FSDU Thematic Report On Banking

a
Banking and Financial Inclusion in Uganda
Financial Sector Deepening
Report on banking and the status

of financial inclusion in Uganda:
Insights from FinScope 2018 Survey
b
Thematic Report
i
TABLE OF CONTENTS
ACKNOWLEDGEMENTS iii
ACRONYMS iv
DEFINITIONS v
INTRODUCTION 1
FINSCOPE SURVEYS 1
FINSCOPE UGANDA 2018 OBJECTIVES 2
FINSCOPE UGANDA 2018 IMPLEMENTATION ARRANGEMENTS 2
FINSCOPE UGANDA 2018 SAMPLING FACTS AND STATISTICS 3
FINANCIAL SECTOR TARGET MARKET 4
FINSCOPE UGANDA 2018 FINDINGS 6
Uganda’s banking sector and financial inclusion 6
Profile of banked adults 7
Uptake of banking services 12
Drivers of uptake 12
Account ownership 12
Frequency and active usage 13
Savings behaviour of banked adults 18
Borrowing behaviour of banked adults 21
Digital behaviour of banked adults 24
Barriers to uptake of banking services 25
Opportunities for banking 26
Indirectly banked 26
Unbanked population 27
CONCLUSIONS AND RECOMMENDATIONS 35
Cover Photos:
Front: A client receives services from a bank counter. Photo: Bank of Uganda
Back: Licensed Commercial Banking Institutions and MDIs in Uganda.
Banking and Financial inclusion in Uganda
insights from Finscope 2018 survey
Banking is defined to include commercial banks and micro finance deposit taking institutions (MDIs)
Adults who don’t have accounts and use banking services Adults who have accounts and use banking services
2% 9%
In 2018, 11% of adults used banking services; 9% had accounts, while 2% did not have accounts. Using banking services without having
accounts include over the counter (OTC) transactions such as paying school fees and bills and using an account of a relative or friend.
Drivers of uptake Channels used to access bank accounts

37% To save
Receiving salary/wages 73%

26% To pay school fees
15% To keep money safe 41%

11% To get credit/loan 12%
6% To make payments/receive money 5%
2%
4%
Bank branch ATM Mobile phone Internet Agent
81% Frequency of usage of accounts

Types of bank
services used
41% Saving account
ATM/Debit card
19% Current account 8% 51% 40% 8% 49% 42% 7% 54% 38%

% of all banked adults % of banked males % of banked females
Loan account
9% Fixed deposit account

Once or more a week but not daily
Credit card Once or more a month but not daily
2% Less than once a mouth
2%
5% 48% 47% 10% 55% 34%
% of rural based banked adults % of urban based banked adults
Depth of usage of bank services
Saving services Payment services Credit services
iii
ACKNOWLEDGEMENTS
This research was made possible by funding from the Department
for International Development (DFID). It was carried out by Financial
Sector Deepening Uganda (FSDU), in partnership with the FinScope
Secretariat at the Bank of Uganda (BoU), the Uganda Bureau of
Statistics (UBOS) and the FinScope steering committee (see details
below). Data collection was carried out by Ipsos Uganda. Yakini
Development Consulting provided technical advice, undertook data
analysis and drafted this report.
FinScope Steering Committee members:
Financial Sector Deepening

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Thematic Report
ACRONYMS
ATM Automated teller machine
BoU Bank of Uganda
EA Enumeration Area
FSDU Financial Sector Deepening Uganda
FSP Financial Service Provider
KYC Know Your Customer
MDI Deposit-taking microfinance institution
MFI Microfinance institution
OTC Over the Counter
PPI Progress out of Poverty Index
ROSCA Rotating Savings and Credit Association
SACCO Savings and Credit Cooperative Organisations
UBoS Uganda Bureau of Statistics
VSLA Village Savings and Loan Association
A customer accesses ATM services. Photo: BoU.

v
DEFINITIONS
Active usage – refers to having used a financial service in the 30-
day period prior to the FinScope survey (with or without ownership).
Adult population – individuals aged 16 years or older.
Banked population – adults who access and use the services of
commercial banks and MDIs. Credit institutions were omitted. The
banked proportion of the population was recalculated for 2013 to
ensure accurate comparison with this 2018 figures.
Credit service/loan – money is provided upfront by a lender and
repayment is expected to be carried out by the borrower in the
future and according to agreed-upon repayment terms.
Financially excluded – Persons who do not have access to or use
financial services (either formal or informal).
Financially included – those who do have access to or use financial
services (either formal, informal or both).
Formal financially included population – Persons who have
access to or use financial services provided by a formal financial
service provider.
Formal financial service providers – financial service providers
who are regulated or supervised, e.g. commercial banks,
microfinance institutions (including deposit-taking institutions),
Savings And Credit Cooperative Organisations (SACCOs), credit
institutions, cooperatives, mobile money service providers,
insurance service providers, pension funds, capital markets, forex
bureaus and money transfer institutions (such as Western Union
and MoneyGram).
Formal financial services – financial services provided by formal
financial service providers.
Informal financially included population – those who use
financial services provided by an informal financial service provider.
Informal financial service providers – financial service providers
who are not regulated or supervised, e.g. savings groups, Village
Savings and Loan Associations (VSLAs), Rotating Savings and Credit
Associations (ROSCAs) and community-based money lenders and
burial societies. Family and friends are not regarded as informal service
providers.
Informal financial services – financial services provided by an
institution or individual that is not regulated or supervised.
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Thematic Report
Insurance service – provides the user with a means to put aside

money in order to receive financial protection or reimbursement when
losses occur.
Payment service – provides the user with a means to move money
from one wallet to another (this can be from person to person, person
to business, business to person, person to government, government to
person, business to government or government to business).
Saving service – provides the user with a means to put aside money
for safe keeping.
Uptake – refers to having access to or using a financial service (e.g.
opening an account with a service provider or using someone else’s
account).
Usage – refers to having used a financial service in the 12-month period
prior to the FinScope survey (with or without ownership).
Receiving cash from a customer. Photo: Bank of Uganda

1
INTRODUCTION
To develop effective interventions – financial or otherwise – aimed
at developing any sector, it is important to have a comprehensive
understanding of the sector. In particular, it is important to understand
the specific challenges faced by that sector and the capacity that exists
to deal with them.
The objective of this report is to give an overview of the Ugandan
banking sector and the potential opportunities that exist to increase
the banked population. The information generated by the FinScope
Uganda survey, conducted in 2018, provides the basis for this report’s
analysis.
Information presented in all tables and figures are obtained from
analysis of FinScope 2018 dataset.
FINSCOPE SURVEYS
The FinScope survey was developed by FinMark Trust. It was designed
to determine how people manage their money and the extent to
which they use financial services to do so, and to monitor changes
in levels of financial inclusion over time. To facilitate higher levels of
financial inclusion, FinScope also provides insights into the drivers of
uptake and usage of financial services among different segments of
the adult population, as well as insights into factors limiting uptake
and usage within different population segments. FinScope is of value
to both policymakers who wish to promote financial inclusion and
improve the functioning of financial markets, and to private service
providers who wish to develop strategies and design financial products
that are relevant to customers.
The first FinScope survey was carried out in Uganda in 2006. The
second survey, which allowed an assessment of changes in the market,
was conducted in 2009, and the third took place in 2013.
FinScope survey findings are crucial for stakeholders in Uganda’s
financial sector, particularly because they establish credible
benchmarks of financial inclusion and insights into obstacles to
growth. FinScope also informs both policy reform and innovation in
service development and delivery, thereby helping to increase levels of
financial inclusion.
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FINSCOPE UGANDA 2018 OBJECTIVES

The 2018 survey had 3 main objectives:
1. To track overall trends in financial inclusion, in order to provide
information on how the landscape of inclusion has changed since
2007. This included benchmarking these trends against peer
countries within the region.
2. To provide insights that could be utilised both at policy and market
levels to further deepen financial inclusion.
3. To illustrate the financial service needs of the adult population of
Uganda.
FINSCOPE UGANDA 2018

IMPLEMENTATION ARRANGEMENTS
The 2018 FinScope survey was commissioned by FSD Uganda.
After an open tender, Ipsos Uganda was selected to conduct fieldwork
and data collection. Yakini Development Consulting was selected
to provide technical assistance during survey implementation,
to analyse data and to write FinScope reports. A top-line findings
report and four thematic reports have been written (on the themes
of insurance, banking, gender and young adults, and informal
inclusion). The Uganda Bureau of Statistics (UBoS) drew the sample,
as well as validated and weighted the data from this study, making it
representative of the Ugandan adult population of 18.6 million.
Post Bank unveils prepaid card to ease field payments. Photo: FSDU
3
FINSCOPE UGANDA
2018 SAMPLING FACTS
AND STATISTICS
A three-stage stratified sampling approach
was used to achieve a representative
sample of the adult population:
•• The first stage of sampling looked at
geographic representation. A sample
of 320 enumeration areas (EAs) Targeted EAs: 320
were selected using a ‘probability EAs
proportional to size’ (PPS)
approach ensuring national, regional Achieved EAs: 316
and urban-rural representativeness. EA EAs
sampling was conducted by UBoS.
Targeted sample:
•• During the second stage of sampling, 3,200 respondents
10 households were selected at
random from a comprehensive list Achieved sample:
of households in each sampled EA. 3,002 respondents
The lists of households for each of the (94% response rate)
sampled EAs were compiled by Ipsos
enumerators prior to conducting After weighting,
the FinScope data
fieldwork. During this listing process,
represents an adult
enumerators moved through each EA
population of 18.6
compiling a list of every structure and million.
household.
•• During the third stage of sampling,
one adult from each of the 10
households was selected at random to
be interviewed.
The sampling approach ensured that results
from the survey can be disaggregated by
region and location setting (i.e. rural or
urban), as well as by demographic attributes
such as sex, socio-economic classification
and main income-generating activity.
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Thematic Report
FINANCIAL SECTOR TARGET MARKET

