Findings by a team of researchers from the College of Business and Management Sciences (CoBAMS) have recommended that the Government through its agencies should partner with private financial institutions to organise financial literacy trainings to teach households on how to access capital, save and invest in productive ventures. The recommendations were made at a research dissemination workshop for the project titled: Evaluation of the effectiveness of financial inclusion on household’s welfare in Uganda: A case study of Busoga region.

While officially opening the hybrid dissemination workshop held on Wednesday 29^th September 2020 in the School of Business Conference Room and virtually, the Principal CoBAMS, Dr. Eria Hisali thanked the Government of Uganda for funding the project through the Makerere University Research and Innovations Fund (Mak-RIF). He equally commended the Principal Investigator (PI), Dr. Eric Nzibonera and his team on successfully completing their project and achieving the set objectives.

Dr. Hisali proposed four options to ensure that the findings from the study reach a wider audience.

1. Immediately upload the findings on the College’s new working paper series website, which will enable staff to read the document and provide feedback
2. Proceed to transform the working paper into a journal article so as to reach audiences from different parts of the world
3. Proactively review curricular in preparation for the possibility of gradually using research from Makerere as part of course outlines and teaching materials.
4. Take advantage of the College’s planned framework of engaging policy makers formally through policy labs that will be held every quarter.

Presenting the findings from the project, the PI Dr. Nzibonera thanked the Principal for his advice and his research team for their hard work. Other members of the team that sampled 430 heads of households included the Dean School of Business Dr. Godfrey Akileng and Ms. Hellen Nambi.

“Financial Inclusion is a process through which financial services are delivered to the disadvantaged and low-income sections of the society on a timely basis and at affordable costs” defined Dr. Nzibonera, adding that “the relationship between financial inclusion and poverty alleviation has been widely discussed but only few studies explore the effect of financial inclusion on household welfare.”

He therefore shared the twofold objective of the project as; to establish the extent to which the rural households engage in financial inclusion and to examine the nature of household welfare and establish the extent to which financial inclusion enhance households’ welfare. The latter, he noted, would help guide policy recommendations to the Government and private sector.

Dr. Nzibonera noted that financial inclusion is measured through establishing the extent of availability and accessibility to financial services, affordability, usage and quality of financial products. He added that household welfare is improved through access to quality education and health services, improved shelter, food production and consumption as well as access to information.

The findings on availability and accessibility to financial services revealed an interesting pattern. “Whereas households still find it hard to access formal financial services for savings and deposits’ and services provided by bank agents are irregular, they easily access mobile money services for withdrawals and payments” he shared.

In terms of affordability, findings revealed that although the cost of accessing financial institutions and withdrawing funds from mobile money agents is still high, the cost of accessing financial services through bank agents and carrying out financial transactions through financial institutions is affordable.

Investigations into the usage and quality of services showed that households find it easy to use mobile money and village SACCOs to make deposits and payments for school fees. Despite the ease of use, households find it hard to save with banks, microfinance institutions and SACCOs.

“The accounts opened in banks and SACCOs are not frequently used and the services offered by banks or their agents are not regular” added Dr. Nzibonera.

The research team’s findings showed that financial inclusion has partly enhanced the welfare if households in Busoga.

“The study revealed improvement in income levels as a result of accessing loans from financial institutions and SACCOs. The number of school going children has also increased as a result of borrowing opportunities from SACCOs” said the PI.  

Dr. Nzibonera added that although it is easy for households to access information about financial services relevant for welfare improvement, “there is limited income to enable households gain access to good healthcare and carry out construction.”

The team therefore made the following policy recommendations;

1. Financial and microfinance institutions should employ agents to at least every parish or sub-county to grant households easy access to financial services.
2. Government through District commercial officers should encourage households to organise into village savings and credit cooperative organisations (SACCOs) at parish level and identify unique financial products that promote savings and investments for different groups.
3. Government agencies such as the Micro Finance Support Centre and Operation Wealth Creation (OWC) should partner with private financial institutions to organise financial literacy trainings for households on how to save as well as identify and invest in productive investment ventures.
4. The cost of financing should be reduced to rates that are affordable by households. This will improve household income for both consumption and investment.
5. Financial institutions should design financial products that would enable households to access funds for construction as long as there is a clear payment plan and evidence of source of income for loan repayments.

Speaking on behalf of the Mak-RIF Grants Management Committee (GMC) Chairperson Prof. William Bazeyo, Dr. Helen Nambalirwa Nkabala congratulated the research team upon the successful dissemination and thanked Dr. Hisali for proposing policy labs as a means of engaging policy makers.

She urged Dr. Nzibonera as a firsthand witness on the state of financial inclusion to go beyond the policy recommendations and draft a successor project proposal on solutions that can clearly and precisely take financial inclusion at the grassroots level to the next level.

“You are the right people to guide Government on what unique product the community will get and how it will help improve their financial knowledge” she recommended.

Dr. Nkabala thanked the Government for funding research and innovations that inform national development priorities and the University Management for creating an environment conducive to conducting research. In the same breath she thanked the GMC for providing oversight and the GMC Secretariat for ensuring that the projects run smoothly.

“This is a clear example of taking the Ivory Tower to the community” she concluded.

Representing Mr. John Peter Mujuni, Executive Director, Microfinance Support Centre (MSC) and Chief Guest at the dissemination, Mr. Godfrey Mangeni thanked the research team for a job well done, and pledged take the findings and policy recommendations very seriously.

“Please share these findings so that we can work with you in other areas like Bukedi and Karomoja to improve our services” he remarked.

Mr. Mangeni shared that there still remains a lot of work to be done to support Government’s Parish Development Model in the Busoga region despite MSC’s zonal office in Jinja and a satellite office in Iganga and as such, called upon researchers from Makerere to share their expertise.

Delivering the concluding remarks, Dr. Akileng in his dual capacity as Research Team member and Dean noted that Financial Inclusion is an important topical issue for national development and therefore expressed happiness that the Government had found it fitting to fund the project.

“As a nation, we need to reflect reflect on Government interventions aimed at addressing gaps of financial inclusion that financial institutions have not been able to fill” he rallied. This reflection, he said, ought to be guided by the question ‘Where have been the successes in social impact and where have been the failures?’

He noted that although Financial Technology (FINTECH) is the buzzword when it comes to improving service delivery, its success is hinged on how easy it will be for end-users at the grassroots level to adopt the various solutions offered.

“I believe that a highly informed community with the ability to easily access financial services and mobilise savings is key to the improvement of household earnings as well as boost demand and productivity in the country” he added.

In the discussion that preceded the concluding remarks, Mr. John Emoi, the Manager Investments at Uganda Development Bank who joined the conversation virtually had expressed his organisation’s keen interest in the days topic and research findings. Particularly, he had urged the research team to include the development of FINTECH models as a means of disseminating financial services among their policy recommendations.

In conclusion, Dr. Akileng called for affirmative action for business teaching institutions, “Business touches every sector and it is important to appreciate that if we must make money in any sector, we must understand business.”