No sooner had I sat down at the boardroom table when my colleague started to paint the landscape, revealing to me the extent to which financial exclusion was effectively choking opportunities for the vast majority of the people of Uganda to improve their own lives, 82 per cent to be precise. With only as many as ten percent of the people having proper bank accounts and another eight percent enjoying the benefits of owning accounts in microfinance institutions (MFIs), and savings and credit cooperatives (SACCOs), there was a lot of work to be done to achieve financial inclusion.
However at the same time mobile money was beginning to take off in Uganda. And it seemed to be the way ahead for the multitudes of the unbanked, many of whom know little about banks. Some would know from their own experiences, others from stories they’d heard from friends and relatives, enough to know that banks were probably not for them.
People in the village may have had their first experience with a bank when they had to travel to Kampala from the village in a shared taxi to pay school fees. They had to queue, sometimes for hours.
They might also have noticed that notions of self respect and dignity seemed different in the big town or city. Those who lived in the village pondered on how to spend their time and energies economically, so as to sync with the cycles of nature, managing how they would work during daylight hours, take advantage of cool times and hot times, wet and dry seasons. They were diligent to care for the soil, plant and attend to their crops, harvesting, preserving, and preparation of food. No one needed to tell them that it was the farmer that made the world go round.
But now they were hearing from neighbours who, between hoeing the garden and feeding the chickens, had paid school fees by mobile phone, right there in the village. Mobile money agents, foot soldiers for one of the telecom companies, were telling them about how they could enjoy the benefits of opening their own mobile payment accounts. They were learning that they could transact business and do things in a much simpler, straight forward, friendly and honest way more suitable to their way of life.
I had understood much of this before, but it was hitting me now, how critically important it was to the development and betterment of people’s lives, to the welfare of their families, communities, and, eventually, to the health of the country, that these kinds of financial services be made easily available to all. The government, aware of the need, was lowering the barriers that had previously excluded their participation in the formal economy. But there is still some ways to go yet to make it universally available in the truest sense.
Regulatory frameworks would need to be re-examined to balance security issues against inclusion principles; preserving a secure and competitive environment for the sake of benefiting the poorest in the land. If done right, mobile banking and payments could create wealth equitably for all.
My colleague had drawn a figure on the boardroom whiteboard representing a person in the village who had been effectively disenfranchised through being deprived of financial services. I was getting a picture that there was untapped wealth here that could turn into something like a gold rush. Mobile financial services would help people make better use of their time and minimal resources, better enjoying the richness of life around them.
All kinds of innovative new services could eventually allow this to happen. The provision of mobile money could greatly improve the quality of people’s lives here, and I was getting excited at the prospect that we were tantalizingly close to witnessing these changes. I had a sense of urgency about it; how could we make it happen sooner?
I said in an interview on CNBC Africa a couple of years ago that I thought mobile money would be a driver for the creation of all kinds of innovative new services, mobile health, mobile agriculture, mobile education. M-Pesa had just then begun to take Kenya by storm. But now it seemed
Uganda was strategically placed to become one of the most interesting places on God’s earth for the development and creation of new mobile money products and services. It’s still early days, yet financial growth is obviously taking place at an unprecedented pace and at an unexpected level; testimonials are wafting in the wind about how rural farmers, tea estate migrant workers and their families are poised to benefit from the resulting wealth creation.
And it is becoming increasingly clear that inclusive national economic development is impossible without a comprehensive grassroots-based financial infrastructure in place. This begs the question, of the banks, MFIs, SACCOs, Bank of Uganda, NGOs, SMEs – and mobile money services providers: “What is your financial inclusion plan?”
Daniel Stern is the director of UConnect