According to the Uganda Bureau of Statistics’ 2018 mid-year estimates,
the size of the Uganda population is 38.7 million. The target market
for the financial sector (including the banking sector) is the adult
population of Uganda. This includes those over 16 years of age, who
are therefore eligible to work and generate income, and as such
are potential consumers of financial services. The adult population
of Uganda is 18.6 million. Table 1 gives a summary of its size and
demographic distribution.
Table 1: Uganda adult population: 2018
Characteristics Number of adults % of adults
Total population 18,572,641 100%
Geographical setting
Rural 14,138,155 76%
Urban 4,434,485 24%
Gender
Male 8,588,679 46%
Female 9,983,962 54%
Age Category
16 to 25 years 5,956,209 32%
26 to 35 years 4,919,494 26%
36 to 45 years 3,090,047 17%
46 to 55 years 2,125,581 11%
55 to 65 years 1,599,173 9%
Older than 65 years 882,137 5%
Education level
Never went to school 2,694,672 15%
Primary levels 10,293,617 55%
Secondary levels 4,502,427 24%
Specialized training 854,751 5%
Tertiary 199,133 1%
Main source of income
Farmers/fishers 8,822,636 48%
Dependents 3,633,421 20%
Casual labourers 2,701,769 15%
Business owners: traders 1,133,906 6%
5
Characteristics Number of adults % of adults

Formal sector employed 617,084 3%
Business owners: service 453,214 2%
providers
Informal sector employed 363,456 2%
Other 847,154 5%
NOTE: ‘Casual labourers’ is a common term used to describe workers performing

a variety of services, on a temporary or part-time basis. Casual labourers usually
get paid on completion of their work, with wage levels varying from job to job.
Adults from low-income households often perform casual labour to cope with
unexpected expenses. Casual labour is different from being employed in the
informal sector (e.g. working for the owner of an unregistered business or a farmer)
in the sense that those employed in the informal sector receive wages (usually a
fixed amount) on a regular basis.
Table 1, above, shows that Uganda’s adult population is relatively young

(58% are under 36), a slight majority (54%) are female, and around
three-quarters live in rural areas. Just over half of the adult population
is educated up to primary school level. Most rely on irregular sources
of income, and 20% depend on others to give them money or to cover
their expenses.
A customer accessing Agent banking services. Photo: FSDU

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Thematic Report
FINSCOPE UGANDA 2018 FINDINGS

UGANDA’S BANKING SECTOR AND FINANCIAL INCLUSION
In 2018, 11% of adults used services from
banks; 9% and 2% of them had accounts and
did not have accounts respectively.
Ownership is defined to mean those who currently have an account
and those who use such accounts. It includes those who do not have
an account but use the services. While in the previous FinScope
surveys, banking included commercial banks, Credit Institutions (CIs)
and Microfinance Deposit-taking Institutions (MDIs), in 2018, only
banks and MDIs were considered hence the need to revise 2013 figures
for banking to exclude CIs. The revision was made to make findings
from FinScope Uganda comparable across 2013 and 2018 and also
across other countries where FinScope is conducted. In addition, CIs
were excluded because they do not provide a full range of financial
services which the financially excluded and the underserved would
need to enable them pay, save, borrow and acquire assets.1
Figure 1 below shows that in 2013, 13%, of adults used services from
banks. Of those who used banking services, 9% had accounts, while 4%
did not have accounts. In 2018, 11% of adults used services from banks.
Of those who used banking services, 9% had accounts, while 2% did
not have accounts. The 2% drop in those who used banking services
between 2013 and 2018 was caused by those adults who use banking
services without owning an accounts. Using banking services without
owning an account include over the counter transactions (OTC) such
as paying school fees and bills and using an account of a relative or
friend.
Figure 1: 2013 and 2018 ownership and usage of banking services
2013 ownership and usage 2018 ownership and usage
Adults who use only 4% Adults who use only 2%
Adults who have accounts 9% Adults who have accounts 9%
0% 2% 4% 6% 8% 10% 0% 2% 4% 6% 8% 10%
1 http://www3.weforum.org/docs/WEF White Paper Advancing Financial Inclusion Metrics.pdf

7
A comparison with other countries in which FinScope surveys have

been conducted shows that, when it comes to the proportion of
adults who use banking services, Uganda is lagging behind (see
Figure 2 below). The biggest challenge for Uganda lies in accessing
its largely rural population (76% of adults live in rural areas, compared
to, for example, 66% in Tanzania). Given the high cost of providing
financial services to rural areas, Financial Service Providers (FSPs)
(banks included) lack an incentive to do so. This means that only 7%
of rural Ugandans are ‘banked’, compared to 24% of those residing
in urban areas. To bring about growth in the banking sector, Uganda
will have to find innovative ways of reaching potential consumers in
the countryside. Agent banking, which was implemented in Tanzania
in 2013 and introduced recently in Uganda, and mobile banking are
examples of such innovations. These figures indicate that there is a
good opportunity to grow banking through mobile services.
Figure 2: Country comparison
Figure 2: Country comparison
SA '17 77%
Kenya 16 42%
Rwanda '16 26%
Tanzania '17 13%
Uganda 18 11%
% adults who have/use bank services

Profile of banked adults
6.2 Profile of banked adults
Kampala has the highest percentage of
Table 2 gives a regional overview of the banked population of Uganda. Once more, it is clear that those
banked adults
in rural regions (42%),
(such as followed
Karamoja, Kigezi and Bugisu) by Wakiso
are less likely to banked than those in urban
(20%), and Karamoja has the least
regions (like Kampala and Wakiso).

Table 2 gives a regional overview of the banked population of Uganda.
Once more, it is clear that those in rural regions (such as Karamoja,
Kigezi and Bugisu) are less likely to be banked than those in urban
regions (like Kampala and Wakiso).
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Thematic Report
Table 2: Regional breakdown of the banked population

Region Districts included Number % of adults % of adults % of regional Median
of adults in region in region contribution monthly
banked banked unbanked of banked income in
adults in region (UGX)
Uganda
Kampala Kampala 394,255 42% 58% 19% 300,000

Wakiso Wakiso 115,477 20% 80% 6% 220,000
Bunyoro Bulisa, Hoima, 120,384 13% 87% 6% 220,000
Kagadi,
Kakumiro,
Kibaale,
Kiryandongo,
Masindi
Ankole Buhweju, 286,640 15% 85% 14% 150,000
Bushenyi,
Ibanda, Isingiro,
Kiruhura,
Mbarara,
Mitooma,
Ntungamo,
Rubirizi,
Sheema.
Central2 Buikwe, 363,866 13% 87% 17% 166,667
Buvima,
Kayunga,
Kiboga,
Kyankwanzi,
Kyotera,
Luwero,
Mityana,
Mubende,
Mukono,
Nakasongola,
Nakaseke
Acholi Agago, Amuru, 108,995 11% 89% 5% 110,000
Gulu, Kitgum,
Lamwo,
Nwoya, Omoro,
Pader
Lango Alebtong, 143,606 11% 90% 7% 88,000
Amolatar,
Apac, Dokolo,
Kole, Lira,
Otuke, Oyam,
Pakwach
Central 1 Butambala, 95,816 9% 91% 5% 186,000
Gomba,
Kalanga,
Lwengo,
Lyantonde,
Masaka,
Mpigi, Rakai,
Ssembabule
9
Region Districts included Number % of adults % of adults % of regional Median

of adults in region in region contribution monthly
banked banked unbanked of banked income in
adults in region (UGX)
Uganda
Busoga Bugiri, 108,041 8% 92% 5% 110,000

