NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, October 21, 2014

In Uganda, many point to the success of mobile money in improving financial inclusion by promoting peer-to-peer money transfer. The widespread presence of mobile service stations and variety of services, particularly in urban areas, are an obvious show of activity. Mobile money users describe its benefits as reduction in transaction time, improved security, and convenience. As a woman who owns a small printing business said, she no longer has to travel long distances to deposit money with her supplier for delivering goods. Instead, she just goes to a close-by mobile service center.

The mobile centres are easy to use because they require little paperwork-typically just the transaction fee and recipient’s mobile number. Similarly, a home owner whose utility billing accounts are linked to her mobile phone praises the service on decreasing her time spent waiting in long queues. While shortening the distance between the payer and recipient is a tremendous achievement, it is only a small fraction of the level of financial inclusion that needs to be attained in the country. A recent FinScope III (2013) study by the Economic Policy Research Center (EPRC) reveals that 15 per cent of adults in Uganda are entirely financially excluded. They do not use formal banks, non-bank formal institutions, or informal institutions. The report also reveals that only 19.5 percent of the adult population has an account at a formal financial institution.