Despite several advertisements and campaigns by commercial banks, the private sector and the government to cause a mindset change in Ugandans and promote a culture of saving money for prosperity, not much has changed.
According to recent data by Sauti za Wananchi
, a Twaweza East Africa research, only one in six Ugandans operate a bank account. The research further notes that less than 10% of the bank owners use their bank accounts to save money.
Most of the account operators being the wealthy and educated living in urban areas, the poor and rural dwelling Ugandans still need several intervention programmes to join the formal cash economy.
A 2017 Bank of Uganda research found that access to bank branches remains concentrated in a few districts particularly in the Central region.
Kampala, Ntungamo, Mukono, Mbarara, Lira and Wakiso have more than 2 access points per 10,000 adults while 41 per cent and 48 per cent of districts out of the 112 districts in Uganda lack access to any bank branch and ATM.
As a result, the Central Bank found that 51% of Ugandans who try to save prefer keeping money in a hidden place in the house.
“This is a bad practice because the money is not safe; it can be misused or stolen. We are calling upon the public to get into the habit of saving with regulated financial institutions,” James Ivan Ssettimba, the deputy director, financial inclusion division at BoU said.
Ssemattimba also revealed that some Ugandans fear to enter banks because of the setup.
“Some people from rural areas fear walking into banks because of the environment. They feel intimidated so they would rather keep their money at home under their beds,” noted Ssemattimba.
On Wednesday, October 31, Uganda joined the rest of the world to mark the World Savings Day – an activity of the Financial Inclusion Week – but with a better half of the population still unbanked (out of the cash economy), several interventions are needed to break the ice.
Saving is for the rich
In an interview with Matooke Republic
, Edmond Turwomwe, Centenary Bank’s manager for Kabale branch noted that most Ugandans think that for one to save, they need to have a lot of money.
“That is not the case. You do not need to have a lot of money to save. Even with the little you have, you can start and still make it. Some banks do not request for any fee while opening up an account. So we are calling upon people to save,” said Turwomwe said.
He further noted that the reasons most youth don’t save with commercial banks is that they don’t want to be disturbed with “paperwork” which is what has given rise to the mobile and digital banking platforms in Uganda.
Is mobile money the solution?
If the figures by Twaweza East Africa are anything to go by, then over 84% of Ugandan have access to mobile money services and therefore can easily make daily savings through platforms like MTN MoKash.
Since the inception of mobile money services in Uganda in March 2009, the number of registered subscribers has increased from 10,010 in March 2009 to 23 million as of August 2018.
The problem, however, is that 62% of the mobile money users use the platforms only as transitions accounts (to receive and send money) but not for saving while 26% use the services to borrow money (loans), buy airtime and pay bills.
With the mobile money tax now fully in place, it is less likely that Ugandans will look at mobile money as a viable savings alternative.
As a result, Bank of Uganda earlier this week launched the “my money’ campaign to among other things raise financial literacy among Ugandans and create awareness on the need to ‘save with a plan.’
“Low savings affects how much one can invest. You cannot invest on loans alone. One needs to start with investing their own savings and then one can get a boost from a financial institution,” Dr Louis Kasekende, the Deputy Governor, BoU told the public at Constitutional Square in Kampala.
Kasekende also encouraged parents to raise their children with a mentality to save money so that they can grow in it and live it as a culture.