Bjuyendi,
Iganga,
Jinja, Kaliro,
Kamuli, Luuka,
Mayuge,
Namayingo,
Namutumba
Tooro Bundbugyo, 96,171 7% 93% 5% 110,000
Bunyangabu,
Kabarole,
Kamwenge,
Kasese,
Kyenjojo,
Ntoroko
Teso Amuria, 46,095 6% 94% 2% 101,000
Bukedia,
Kaberamaido,
Kumi, Ngora,
Serere, Soroti
West Nile Adjumani, 55,999 6% 94% 3% 110,000
Arua, Kaboko,
Marachi, Moyo,
Nebbi, Yumbe,
Zomba
Bukedi Budaks, Busia, 69,277 6% 94% 3% 66,000
Butaleja,
Butebo,
kibuku, Pallisa,
Tororo
Bugishu Bududa, 62,562 5% 95% 3% 166,667
Bukwo,
Bulambuli,
Kween,
Manafwa,
Mbale,
Namisindwa,
Sironko
Kigezi Kabale, 22,768 4% 96% 1% 80,000
Kanugu,
Kisoro,
Rubanda,
Rukungiri
Karamoja Abim, Amudat, Note: The number of banked adults in the 140,000
Kaabong, Karamoja region is so small that no banked
Moroto, respondents were identified during the
Nakapiripirit, FinScope survey
Napak
UGANDA TOTAL 2,089,952 11% 89% 100% 150,000
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Thematic Report
Figure 3: Geographic distribution of banked adults
Figures 3 to 7, below, illustrate the geographic and demographic

distributions of banked adults across the whole of Uganda. Figure 3
shows that 52% of banked Ugandans live in urban areas.
Rural, 48%
Urban, 52%
Rural, 48%
Urban, 52%
Banked Ugandans are slightly more likely to be male than female, as Figure 4 shows. When looking at

the adult population as a whole, 13% of Ugandan men are banked compared with 10% of women.
Banked
Ugandans are slightly more likely to be male than female, as
Figure 4 shows. When looking at the adult population as a whole, 54%
Banked Ugandans are slightly more likely to be male than female, as Figure 4 shows. When looking at
of Ugandan men are banked compared to 46% of women.
Figure 4: Gender distribution of banked adults
the adult population as a whole, 13% of Ugandan men are banked compared with 10% of women.
Female, 46%
Male, 54%
Female, 46%
Male, 54%
Figure 5 shows that, of the categories used in the FinScope survey,

banked Ugandans are most likely to be aged between 26 and 35 years.
Figure 5 shows that, of the categories used in the FinScope survey, banked Ugandans are most likely
Those over 65 years are the least likely to be banked.
to be aged between 26 and 35. Those over 65 are the least likely to be banked.
Figure 5: Age distribution of banked adults
Figure 5: Age distribution of banked adults
Figure 5 shows that, of the categories used in the FinScope survey, banked Ugandans are most likely
to be aged between 26 and 35. Those over 65 are the least likely to be banked.
16 to 25 years 26%
26 to 35 Years 34%

36 to 45 years 17%
46 to 55 years 13%
55 to 65 years 6%
Older than 65 years 3%
% banked adults

With regards to education, it is most common that banked Ugandans have achieved up to the
secondary level. Nearly a quarter have obtained specialised training, compared with just 5% for the
adult population as a whole.
55 to 65 years
3%
11
% banked adults
% banked adults

With regards to education, it is most common that banked Ugandans have achieved up to th
With regards to education, it is most common that banked Ugandans have achieved up to th
secondary level. Nearly a quarter have obtained specialised training, compared with just 5% for th
secondary level. Nearly a quarter have obtained specialised training, compared with just 5% for th
With regards to education, it is most common that banked Ugandans
have achieved up to secondary level. Nearly a quarter have obtained
specialised training. Figure 6: Level of education of banked adults
Figure 6: Level of education of banked adults
Figure 6: Level of education of banked adults
Never went to school 4%
Never went to school 4%
Primary levels 27%
Primary levels 27%
Secondary levels 38%
Secondary levels 38%
Specialized training 24%
Specialized training 24%
Tertiary 7%
Tertiary 7%
% banked adults
% banked adults

FigureFigure 7, below, shows that farming (33%) and formal sector employment (22%) are the most commo
7, below, shows that farming (33%) and formal sector
Figure 7, below, shows that farming (33%) and formal sector employment (22%) are the most commo
employment (22%) are the most common sources of income among
sources of income among adults who have bank accounts. Interestingly, some 15% of adults who ar
adultssources of income among adults who have bank accounts. Interestingly, some 15% of adults who ar
who have bank accounts. Interestingly, some 15% of adults who
banked are dependent on others for money.
banked are dependent on others for money.
are banked are dependent on others for money.
Figure 7: Main sources of income of banked adults
Figure 7: Main Sources of income of banked adults
Figure 7: Main sources of income of banked adults
Farmers/fishers 33%
Farmers/fishers 33%
Dependents 15%
Dependents 15%
Casual labourers 12%
Casual labourers 12%
Business owners: traders 6%
Business owners: traders 6%
Formal sector employed 22%
Formal sector employed 22%
Business owners: service providers 3%
Business owners: service providers 3%
Informal sector employed 2%
Informal sector employed 2%
% adults of banked adults

% adults of banked adults
The FinScope 2018 survey for Uganda included, for the first time,
The FinScope 2018 survey for Uganda included, for the first time, geospatial mapping of the location
geospatial mapping of the locations of financial service access points
The FinScope 2018 survey for Uganda included, for the first time, geospatial mapping of the location
of financial service access points within the enumerator areas that were sampled. This data indicate
withinof financial service access points within the enumerator areas that were sampled. This data indicate
the enumerator areas that were sampled. This data indicates
that there
that there is a significant
is a significant correlation between
correlation between proximity
proximityto bank services and service uptake
to bank
that there is a significant correlation between proximity to bank services and service uptake
services and service uptake – especially in rural areas.2 In these areas,
only 7% of adults who live in EAs without bank services are banked, 1

compared with 20% in EAs that do have bank services. 1

In urban areas, the proportion of adults who are banked also increases
if banking services are offered within the EA in which they live. In this
case, however, the increase is only 4% (from 24% to 28%). It therefore
seems that, given most banking service providers are located in urban
areas, urban-based adults are less concerned than those in rural areas
about proximity to banking services.
2 Bank services that were mapped included bank branches, ATMS and bank agents.
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Thematic Report
especially in rural areas.7 In these areas, only 7% of adults who live in EAs without bank service
banked, compared with 20% in EAs that do have bank services.

UPTAKE OF BANKING SERVICES
In urban areas, the proportion of adults who are banked also increases if banking services are of
within the EA in which they live. In this case, however, the increase is only 4% (from 24% to 28
Drivers of uptake
therefore seems that, given most banking service providers are located in urban areas, urban-b
adults are less concerned than those in rural areas about proximity to banking services.
The

most significant driver of uptake of
banking service is the need to save. The
least
6.3 significant driver is the need to make
Uptake of banking services
payments.
6.3.1 Drivers of uptake
The most significant driver of banking service uptake is the need to save. Figure 8, below, show
The most significant driver of banking service uptake is the need to save.
37% of banked adults began using banking services in order to save. The next most common re
Figure 8, below, shows that 37% of banked adults began using banking
to open a bank account was to have somewhere in which to deposit a salary or wages. This aligns
services in order to save. The next most common reason to open a bank
the fact that 25% of banked adults receive a regular salary or wage from formal and/or informal s
account was to have somewhere in which to deposit a salary or wages.
employment.
This aligns with the fact that 25% of banked adults receive a regular
salary or wage from formal and/or informal sector employment.
Figure 8: Drivers
Figure 8: Drivers of banking of banking service uptake
service uptake
To save 37%
To receive salary/wages 26%
To pay school fees 15%
To keep money safe 11%
To get credit/loan 6%
To make payments/receive money 4%
% of adults who have/use bank services

Account ownership
6.3.2 Account ownership
More than eight out of ten Ugandans who use banking services have accounts in their own nam
More than eight out of ten Ugandans who use banking services
have accounts in their own names. A smaller proportion (14%) access
smaller proportion (14%) access bank services indirectly, either through group membership, by
bank services indirectly, either through group membership, by
someone else’s account, or by making over-the-counter (OTC) payments. Figure 9 presents the fin
using someone else’s account, or by making over-the-counter (OTC)
on account ownership.
payments. Figure 9 presents the findings on account ownership.
13
Figure 9: Account ownership
Figure 9: Account Figure 9: Account ownership

ownership
Own account 74%
Joint account 7%
Own account 74%
Group account 7%
Joint account 7%
Someone else's account 2%
Group account 7%
OTC payments 10%
Someone else's account 2%
OTC payments 10%
% of bank population
% of bank population

Figure 10 shows the types of services used by adults who are banked.
10 shows
Figure
Just over 80% havethe types of services
savings accounts,used which
by adults
arewho
by farare
thebanked.
mostJust over 80% have sa
accounts, which are by far the most popular service. Debit cards are the next most common se
popular service. Debit
Figure 10 shows the cards
types are the next
of services most
used common
by adults who service used
are banked. Just over 80% ha
by banked Ugandans. The low level of usage of fixed deposit accounts,
used by banked Ugandans. The low level of usage of fixed deposit accounts, in comparison wit
accounts, which are by far the most popular service. Debit cards are the next most comm
in comparison with the much higher usage of savings accounts,
much higher usage of savings accounts, indicates that Ugandans are saving for short-term, rather
used by banked Ugandans. The low level of usage of fixed deposit accounts, in compariso
indicates that Ugandans are saving for short-term, rather than long-
long-term, reasons.
term,much higher usage of savings accounts, indicates that Ugandans are saving for short-term, r
reasons.
long-term, reasons.
Figure 10: Types of bank services used
Figure 10: Types of bank accounts held
Figure 10: Types of bank accounts held
Savings account 81%
ATM/Debit card 41%
Savings account
Current account 19% 81%
ATM/Debit card
Loan account 9% 41%
Current account
Fixed deposit account 2% 19%
Loan account
Credit card 2% 9%
Fixed deposit account 2%
Credit card 2%
Whereas debit cards are used % of banked adults
with a current account, the ‘ATM/debit’
card category is separated from% of banked adults
‘savings account’ because some adults
do not use cards with their savings accounts.

