What financial inclusion is teaching us about Uganda’s economy

• Financial inclusion depends as much on trust and behaviour as it does on technology.

• Digital financial services can cut the hidden costs of banking for rural and low-income Ugandans.

• Savings groups can contribute more to economic growth by building long-term capital and investing in productive assets.

• Financial literacy, mobile connectivity and responsible access to credit are essential to turning financial access into lasting prosperity.

By Abdallah Aziz Epalat

It is easy, from inside the formal financial sector, to define inclusion in terms of accounts opened, transaction volumes or people reached. But when you work closely with communities that have traditionally operated outside conventional banking, a different picture emerges.

The biggest lesson is that financial inclusion is not primarily a technology problem.

It is a trust, behaviour and productivity problem. That matters for both the financial services industry and the wider economy. Trust comes before transactions.

Working with Wendi, Pearl Bank’s digital wallet, and thousands of SACCOs, savings groups, farmers and small traders has changed the way I think about financial inclusion.

Underserved customers are not necessarily unwilling to use formal financial services. Many have developed systems that reflect the realities around them.

Savings groups have operated for decades through physical meetings, cash collections, handwritten records and trusted officials. These systems are familiar and accessible, but they also create vulnerabilities.

When one individual holds group funds, members depend heavily on personal trust. Poor record-keeping can cause disputes, while weak governance can undermine otherwise successful groups.

The lesson for the industry is that technology creates the greatest value when it strengthens trust rather than simply digitising transactions.

Clear records, multiple approvals and clearly defined ownership of group funds improve confidence. That confidence is economic infrastructure. People are more willing to save when they trust the system holding their money.

A second lesson is that we often underestimate the true cost of conventional banking for rural and low-income customers. The cost is not only the transaction fee.

Consider a farmer who must leave the garden, travel to town, pay transport costs and spend hours waiting to complete a transaction. For a salaried professional, two hours at a bank may be an inconvenience. For a farmer or market trader, those hours can mean lost production and income.

The industry therefore needs a broader definition of affordability. A financial service is affordable when it reduces the total cost of accessing money, including transport, time, paperwork and transaction charges.

When millions of people spend less time moving money and more time farming, trading and producing, the wider economy also becomes more productive.

Saving is not enough. Perhaps the most interesting lesson for us at Wendi has come from observing how savings groups use their money. Many groups save throughout the year and then distribute almost everything among members at the end of the cycle.

The benefits are real. Members pay school fees, buy livestock, acquire land or start small businesses. But the following year, many groups start again from zero.

This raises a bigger question: Should financial inclusion stop at helping people save, or should it help them accumulate capital?

The stronger groups are often those that retain part of their savings, invest collectively and increasingly distribute returns rather than consume the original capital.

That transition could be transformative because Uganda does not only need more savers. It needs millions more owners of productive assets. If savings groups can gradually move from annual distribution towards permanent capital accumulation, they can become important vehicles for local investment.

Financial literacy must follow access to financial services. Access without financial capability creates another challenge.

Pearl Bank has been deliberate in driving the financial literacy agenda while delivering on its promise of fostering prosperity for Ugandans. This is implemented through its high-impact goals of driving sustainable financial inclusion and stimulating entrepreneurship through products and services tailored to customers’ financial needs.

As more people gain access to credit, savings products and government programmes, they also need to understand debt management, budgeting, investment, interest and the difference between consuming capital and deploying it productively.

The lasting economic impact depends on whether beneficiaries invest productively, manage debt responsibly, build sustainable enterprises and eventually recycle that capital through repayment and reinvestment. This is particularly important when we consider initiatives such as the Parish Development Model, which operates across the country.

Putting money into communities is only the beginning. Financial institutions should therefore stop seeing financial literacy as an optional corporate social responsibility activity. Education must become part of the financial product itself.

Another lesson is the growing importance of even the simplest mobile phone. A person without access to a registered phone number is increasingly excluded not just from communication, but also from payments, savings, credit and government programmes.

A basic handset is becoming almost as important to financial participation as proximity to a physical bank branch once was. Digital connectivity, identity systems, telecommunications and financial services are becoming part of the same economic infrastructure.

Ultimately, the financial industry may also need to rethink how it measures success.

Customer numbers matter. Transaction volumes matter. Deposits matter. But they are inputs. The real outcomes are whether farmers produce more, traders expand their businesses, households become more financially resilient and savings groups accumulate productive assets.

My experience working with Wendi has convinced me that Uganda’s next financial inclusion challenge is much bigger than putting people onto digital platforms.

The opportunity is to turn access into capability, savings into capital and millions of small economic actors into stronger participants in Uganda’s growth story. This is the larger transformation that Wendi has helped make more visible.

We believe that when individuals and businesses grow, Uganda prospers.

The writer is the Manager, SACCOs at Pearl Bank