How Mobile Money Increases Likelihood of Saving In Uganda

Uganda has been classified as one of those countries with a low saving culture. However, a new study on Mobile Money and Individual Savings in Uganda carries some optimism. In Musa Mayanja Lwanga and Annet Adong’s paper; “A Pathway to Financial Inclusion”, mobile money could affect people’s attitudes towards saving.

According to the study, those who were registered mobile money users were far more likely to save with mobile money compared to their unregistered counterparts. Mobile money usage was also discovered to be more prevalent in urban areas than in rural areas. This was attributed to lower incomes in rural areas, thus a lower propensity to save. The poor infrastructure in rural areas in the form of limited electricity and telecommunications services discouraged the use of mobile phones. As a result, many rural dwellers did not take on mobile money as a saving mechanism.

However, there were other factors that also played a great deal in the limited use of mobile money as a saving mechanism. These included the legal limitations that do not incorporate mobile finance services into mobile money. Another hindrance was the nonexistence of interest payments on mobile money savings.

The evolution and adoption of Mobile money in Uganda has in the past driven financial inclusion in the country. The introduction of mobile money in 2009 resulted in an increase in the proportion of the population using formal nonbank financial services from 7 (in 2006) to 34 percent. Use of informal services fell from 42 percent to 31 percent between 2009 and 2013.

As of 2013/2014, there were 17.6 million mobile money account holders in Uganda compared to 19.5 million mobile phone subscriptions in the same time frame. Mobile Money agent statistics show that there are 1790 agent stands compared with 477 commercial bank branches and 699 Automated Teller Machines (ATMs).

For a government that’s aiming towards Financial Inclusion and increase in saving habits, mobile money could provide an easier path. If government promotes mobile money registration, it could Uganda’s action in the right direction. However, this can only be actualized on the backdrop on better infrastructural services especially in areas lagging behind. Secondly, the paper notes; “the government should develop the appropriate institutional and legal framework that fosters the growth of mobile money beyond mobile payments to encompass all spheres, including mobile finance.”