Whereas debit cards are used with a current account, the ‘ATM/debit’ card category is separated
Frequency and active usage
‘savings account’ because some adults do not use cards with their savings accounts.
Whereas debit cards are used with a current account, the ‘ATM/debit’ card category is sepa
In terms
6.3.3 of how frequently Ugandans use banking services, the
‘savings account’ because some adults do not use cards with their savings accounts.
findings illustrated by Figure 11 demonstrate most use their bank once
In
or terms
6.3.3
more of how frequently
but notUgandans
weekly. Ituse
a month, banking
is very rareservices, the findings
for Ugandans illustrated by Figu
to access
demonstrate most use their bank once or more a month, but not weekly. It is very rare for Ugan
banking services on a daily basis, even in urban areas.
In terms of how frequently Ugandans use banking services, the findings illustrated by
to access banking services on a daily basis, even in urban areas.
demonstrate most use their bank once or more a month, but not weekly. It is very rare for
to access banking services on a daily basis, even in urban areas.
14
Thematic Report
Figure 11: Frequency of usage of bank services

8%
% of all banked adults 8%
% of all banked adults 51%
51% 40%
40%
8%
% of banked males 8%
% of banked males 49%
49% 42%
42%
7%
% of banked females 7%
% of banked females 54%
54% 38%
38%
5%
% of rural-based banked adults 5%
% of rural-based banked adults 48%
48% 47%
47%
10%
% of urban-based banked adults 10%
% of urban-based banked adults 55%
55% 34%
34%
Daily
Daily
Once or more a month but not weekly
Once or more a month but not weekly
Less than once a month
Less than once a month

As Figure 12 shows, 74% of banked adults are defined as ‘active’ users

of banking services (that is, they have used banking services at least
As Figure 12 shows, 74% of banked adults are defined as ‘active’ users of banking services (that is,
once in the 90 days prior to responding to the survey). Eighteen per
As Figure 12 shows, 74% of banked adults are defined as ‘active’ users of banking services (that is,
they
cent have
of
they have used
banked
used banking services
Ugandans,
banking services at at
onleast
least once
the
once in in
other the
the 90 days
hand,
90 days prior
prior to
had to
notresponding
used any
responding to the
to the survey).
survey).
Eighteen per cent of banked Ugandans, on the other hand, had not used any banking services for at
banking services for at least six months. The main reason cited for
Eighteen per cent of banked Ugandans, on the other hand, had not used any banking services for at
least six months. The main reason cited for being inactive was not having a need to use a bank. This
being inactive was not having a need to use a bank. This could either
least six months. The main reason cited for being inactive was not having a need to use a bank. This
could either
be be indicative
of of services no longer being relevant to to the
could
be either
indicative indicative
of services services no
no longer longer being
being relevantthe
relevant individual (i.e.
toindividual (i.e. a a supply-side
the individual supply-side
(i.e.
barrier) or the individual not having enough money with which to operate an account (a demand-side
abarrier) or the individual not having enough money with which to operate an account (a demand-side
supply-side barrier) or the individual not having enough money with
barrier).
barrier).
which to operate an account (a demand-side barrier).
Figure 12: Most recent usage of bankig services
Figure 12: Most recent usage of banking
Figure 12: Most recent usage of banking services
services
Yesterday/today 5%
Yesterday/today 5%
In the past 7 days 10%
In the past 31-90 days 16%
In the past 31-90 days 16%
More than 90 days ago but less than 6 months ago 8%
More than 90 days ago but less than 6 months ago 8%
6 months or longer ago 18%
6 months or longer ago 18%


Figure 13, below, shows that banked women are more likely than their
Figure 13, below, shows that banked women are more likely than their male counterparts to have used
Figure 13, below, shows that banked women are more likely than their male counterparts to have used
male counterparts to have used banking services within the 30 days
banking services within the 30 days prior to the study. Those living in urban areas are, as expected,
banking services within the 30 days prior to the study. Those living in urban areas are, as expected,
prior to the study. Those living in urban areas are, as expected, also
also more likely to have used services recently than those in rural areas. The latter cite distance to
also more likely to have used services recently than those in rural areas. The latter cite distance to
more likely to have used services recently than those in rural areas. The
bank branches as being a barrier to active usage.
bank branches as being a barrier to active usage.
latter cite distance to bank branches as being a barrier to active usage.
18
18

15
Figure 13: Active usage by gender and geography

Figure 13: Active Usage by gender and geography
Figure 13: Active usage by gender and geography
Banked males 55% 17% 28%
Banked males 55% 17% 28%

Banked females 61% 15% 24%
Banked females 61% 15% 24%

Rural-based banked adults 53% 17% 30%
Rural-based banked adults 53% 17% 30%

Urban-based banked adults 62% 15% 22%
Urban-based banked adults 62% 15% 22%

30 days active 90 days active Inactive

Figure 14 gives an overview of active usage by means of employment.
Figure 14 gives an overview of active usage by means of employment. Those employed in the formal
Those employed in the formal sector, who therefore receive salaries
sector, who therefore receive salaries through their bank accounts, are the most likely to be active
Figure 14 gives an overview of active usage by means of employment. Those employed in the formal
through their bank accounts, are the most likely to be active users.
users. Ugandans who rely on farming or fishing for income are less likely to be active bank users, while
sector, who therefore receive salaries through their bank accounts, are the most likely to be active
Ugandans who rely on farming or fishing for income are less likely to
nearly half of dependants are considered inactive.
users. Ugandans who rely on farming or fishing for income are less likely to be active bank users, while
be active bank users, while nearly half of dependants are considered
nearly half of dependants are considered inactive.
inactive. Figure 14: Active usage and main income-generating activity
Figure 14: ActiveFigure 14: Active usage and main income-generating activity
usage and main income-generating activity
Formal sector employed 90% 4% 6%
Formal sector employed

Farmers/fishers 49% 90% 20% 4% 6%
32%
Farmers/fishers
Business owners 49% 57% 20% 20% 32% 23%
Business owners
Dependants 57%
34% 22% 20% 23%
44%
Dependants 34% 22% 44%


Among inactive users, business owners are the most likely to cite the fact that services do not meet
Among their needs.
inactive users, business owners are the most likely to cite the
Among inactive users, business owners are the most likely to cite the fact that services do not meet

fact that
their needs. services do not meet their needs.
Among banked Ugandans, as Figure 15 shows, the most commonly used means of accessing banking

Among banked Ugandans, as Figure 15 shows, the most commonly
services is a bank branch, followed by an ATM.
Among banked Ugandans, as Figure 15 shows, the most commonly used means of accessing banking
means of accessing banking services is a bank branch, followed
used
services is a bank branch, followed by an ATM.
by With regards to specific services used, the FinScope findings further reveal that:
an ATM.
• Women (52%) are more likely than men (33%) to use an ATM
With regards to specific services used, the FinScope findings further reveal that:
With regards to specific services used, the FinScope findings further
• Urban-based banked adults (50%) are significantly more likely than those in rural areas (29%)
• Women (52%) are more likely than men (33%) to use an ATM
reveal that:to use an ATM
• Urban-based banked adults (50%) are significantly more likely than those in rural areas (29%)
•• Women • Fifty per cent of formally employed Ugandans and 60% of dependants reported using an ATM
(52%) are more likely than men (33%) to use an ATM
to use an ATM
• Farmers reported using an agent for banking services more often than using other channels;
•• Urban-based
• Fifty per cent of formally employed Ugandans and 60% of dependants reported using an ATM
banked adults (50%) are significantly more likely
an indication of the potential of agent banking to reach a large section of the population.
Farmers reported using an agent for banking services more often than using other channels;
• than those in rural areas (29%) to use an ATM
an indication of the potential of agent banking to reach a large section of the population.
•• Fifty
per cent of formally employed Ugandans and 60% of
dependants reported using an ATM
•• Farmers reported using an agent for banking services more
19

19

16
Thematic Report
often than using other channels; an indication of the potential

of agent banking to reach a large section of the population.
Figure 15: Channels used to access bank services

Bank branch 73%
ATM
Bank branch 41% 73%
ATM
Mobile phone 12% 41%
Mobile phone
Internet 2% 12%
Internet
Agent 2% 5%
Agent 5%
% banked adults who use the channel
% banked adults who use the channel

