises in Uganda; it should help these enterprises to flourish and generate more output and boost the incomes of their owners and operators.
 
Kasekende warned that there are dangers that consumers may contract debts which exceed their capacity to repay. Hence, he noted that it is essential that efforts to promote financial inclusion are accompanied by programmes to enhance financial literacy and consumer protection.