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IMF lauds Uganda financial inclusion journey

The International Monetary Fund says Uganda has made significant strides to improve financial inclusion with the implementation of the First National Financial Inclusion Strategy.

The IMF staff appraisal report says many initiatives and reforms have been undertaken through efforts of both the public and private sector which aligned with the second National Development Plan and the National Financial Inclusion Strategy.

“In 2021, 66 percent of the adult population reported having an account or using a mobile money service, 20 percentage points higher than the EAC average. These achievements are largely attributed to the surge of agent banking and mobile money, which have created new opportunities to better serve financially-excluded population,” the IMF points out.

It adds: “The access points at the national level reached 309.5 per 10,000 adults by September 2023, surpassing the target of 61.5 set by NFIS I.”

The ministry of Finance, Planning and Economic Development (MOFPED) introduced the National Financial Inclusion Strategy in 2017 to accelerate the level of financial inclusion in the country.

Nevertheless, the IMF staff appraisal report notes that despite the significant strides made to ensure that women are part of the financial inclusion, Uganda is still grappling with a notable gender gap in the utilisation of formal financial services.

The report notes that digital technology has played a crucial role in ensuring that women are part of the financial inclusion, with 65 per cent of women owning bank accounts compared to 67 per cent of men in 2021, a substantial increase from 15 per cent in 2011.

Although female ownership of mobile money accounts has risen from 29 per cent in 2014 to 53 per cent in 2021, the Financial Access Survey indicates that only 35.8 per cent of adult females had deposits with commercial banks in 2021, compared to 71 per cent of adult males.

The IMF report noted that there remains a wide gap in access to financial services between those living in the rural areas compared to those in the urban centres. According to the IMF, in the year 2021, only 32 per cent of rural adults held accounts with financial institutions, compared to 42 per cent in urban areas.

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