Bank services are most likely to be used for transferring money,
Bank services are most likely to be used for transferring money, making payments and saving (see
making Bank services are most likely to be used for transferring money, making payments and saving (see
payments and saving (see Figure 16). Only 11% of bank clients,
Figure 16). Only 11% of bank clients, on the other hand, use credit or loan facilities.
on the other hand, use credit or loan facilities.
Figure 16). Only 11% of bank clients, on the other hand, use credit or loan facilities.
Figure 16: Types of services used by bank clients
Figure 16: Types of services most used by bank clients
Figure 16: Types of services used by bank clients
Payment services
Payment services
40%
40%
52%
52%
Insurance services Saving services
Insurance services Saving services
11%
11%
Credit services
Credit services

According
to the survey findings, there are no Ugandans who use
only bank services
According
According to and
to the
the nofindings,
survey
survey other there
financial
findings, there are
are no
no services.
Ugandans
Ugandans Those
who
who use who
only
use access
bank
only services
bank and and
services no no
other
other
banks also use non-bank formal services and/or informal services (see
financial services. Those who access banks also use non-bank formal services and/or informal services
financial services. Those who access banks also use non-bank formal services and/or informal services
Figure 17 below). More than half of the banked population (63%) also
(see Figure 17 below). More than half of the banked population (63%) also use informal services. In
(see Figure 17 below). More than half of the banked population (63%) also use informal services. In
addition, 36% of Ugandans who hold bank accounts access financial services from non-bank formal
use informal services. In addition, 36% of Ugandans who hold bank
addition, 36% of Ugandans who hold bank accounts access financial services from non-bank formal
accountsservice providers. These trends seem to indicate that Ugandans consider banking services inadequate
access financial services from non-bank formal service
service providers. These trends seem to indicate that Ugandans consider banking services inadequate
when it comes to providing for their full range of financial needs.
providers. These trends seem to indicate that Ugandans consider
when it comes to providing for their full range of financial needs.

banking Figure 17: Overlaps in uptake of banking and other financial services
services inadequate when it comes to providing for their full
range ofFigure 17: Overlaps in uptake of banking and other financial services
financial needs.
17
Figure 17: Overlaps in uptake of banking and other financial services

Figure 18, below, shows that 93% of banked adults also use mobile
Figure 18, below, shows that 93% of banked adults also use mobile money services to send money to,
money services to send money to, or receive money from, other parts
or receive money from, other parts of the country.
of the country.
Figure 18: Non-bank formal services used by banked adults
Figure 18: Non-bank formal services used by banked adults
Mobile money services 93%
Pension funds 14%
SACCO services 13%
MFI services 11%
Insurance services 6%
Cooperative services 2%
Capital markets 0.40%
% of banked population who have/use the service

Figure 19Figure 19 illustrates that 44% of adults who have bank accounts also access savings from savings groups
illustrates that 44% of adults who have bank accounts also
access savings from savings groups or SACCOS. An additional 24% and
or SACCOS. An additional 24% and 17% access savings from ROSCAs and burial societies respectively.
17% access savings from
The relatively low ROSCAs
usage of burial and burial
societies can societies
be explained respectively.
by their limited The
penetration and
relativelyconvenience.
low usage of burial societies can be explained byborrow
Only a very small proportion (3%) of banked Ugandans their from
limited
informal money
penetration and convenience. Only a very small proportion (3%) of
lenders.
banked Ugandans borrow from informal money lenders.
21

18
Thematic Report
Figure 19: Informal services used by the banked population

Figure 19: Informal services used by the banked population
Savings group/VSLAs 44%
ROSCAs 24%
Burial societies 17%
Money lenders 3%
% of banked population who have/use the service

There are a number of other reasons why adults who have bank
There are a number of other reasons why adults who have bank accounts continue to use the services
of other types of provider:
accounts continue to use the services of other types of provider:
•• Microfinance institutions (MFIs) and cooperative services give
• Microfinance institutions (MFIs) and cooperative services give them access to credit services
or loans
them access to credit services or loans
• SACCO membership provides networking opportunities, as well as access to credit
•• SACCO membership provides networking opportunities, as well
• Informal group membership (savings groups/VSLAs, ROSCAs and burial societies) allows access
as access to to insurance, as well as a lump sum during pay-out
credit
• Money lenders can provide quick access to credit
•• Informal group membership (savings groups/VSLAs, ROSCAs and
• Most banked adults who access loans from SACCOs or ROSCAs lack the collateral required to
burial societies) allows access to insurance, as well as a lump sum
access loans from banks.
during pay-out

•• Money lenders can provide quick access to credit
•• Most banked adults who access loans from SACCOs or ROSCAs
lack the collateral required to access loans from banks.
SAVINGS BEHAVIOUR OF BANKED ADULTS

Banks are the most popular avenues of
savings. Mobile services are the next most
popular way to save.
More than half (54%) of Ugandan adults save, and 75% of those who are
banked do so. Table 3 gives a demographic overview of banked adults
who save. These findings indicate that those who do so are most
likely to be male, aged between 26 and 35, have achieved secondary
education, and be employed in the formal sector.
22

19
Table 3: Profile of banked adults who save
Banked population
Characteristics
Savers Non savers
Number of adults 1,586,976 502,977

% of adults 76% 24%
Rural 49% 47%
Urban 51% 53%
Gender
Male 58% 40%
Female 42% 60%
Age Category
16 to 25 years 24% 34%
26 to 35 years 37% 26%
36 to 45 years 15% 21%
46 to 55 years 13% 14%
56 to 65 years 7% 3%
Older than 65 years 4% 3%
Educational level
Never went to school 3% 7%
Primary levels 26% 30%
Secondary levels 39% 33%
Specialized training 26% 19%
Tertiary 6% 11%
Farmers/fishers 34% 31%
Dependents 11% 27%
Casual labourers 13% 9%
Business owners: traders 5% 10%
Formal sector employed 24% 16%
Business owners: service 3% 3%
providers
Informal sector employed 2% 0%
20
Thematic Report
Banked adults regard banks as the safest way to save; 69% of those who
save do so with a bank. Mobile services are the next most popular way
to save, followed by savings groups/VSLAs. Just over a tenth of banked
Ugandans who save do so by keeping money at home (see Figure 20).
Figure 20: Savings mechanisms used by banked adults who save
Bank 69%
Bank 31% 69%
Bank
SG/VSLA 31%
28% 69%
SG/VSLA 15% 28%
31%
SG/VSLA
ROSCA 11%15% 28%
ROSCA 8%11%
15%
ROSCA
Give to household member to keep safe 3% 8%11%
Give to household member to keep safe 3%
1% 8%
Give to household member to keep safe 1%
3%
1%
% of banked adults who save

As shown in Figure 21, below, almost half of banked Ugandans report that the most important factor
As shown in Figure 21, below, almost half of banked Ugandans report
in choosing where and how to save is the safety of their money. Around one in three is concerned first
that the most important factor in choosing where and how to save is
and foremost about how quickly they will be able to access their savings.
the safety of their money. Around one in three is concerned first and
about how quickly they will be able to access their savings.
foremost
Figure 21: Criteria applied when choosing savings mechanisms
Safety 45%
Safety 45%
Quickest access to savings
Safety 29% 45%
Quickest access to savings 29%
Most convenient (proximity)
Quickest access to savings 9% 29%
Most convenient (proximity) 9%
Best interest
Most convenient (proximity) 5%9%
Best interest 5%
Lowest charges/cost
Best interest 3%
5%
Lowest charges/cost 3%
Lowest charges/cost 3%

Figure 22 shows that 48% of adults who save do so in order to smooth
Figure 22 shows that 48% of adults who save do so due in order to smooth their cash flow. Another
their cash flow. Another 15% save for business purposes, and 14% do so
15% save for business purposes, and 14% do so because they are planning to buy or renovate a house.
because15% save for business purposes, and 14% do so because they are planning to buy or renovate a house.
they are planning to buy or renovate a house.
15% save for business purposes, and 14% do so because they are planning to buy or renovate a house.
Figure 22: Main drivers of savings behaviour
To help with regular expenses 30%
To help with regular expenses
To help cope with unexpected expenses 18% 30%
To help cope with unexpected expenses 18% 30%
Business purposes 15%
To help cope with unexpected expenses
Business purposes 18%
15%
Buy/rennovate residential land/house 14%
Business purposes
Buy/rennovate residential land/house 15%
14%
Buying property to rent out 8%
Buy/rennovate residential land/house
Buying property to rent out
Farming/fishing purposes 6%8% 14%
Buying property to rent out
Farming/fishing purposes 8%
6%
Buying means of transport for personal use 2%
Farming/fishing purposes
Buying means of transport for personal use
Money for when I’m old 2%6%
2%
Buying means of transport for personal use
Money for when I’m old 2%2%
Buying household goods 1%
Money for when I’m old
1%

24
24
21
BORROWING BEHAVIOUR OF BANKED ADULTS

Only 19% of banked adults who borrow do so
from banks. Nearly half borrow from savings
groups/VSLAs
More than half of Ugandans who use banking services are borrowers.
Table 4, below, presents a demographic overview of both those who
borrow and those who do not. The figures indicate that those who
borrow are most likely to be rural-based, have achieved secondary
education and rely on farming or fishing for income.
Table 4: Profile of banked adults who borrow
Banked population
Characteristics Borrowers Non-borrowers

