The Bank of Uganda has said that many Ugandans are still grappling with the challenge of saving their hard-earned money and they now live on hand to mouth system with less left to save.

BoU says most Ugandans survive on hand to mouth

The Bank of Uganda has said that many Ugandans are still grappling with the challenge of saving their hard-earned money and they now live on hand to mouth system with less left to save.

The Deputy Governor of Bank of Uganda Dr Louis Kasekende who headlined on this year’s World Savings day held in Kampala at the constitutional square said Ugandans who do not save lack enough money to cover their expenses.

“According to the latest demand-side survey findings, 54% (10 million) of adult Ugandans save or put money aside for future use.

“Those who are saving (37%) mainly save to cover expenses such as food, education while 26% save for emergencies like illness.

“On the other hand, 46% of Ugandans who are not saving indicated that they are not doing so due to lack of enough money to cover their expenses.

“The reality is that regardless of what you do for a living or how much you earn, savings is an issue that all of us struggle with,” said Kasekende.

“In terms of institutions used for savings, only 34% of savers use formal financial institutions such as commercial banks, micro deposit-taking institutions, credit institutions and SACCOs.

“This year’s event is a special one where for the first time ever, bank of Uganda joined hands with other financial sector regulators and providers for a full week financial services expo to encourage Ugandans to save and invest safely with supervised financial institutions under the theme, “Save More, Achieve More,” Kasekende said in a press interview.

The world-saving day was established on 31st October 1924 during the 1st international savings bank conference held in Milano, Italy, with the objective of encouraging the population to transfer their savings into a formal financial institution rather than keeping it under their mattresses and pit holes. In Uganda, the day has been commemorated since 2016.

In 2017, Bank of Uganda and the Ministry of Finance, Planning and Economic Development launched the national financial inclusion strategy (2017-2022) for Uganda with the vision ‘All Ugandans have access to and use of quality and affordable financial services which helps ensure the financial security.’

Several financial institutions such as commercial banks, microfinance institutions, credit institutions, pension funds, insurance providers, investment service providers and financial literacy educators have had stalls and also offered training to create awareness on savings and also highlight the various options that are available to suit the financial needs of members of the public.

Kasekende highlighted on the milestones conquered by the financial institutions since the inception of celebrating world savings day in Uganda in 2017.

  • The implementation of the strategy has thus far led to the rollout of Agent banking with 9,477 agents spread across the country as at the end of September 2019 to provide access and convenience to savers.
  • the operationalization of Uganda microfinance regulatory authority and the anticipated integration of financial literacy as a subject in the secondary curriculum effective 2020
  • In September 2019 the deposit protection fund increased the protected from Ugx 3 million per customer to Ugx 10 million. All these are aimed at protecting the public against pyramid schemes, unregulated financial services and other financial schemes.

He as far went ahead to highlight on the importance of saving and urged Ugandans to take precaution on the matters at hand.

With this year’s theme, “save more, achieve more” he called upon Ugandans to open up accounts today and start saving if they are to achieve lifetime goals and protect themselves from unforeseen events.

“Emergencies, we all go through tough times in life like sickness or death of loved ones or even loss of income. You will need money set aside for such eventualities to avoid borrowing to cater to what you would have planned for earlier.

“Retirement, each one of us will someday retire and not have access to regular income. In such periods, you will probably need your savings or investments to cover your needs.

“Meeting lifetime goals-we all desire to have things in our lives like a house or car. These can only be achieved if you save some money,” said Kasekende.

He emphasized that; “While regulators are doing their part in protecting savers, we urge the consumers to make the right financial decisions.

“Bank of Uganda, financial sector regulators, financial service providers and other stakeholders have been carrying out different sensitization drives on radio stations, televisions, town hall meetings, as well as financial literacy training to empower the population with the knowledge, skills and confidence to manage their personal finances well.

Kasekende advised financial institutions and educators to take up financial literacy with a focus on financial management and convenient financial products to people so they can achieve results.

“I encourage educators in the country to consider introducing and integrating financial literacy and specifically personal financial management into the curriculum in all profession and making it mandatory to empower our people to make informed decisions with the resources earned.”

“I urge financial services providers to increase access to affordable and convenient financial products and services that can benefit the bulk of the population especially the unserved and underserved segments,” he noted.

Edith Namugga, the Managing Director of Uganda Microfinance Regulatory Authority shared her perspective of the microfinance sector.

“Right now tier 4 is implementing lending and savings under the SACCOs system and non-deposit taking institutions.

“We are looking forward to creating standards as we curb unlawful lending habits for example,  lenders should not retain identity cards in the form of security.

“ If the law gets rightly implemented, all players will have layers of confidence in Uganda’s financial system,” said Namugga.

She said, “Currently 80% Ugandans operate under microfinance and so many are unbanked and don’t even have bank accounts.

“Majority fall under savings and credit cooperation, SACCOs, Non-deposit taking microfinance and fully regulated by the government.”