The Deputy Governor, Bank of Uganda, Michael Atingi-Ego has called on financial and savings institutions to increase their efforts towards financial inclusion after a study revealed that more Ugandans prefer savings their money in boxes at home than entrusting the money with banks.
He made the remarks during the launch of NSSF Smart Card at Kampala Serena Hotel today.
Atingi-Ego quoted findings of savings from the recently published Bank of Uganda Financial Capability Survey whose results showed that 74.2% of the adults understand what saving is and that 57.6% of the adults had saved in the last 12 months and the highest proportion of savers are in the age bracket of 25 – 54 years and 43.9% of them save for consumption.
The Deputy Governor also added that the survey also found that the most preferred saving mechanism is Village Savings and Loan Associations (VSLAs) at 43.9% and savings boxes at 42.3%, which for sure are not safe havens for anyone’s savings.
“These findings reflect the way of life for the masses and we have an obligation as financial sector stakeholders to support the ongoing social-economic transformation initiatives being championed by Government. For example, the 43.9% who save to consume should be supported to save not only for consumption but also for investment. I urge you to position these new products and services in such a way that they can support the population to move from mere consumption to engaging in productive economic activity,” said Atingi-Ego.
While reacting to this revelation, Richard Byarugaba, Managing Director, National Social Security Fund (NSSF) described the findings by Bank of Uganda as unfortunate and informed these savers that whereas putting the money in boxes, guarantees them of the presence, these savings aren’t earning them any interest.
He said: “Today inflation is quite high and therefore, you are losing value of the money every day because that money isn’t earning money for you, so I would like to encourage everybody saving in the tin box at home, please bring the money, put it in an instrument at NSSF and we will invest it for you, we will give you a good return.”
Atingi-Ego revealed that although the Covid-19 pandemic created havoc, wreck and heartache in Uganda, the pandemic also accelerated the adoption of electronic payment and digital payment services.
He revealed that in 2021, data from Bank of Uganda, showed that mobile money transaction values increased by 33.7% from a monthly average of Shs9.5Trn posted in the quarter ended March 2021 to Shs12.7Trn in March 2022, thus indicating annual transaction values by 46% to Shs145.6Trn ending March 2022.
The Deputy Governor also revealed that internet banking and mobile banking transfers have posted significant growth of 82% and 146% respectively between March 2021 and March 2022, while the number of active debit cards increased by 12.4% from 2.59m in March 2021 to 2.91m in March 2022.
Also, debit card transaction volumes increased from 4.4 million transactions in March 2021 to 5.68 million in March 2022, while credit card transaction volumes increased from 142,350 to 230,910 transactions over the same period.