% of adults 57% 42%
Rural 53% 41%
Urban 47% 59%
Gender
Male 54% 54%
Female 46% 46%
Age of category
16 to 25 years 26% 27%
26 to 35 years 33% 35%
36 to 45 years 18% 15%
46 to 55 years 14% 12%
56 to 65 years 6% 7%
Educational level
Specialised training 27% 21%
Tertiary 6% 9%
22
Thematic Report
Banked population
Characteristics Borrowers Non-borrowers

Farmers/ fishers 37% 29%
Dependents 11% 20%
Business owners: service providers 4% 2%
Interestingly, only 19% banked adults who borrow actually do so from

banks (see Figure 23 below). Instead, nearly half borrow from savings
groups/VSLAs, while just under a third borrow from friends and family.
Figure 23: Sources of credit
SG
SA/VLSA 46%
Family/friends
SA/VLSA 32% 46%
Bank
Family/friends 19% 32%
MFI
Bank 9% 19%
SACCO
MFI 7%
9%
Mobile money service provider
SACCO 5%
7%
Credit institution
Mobile money service provider 2%5%
Money Lender
Moneylender in community
Credit institution 2%
2%
Government scheme
Moneylender in community 2%
2%
Government scheme 2%
% of banked adults who borrow
For banked Ugandans, drivers of borrowing behaviour are similar to
those of savings
behaviour. Smoothing cash flow is, again, the number
For banked Ugandans, drivers of borrowing behaviour are similar to those of savings behaviour.
one reason (see Figure 24, below).
Smoothing cash flow is, again, the number one reason (see Figure 24, below).
For banked Ugandans, drivers of borrowing behaviour are similar to those of savings behaviour.
Figure 24: Smoothing cash flow is, again, the number one reason (see Figure 24, below).
Drivers of borrowing behaviour
Figure 24: Drivers of borrowing behaviour
Figure 24: Drivers of borrowing behaviour
To help with regular expenses 43%
For business purposes 19% 43%
For business purposes
To help with unexpected expenses 12% 19%
To help with unexpected expenses
Buy/renovate residential land/house 7% 12%
Buy/renovate residential land/house
For farming/fishing purposes 7%
6%
For farming/fishing purposes
Buy property to rent out 3%6%
Buy property to rent out
Buy means of transport for personal use 3%
1%
Buy means of transport for personal use 1%

Figure 25, below, shows that when choosing a source of capital, 25% of borrowers seek out a lender
who will provide them with the quickest access to credit. Sixteen per cent cited ease of use as their
Figure 25, below, shows that when choosing a source of capital, 25% of borrowers seek out a lender
main criterion for choosing a lender, while 15% look for low interest rates.
who will provide them with the quickest access to credit. Sixteen per cent cited ease of use as their
main criterion for choosing a lender, while 15% look for low interest rates.
23
Figure 25, below, shows that when choosing a source of capital, 25% of
borrowers seek out a lender who will provide them with the quickest
access to credit. Sixteen per cent cited ease of use as their main
criterion for choosing a lender, while 15% look for low interest rates.
Figure 25: Criteria for choosing lenders
Figure 25: Criteria for choosing lenders
Quickest access to the money Figure 25: Criteria for choosing lenders
25%
Easy/simple to use 16%

Quickest access to the money 25%
Proximity – convenient access 16%
Easy/simple to use 16%
Interest rates are low 15%
Proximity – convenient access
Repayment terms suit me 11% 16%
Interest rates are low

Trust 7% 15%
Confidentiality
Repayment terms suit me 2% 11%
Trust 7%
Confidentiality 2%
Many factors discourage banked Ugandans from borrowing (see
Many factors discourage banked Ugandans from borrowing (see Figure 26). A third of those who do
not borrow said that they already had enough income to cover their expenses. Just over a quarter do
Figure 26). A third of those who do not borrow said that they already
not believe in borrowing (which may be for cultural or religious reasons), while 23% are concerned
had enough income to cover their expenses. Just over a quarter do not
that they would not be able to meet the repayment terms. Only 5% of banked adults who do not
believe in borrowing (which may be for cultural or religious reasons),
Many factors discourage banked Ugandans from borrowing (see Figure 26). A third of those who do
borrow cited interest rates being too high, and just 4% said they did not possess the necessary
while 23% are concerned that they would not be able to meet the
collateral. Noticeably, barriers to borrowing for those who are banked are mainly demand-side, rather
not borrow said that they already had enough income to cover their expenses. Just over a quarter do
repayment terms. Only 5% of banked adults who do not borrow cited
that supply-side, in nature.
not believe in borrowing (which may be for cultural or religious reasons), while 23% are concerned
interest rates being
that they would too
not high,
be able and just
to meet the 4% said they
repayment did
terms. not
Only 5% possess
of banked the
adults who do not
necessary collateral. Noticeably, barriers to borrowing
Figure 26 : Barriers to borrowing for those
borrow cited interest rates being too high, and just 4% said they did not who arethe necessary
possess
banked are mainly demand-side, rather that supply-side, in nature.
collateral. Noticeably, barriers to borrowing for those who are banked are mainly demand-side, rather
Income is enough to cover expenses 33%
that supply-side, in nature.
Don’t believe in borrowing 26%
Figure 26: Barriers to borrowing

Worried would not be able to pay back the money 23%
Figure 26 : Barriers to borrowing
Interest charged too high 5%
No security or collateral 4%
Income is enough to cover expenses 1%
Not allowed to borrow bt spouse/family 33%
Don’t believe in borrowing 1%
Cannot get a loan because of credit history 26%
Worried would not be able to pay back the money
Do not know where to borrow from 1% 23%
Interest charged too high 5%
% of banked adults who didn’t borrow
No security or collateral 4%

Not allowed to borrow bt spouse/family 1%
6.6 Digital behaviour of banked adults
Cannot get a loan because of credit history 1%
An analysis of Do not know where to borrow from
attitudes towards cash and technology reveals that nearly nine in ten Ugandans are
1%
prepared to learn and use new technology when it comes to payments, and 80% of banked adults do
not like to carry large amounts of cash. Over three-quarters, however, said they still prefer to use cash
to make payments (see Figure 27). % of banked adults who didn’t borrow
6.6 Digital behaviour of banked adults

An analysis of attitudes towards cash and technology reveals that nearly nine in ten Ugandans are
prepared to learn and use new technology when it comes to payments, and 80% of banked adults do
not like to carry large amounts of cash. Over three-quarters, however, said they still prefer to use cash
27
to make payments (see Figure 27).

24
Thematic Report
DIGITAL BEHAVIOUR OF BANKED ADULTS

Nearly 90% of Ugandans are prepared to learn
and use new technology for payments but
over three-quarters still prefer to pay by cash.
An analysis of attitudes towards cash and technology reveals that
nearly nine in ten Ugandans are prepared to learn and use new
technology when it comes to payments, and 80% of banked adults do
not like to carry large amounts of cash. Over three-quarters, however,
Figure 27: Attitudes towards cash and technology
said they still prefer to use cash to make payments (see Figure 27).
Prepared to learn how to use new technology 89%
Do not like carrying large amounts of cash 80%

Prefer to use cash because everybody uses cash 76%
Believes it is more risky to carry cash than to use cards … 75%

Prepared to learn how to use new technology 89%
Prefer to pay cash rather than paying by phone or
Do not like carrying large amounts of cash … 80% 69%
Would rather deal with people than machines such as

Prefer to use cash because everybody uses cash … 59%
76%
Believes it is more risky to carry cash than to use cards … 75%

% of banked adults
Prefer to pay cash rather than paying by phone or … 69%

Would rather deal with people than machines such as … 59%

% of banked adults

As Figure As Figure 28 shows, remittances, buying goods or services, and bill payments are the key drivers of use
28 shows, remittances, buying goods or services, and bill
payments are the key drivers of use of digital payments.
of digital payments.

Figure 28:As Figure 28 shows, remittances, buying goods or services, and bill payments are the key drivers of use
Drivers of digital payments
of digital payments.
Figure 28: Drivers of digital payments

Remittance 86%
Figure 28: Drivers of digital payments
Buy goods/services 62%
Remittance 86%
Bill payments 26%
Buy goods/services 62%
Bill payments 26%% of banked adults

% of banked adults

6.7 Barriers to uptake of banking services
Most Ugandan adults (89%, or 16.5 million) are unbanked. As the findings summarised in Figure 29
6.7 Barriers to uptake of banking services
show, the main barriers to using banks originate from the demand side. Chief among them is
Most Ugandan adults (89%, or 16.5 million) are unbanked. As the findings summarised in Figure 29
insufficient income, which was cited by over half of unbanked Ugandans. Supply-side perceptions also
show, the main barriers to using banks originate from the demand side. Chief among them is
prevent uptake of banking services. These include proximity to services, inability to maintain the
insufficient income, which was cited by over half of unbanked Ugandans. Supply-side perceptions also
prevent uptake of banking services. These include proximity to services, inability to maintain the
25
BARRIERS TO UPTAKE OF BANKING SERVICES

The main barriers to using banking services
is a perception of insufficient income, cited
by over half of unbanked Ugandans.
Most Ugandan adults (89%, or 16.5 million) are unbanked. As the
findings summarised in Figure 29 show, the main barriers to using
banks originate from the demand side. Chief among them is insufficient
income, which was cited by over half of unbanked Ugandans. Supply-
side perceptions also prevent uptake of banking services. These include
proximity to services, inability to maintain the minimum balance
required by banks and the perceived high cost of banking services.
minimum balance required by banks and the perceived high cost of banking services.
Figure 29: Barriers to banking
Figure 29: Barriers to banking
Insufficient money 53%

Does not know how to open a bank account 3% More than 60% of
Does not understand benefits of having a bank account 2% unbanked adults
report demand side
Does not have the documentation required 2%
barriers
Does not trust banks 2%
Feels intimidated/uncomfortable in a bank 1%
Banks are too far away 13%
Perceived supply-
Cannot maintain the minimum balance 9%
side
Bank service charges are too high 7% barriers
% of unbanked adults

6.8 Opportunities for banking
Opportunities to increase inclusion in the banking sector and to expand the reach of banking services
lie in serving the indirectly banked and in extending services to the unbanked. Sections 6.8.1 and 6.8.2
provide further detail on these opportunities.

6.8.1 Indirectly banked
Although most banked adults (86%) use bank services in their own names, some (14%) use them
through a group account or someone else’s account, or use OTC services (10%). The indirectly
unbanked, who constitute 300,000 Ugandans, represent the first and most obvious opportunity for
banks. Table 5 presents a demographic overview of Uganda’s indirectly banked.
Photo: Uganda Bankers’ Association (UBA)

26
Thematic Report
OPPORTUNITIES FOR BANKING

Opportunities to increase uptake of banking
services is in serving the 14% who are
currently using group accounts and 10% who
use OTC services.
Opportunities to increase inclusion in the banking sector and to
expand the reach of banking services lie in serving the indirectly
banked and in extending services to the unbanked.
Indirectly banked
Although most banked adults (86%) use bank services in their own
names, some (14%) use them through a group account or someone
else’s account, or use OTC services (10%). The indirectly banked, who
constitute 300,000 Ugandans, represent the first and most obvious
opportunity for banks. Table 5 presents a demographic overview of
Uganda’s indirectly banked.
Table 5: Profile of indirectly banked adults
Banked population
Characteristics
Use bank services in own name. Indirectly banked.

Rural 46% 63%
Urban 54% 37%
Gender
Male 55% 45%
Female 45% 55%
Age category
16 to 25 years 24% 41%
26 to 35 years 37% 17%
36 to 45 years 18% 11%
46 to 55 years 14% 7%
55 to 65 years 4% 20%
Educational level
27
Banked population
Characteristics
Use bank services in own name. Indirectly banked.

Tertiary 8%
Informal sector emplyed 2%
Farmers/fishers 48% 50%
Business owners - traders 7% 6%
Business owners - service 3% 4%
providers
Dependents 13% 25%
According to these figures, indirectly banked individuals are most likely

to be rural-based, aged between 16 and 25, and rely either on farming
or fishing for income, or be dependent on a household member to pro-
vide them with money.
These individuals are most likely to be students, whose main service
needs include:
•• money transfer services (for receiving money from their

household members)
•• digital payment facilities to pay school fees and other opportunity
costs
•• educational savings and loan facilities
The indirectly banked are most accessible as 37% are urban-based,
26% own mobile phones, 87% have proof of identity, 21% have
documentation to prove their residential addresses and 20% have both
proof of identity and residence.
Unbanked population
Profile of the unbanked
Table 6 gives an overview of the characteristics of these 16.5 million
unbanked adults in Uganda. They are most likely to be rural-based,
female, aged between 16 and 25 and have achieved only primary
school education. They also tend to rely either on others or on farming/
fishing for income.
28
Thematic Report
Table 6: Profile of the unbanked population
Bank Status
Characteristics
Unbanked Banked
Number of Adults 16,482,688 2,089,953

% of adults 89% 11%
Rural 80% 48%
Urban 20% 52%
Gender
Male 45% 54%
Female 55% 46%
Age Category
16 to 25 years 33% 26%
26 to 35 years 26% 34%
36 to 45 years 17% 17%
46 to 55 years 11% 13%
56 to 65 years 9% 6%
Education level
Specialized triaining 2% 24%
Tertiary 0% 7%
Farmers/ fishers 49% 33%
Dependents 20% 15%

Business owners: service providers 2% 3%
29
Segmenting the unbanked
Six million Adults (32%) provides low hanging

fruits as they already meet KYC requirements
but are not banked. Banks have to invest in
product development and channel upgrading
in order to include three million (16%).
The 16.5 million unbanked adults in Uganda are not homogeneous in
terms of their demographic characteristics, as is illustrated in Table
6. They therefore have varied financial needs, and a ‘one-size-fits-all’
approach to attracting them to banking will not be effective.
The objective of segmenting the unbanked population is to identify
smaller segments with distinct financial service needs, to allow for
better targeting.
The first step in the segmentation process is the identification of
those unbanked adults who have a similar profile to the current
banked population (and who therefore do not appear to have any
significant barriers to uptake). Three clusters were identified: the
banked, bankable after upgrading (development segment) and the
unbankable. Table 7 presents the size of these market segments and
Table 8 details their demographic characteristics.
Table 7: Size of the unbanked segments
Unbanked Segments
Bankable Development Unbankable
Number of adults 6,168,360 3,148,258 7,166,070
% of unbanked adults 32% 16% 37%
Table 8: Geographic and demographic distributions of unbanked segments
% 0f adults per unbanked segment

Characteristics
Rural 62% 87% 92%
Urban 38% 13% 8%

30
Thematic Report
% 0f adults per unbanked segment

Characteristics
Gender
Male 41% 54% 45%
Female 59% 46% 55%
Age category
16 to 25 years 49% 15% 27%
26 to 35 years 27% 21% 26%
36 to 45 years 12% 18% 20%
46 to 55 years 7% 17% 12%
55 to 65 years 4% 18% 9%
Older than 65 years 1% 11% 6%
Education level
Never went to school 1% 28% 23%
Primary levels 46% 72% 65%
Tertiary 1%
Formal sector employed 2% 0% 0%
Informal sector employed 4% 2% 1%
Farmers/fishers 37% 55% 58%
Business owners traders 8% 7% 4%
Business owners service 3% 2% 2%

providers
Casual labouers 17% 11% 15%
Dependents 25% 19% 17%
Bankable segment
The bankable segment comprises 6.2 million adults. Their
demographic profile, level of connectivity and level of wealth are all
largely the same as that of the current banked population. There is no
obvious barrier to banking for the individuals in this segment.
•• Ugandans in the bankable segment are significantly more likely
than other unbanked adults to be from households with higher
31
incomes. Adults in the bankable segment can in general be

described as urban-based, young adults who are either studying
or have just completed studying.
As with the indirectly banked, their main service needs could include:
•• money transfer services (for receiving money from household
members)
•• digital payment facilities to pay school fees and other opportunity
costs
•• educational savings and loan facilities
There are also a number of other likely service needs that can be
addressed:
•• Savings needs – 56% of adults in the bankable segment save.
They choose a savings mechanism based on how quickly they can
access their money, as they are most likely to save to smoothen
cash flow. This also means they are most likely to save on their
phones, with a savings group or at home, although they regard
putting their money in a bank as the safest means of saving.
•• Credit needs – 46% of adults in the bankable segment borrow.
Again, most of them choose a lender based on speed of access
to their money as they mostly borrow to smoothen cash flow, but
they also regard simplicity of the application process and proximity
to the lender as important criteria. They feel most confident
borrowing from family and friends or savings groups. Their asset-
building aspirations may also play a part in their borrowing – 33% (2
million) aspire to buy land while 21% (1.3 million) want to build/buy a
house (although 42% have no strategy to finance these plans).
•• Payment needs – those in the bankable segment are more likely
than others to regard carrying cash as risky, are more willing to
use new technology and are less likely to prefer making payments
using cash.
|| Digital payment needs – bankable Ugandans are more
likely than those in other segments to need money transfer
services to pay their bills or to buy goods and services. Two
million adults (32%) in this segment currently use mobile
phone services to pay for goods and services, while 0.5
million (7%) pay utility bills using mobile money services.
|| Remittance needs – 70% of adults (4.3 million) in the
bankable segment need money transfer services to meet their
remittance needs. Currently, most of them (80%) use formal
services (mainly mobile money services), while 20% don’t have
any digital facilities for sending and receiving money.
32
Thematic Report
Given that the saving and borrowing behaviour of those in the

bankable segment is mainly driven by a need to smoothen cash flow,
most don’t have reliable strategies for future financial security. In other
words, their financial behaviour is driven by short-term, rather than
long-term, concerns. This tendency, together with the finding that
most (60%) admit that they need financial advice but tend to turn to a
household or family member instead of a professional, is indicative of a
need for financial education.
Development segment
There are about 3 million adults in the development segment. They
lack some of the characteristics that would make them bankable;
given the services currently offered by Ugandan banks, some
changes (either on the demand or the supply side) are needed before
individuals in this segment become banked.
•• Accessibility – although adults in this segment have better
capacity to meet KYC requirements than those in the bankable
segment, they are less connected. A regression analysis revealed
that connectivity is more significant for the banking sector than
meeting KYC requirements. Furthermore, the geographical
distribution of the adults in this segment makes them much less
accessible for FSPs than those in the bankable segment – 87% live
in rural areas.
•• Demand-side barriers making this segment less profitable for
banks are as follows:
|| They are older than those in the bankable segment – one
in three are older than 55 and therefore nearing the age
of becoming dependent on others for money, rather than
being economically active
|| They are more likely than those in the bankable segment to
rely on irregular sources of income, such as farming/fishing
activities and casual labour
|| They have not obtained a secondary education, and are
therefore likely to be less financially literate than those in
the bankable segment
|| They are more likely than those in the bankable segment
to prefer to use cash rather than technology to make
payments.
•• In terms of supply-side barriers, those in the development
segment are more likely than those in the bankable segment
to cite distance from a bank as a reason for not using banking
services.
33
o They have not obtained a secondary education, and are therefore likely to be less
financially literate than those in the bankable segment
o They are more likely than those in the bankable segment to prefer to use cash rather
than technology to make payments.
• In terms of supply-side barriers, those in the development segment are more likely than those
Unbankable segment
in the bankable segment to cite distance from a bank as a reason for not using banking
services.
The unbankable segment includes 7.2 million Ugandans. They are so

different from the currently banked population that it is likely they
will not become bankable in the short term. This segment is beyond
6.8.2.2.3 Unbankable segment
the current banking access frontier and significant changes (on both
The unbankable segment includes 7.2 million Ugandans. They are so different from the currently
the demand as well as the supply side) are needed to make these
banked population that it is likely they will not become bankable in the short term. This segment is
individuals reachable.
beyond the current banking access frontier and significant changes (on both the demand as well as the
supply side) are needed to make these individuals reachable.
One of the major factors in this is that adults in the unbankable
segment come from the country’s lowest income households. In terms
One of the major factors in this is that adults in the unbankable segment come from the country’s
of self-reported barriers to banking, they are significantly more likely
lowest income households. In terms of self-reported barriers to banking, they are significantly more
than other unbanked adults to claim that they do not have enough
likely than other unbanked adults to claim that they do not have enough money to justify opening a
money to justify opening a bank account.
bank account.
Unbankable Ugandans are also very difficult for banks to access.
Unbankable Ugandans are also very difficult for banks to access. Ninety-two per cent of them live in
Ninety-two per cent of them live in rural areas, only 25% have mobile
rural areas, only 25% have mobile phones and none of them have internet access.
phones and none of them have internet access.

Figure
Figure 30 gives
30 gives an overview
an overview of the accessibility
of the accessibility ofdifferent
of adults in the adultssegments
in the in terms of
connectivity and capacity to meet KYC requirements.
different segments in terms of connectivity and capacity to meet KYC
requirements.
Figure 30: Connectivity and capacity to meet KYC requirements

Figure 30: Connectivity and capacity to meet KYC requirements
94%
90%
86%
80% 82%
68%
56%
38%
33% 32%
25%
20% 19%
16% 15% 13%
9% 7%
1% 0%
Mobile phone Internet access ID documentation Proof of residence Both

ownership
Currently banked Bankable Development Unabankable

7 CONCLUSIONS

Having stabilised since 2013, the banking sector in Uganda currently serves 11% of the adult
population. In comparison with neighbouring countries in which a FinScope survey has been
conducted, this is low. The biggest challenge for Uganda lies in the accessibility of its adult population.
35

34
Thematic Report
A customer accessing banking services. Photo: Bank of Uganda

35
CONCLUSIONS AND RECOMENDATIONS

Only 7% of adults in rural areas are banked
compared to 24% in urban areas due to high
cost of opening bank branches in rural areas.
The banking sector in Uganda currently serves 11% of the adult
population. The biggest challenge for Uganda lies in the accessibility
of its adult population. Most adults (76%) reside in rural areas, and the
high cost of providing financial services to these parts of the country
tends to prevent FSPs from extending their services. This means
only 7% of rural Ugandans are banked, compared with 24% of those
who live in towns and cities. The agency banking initiative is likely to
address this, if bank agents are deliberately selected and established in
a way that addresses the rural-urban divide.
The need to save is a key driver of banking services; 37% of banked
adults started using a bank in order to save. Single account ownership
constitutes 86% of all bank account ownership, and most Ugandans
(51%) use their accounts more than once a month. Bank branches
are the most popular means of operating an account. More than half
of the banked population (63%) also use informal services, casting a
doubt as to whether banking services are relevant and adequate for
many Ugandans. Opportunities to increase inclusion in the banking
sector and to expand the reach of banking services lie in serving the
indirectly banked and in extending services to the unbanked.
Among the unbanked, this report has identified three distinct
market segments: the bankable, a development segment, and the
unbankable. The bankable segment comprises 6.2 million Ugandans,
all of whom share similar characteristics to those who are currently
banked. The development segment is made up of 3 million adults,
each of whom lacks some of the characteristics that would make them
bankable but represents a potential customer, should certain changes
on the demand or supply side be made. The unbankable segment is
beyond the current banking access frontier; significant changes would
be required to make these individuals bankable.
36
Thematic Report
Innovative products and channel upgrading

that bring down costs of service delivery are
likely to increase uptake of banking services
to 45%.
If the Ugandan banking sector were to be successful in converting all
of those in the bankable segment, the banked proportion of Uganda’s
adult population would rise to 45% – putting Uganda on a par with
Kenya.
This study therefore recommends direct marketing initiatives,
innovative product development and the upgrading of delivery
channels (such as agent banking) – targeted at the bankable and
development sectors – are necessary to increase the reach of banking
services in Uganda.
A montage of a client accessing stock exchange services online. Photo: Bank of Uganda
37
38
Thematic Report
39
40
Thematic Report
Financial Sector Deepening Uganda (FSD Uganda)

Plot 7A, John Babiha Avenue, Kololo, Kampala
P.O. Box 608 Kampala, Uganda
Tel: +256 414 231260
Email: info@fsduganda.or.ug

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Banking and Financial Inclusion in Uganda

Financial Sector Deepening

Report on banking and the status

Drivers of uptake Channels used to access bank accounts

Receiving salary/wages 73%

15% To keep money safe 41%

81% Frequency of usage of accounts

41% Saving account

19% Current account 8% 51% 40% 8% 49% 42% 7% 54% 38%

9% Fixed deposit account

Financial Sector Deepening

A customer accesses ATM services. Photo: BoU.

Insurance service – provides the user with a means to put aside

Receiving cash from a customer. Photo: Bank of Uganda

FINSCOPE UGANDA 2018 OBJECTIVES

FINSCOPE UGANDA 2018

FINANCIAL SECTOR TARGET MARKET

Characteristics Number of adults % of adults

NOTE: ‘Casual labourers’ is a common term used to describe workers performing

Table 1, above, shows that Uganda’s adult population is relatively young

A customer accessing Agent banking services. Photo: FSDU

FINSCOPE UGANDA 2018 FINDINGS

2013 ownership and usage 2018 ownership and usage

Adults who use only 4% Adults who use only 2%

Adults who have accounts 9% Adults who have accounts 9%

1 http://www3.weforum.org/docs/WEF White Paper Advancing Financial Inclusion Metrics.pdf

A comparison with other countries in which FinScope surveys have

% adults who have/use bank services

Table 2: Regional breakdown of the banked population

Kampala Kampala 394,255 42% 58% 19% 300,000

Region Districts included Number % of adults % of adults % of regional Median

Busoga Bugiri, 108,041 8% 92% 5% 110,000

Figure 3: Geographic distribution of banked adults

Figures 3 to 7, below, illustrate the geographic and demographic

Figure 4: Gender distribution of banked adults

Figure 5 shows that, of the categories used in the FinScope survey,

% adults of banked adults

To receive salary/wages 26%

To pay school fees 15%

To keep money safe 11%

To make payments/receive money 4%

% of adults who have/use bank services

Figure 9: Account ownership

Figure 9: Account Figure 9: Account ownership

Figure 11: Frequency of usage of bank services

% of adults who have/use bank services

Figure 13: Active usage by gender and geography

Banked males 55% 17% 28%

Banked females 61% 15% 24%

Rural-based banked adults 53% 17% 30%

Urban-based banked adults 62% 15% 22%

Formal sector employed

Dependants 34% 22% 44%

30 days active 90 days active Inactive

often than using other channels; an indication of the potential

Figure 15: Channels used to access bank services

Figure 17: Overlaps in uptake of banking and other financial services

Mobile money services 93%

Pension funds 14%

SACCO services 13%

MFI services 11%

Capital markets 0.40%