Data from Twaweza’s new Sauti za Wananchi survey, a nationally-representative, high-frequency mobile phone panel survey, which captured 1,925 respondents between October 6-13, 2017, has revealed major facts about household finances in Uganda. Eagle Online brings the readers the issues captured:
According to the survey, the most serious problems facing Ugandan households are financial. One out of four citizens (26 per cent) say the most serious problem facing their own household is poverty or inequality, while one out of eight (15 per cent) mention hunger / drought or the high cost of living (14 per cent). Public services are the next concern, including water (13 per cent), health (10 per cent) and education (9 per cent).
At national level, there are fewer consensuses. One in six citizens (16 per cent) say the most serious problem facing Uganda today is health, more than for any other issue, but poverty and inequality (14 per cent) and implementation of the constitution (13 per cent) are cited by similar numbers. Several other issues are also named by significant minorities, including corruption (9 per cent), hunger / drought (9 per cent), and water (8 per cent).
The survey shows that 5 out of 6 or 84 per cent of the citizens interviewed are unhappy with the country’s economic management. “The same economic concerns are evident in citizens’ levels of satisfaction in the direction Uganda is heading, the report of the survey shows.
It also indicates there are also high levels of dissatisfaction with the country’s trends on corruption (80 per cent) and employment (71 per cent). However, the report says a majority (62 per cent) are satisfied with the country’s progress on improving security.
The report further reveals that one out of two citizens (49 per cent) had, in the three months before the survey, gone a whole day without eating due to a lack of money or other resources.
Larger numbers experienced difficulties with food security over the same period. “Five out of six (85 per cent) have been worried that they would run out of food, and three out of four (75 per cent) had to skip a meal,” says the report.
However, the report says there is considerable variation in experiences of food security across Uganda, although the number of people going without food for a whole day remains high across groups. 45 per cent of the urban areas and 51 per cent of the rural areas had people go for a whole day without food. Wealthier households had 39 per cent and poorer ones had 60 per cent often go hungry.
The sharpest variations come when considering specific sub-regions. In Karamoja, five out of six residents (85 per cent) went a whole day without food in the three months before the survey, and the numbers are also very high in Central (75 per cent), and Teso (73 per cent). In comparison, one out of ten residents of Lango (9 percent) and three out of ten in Bunyoro (30 per cent) and West Nile (30 per cent) experienced this problem.
The survey also established that only 1 out of 5 or 22 percent of the households had sufficient income to cover their daily needs. This number is consistent across urban (23 per cent) and rural (22 per cent) areas, and wealthier households (28 per cent) are slightly more likely to say their income is sufficient than poorer households (20 per cent).
The report says that some households look for alternative means when they run out income. “When a household’s income comes up short, various coping strategies are used, including borrowing money or obtaining food and other supplies on credit (43 per cent), cutting back on consumption (26 per cent), or asking for assistance from family or friends (15 per cent),” it says in part.
In the hypothetical situation of being given a gift of UGX 350,000 by the government, most citizens interviewed said they would spend on average Shs185, 000, or a little over half the amount, on starting or boosting a business venture. Substantial amounts (Shs59, 000 of the hypothetical gift would also be spent on boosting agricultural productivity and Shs44, 000 on school fees.
“Much smaller amounts would, on average, be spent on day-to-day living expenses, including Shs20, 000 on food and Shs2, 000 on non-food items such as fuel and phone credit,” reads the report.
The report of the survey reveals that only one in six citizens (17 per cent) of the citizens interviewed has a bank account, either alone or jointly with another person. Men (22 per cent) are nearly twice as likely as women (12 per cent) to have an account, and those in urban areas (25 per cent) are much more likely to have an account than those in rural communities (13 per cent).
The report shows there are also strong links with age and wealth, with young people (6 per cent) and the poor (6-7 per cent) particularly unlikely to have a bank account. The wealthiest citizens (37 per cent) are the most likely to have bank accounts.
The most commonly mentioned reason for having opened a bank account is for savings or keeping money safe (64 per cent) while the most common reason given for not having an account is a lack of sufficient funds to make it worthwhile (92 per cent).
“Looking back at earlier data collected, there has been no significant change in the proportion of citizens holding bank accounts in Uganda over the past few years; there may even have been a small decline. The Financial Sector Deepening Trust found that 21 per cent had a bank account in 2009,” the report says. This, the report says, suggests access to formal banking services has been slower than the rate of population growth.
The National Financial Inclusion Strategy, highlights a need to focus on people of particular groups who are more financially excluded than others. The Sauti za Wananchi data shows there is lower ownership of bank accounts among the women, rural communities and young people between 18 to 24 years.
Borrowing money in the past five years
According to the report, one out of three citizens (35 per cent) of the citizens interviewed said they had taken a loan or borrowed money in the past five years. This number is higher among men (40 percent) than women (29 per cent), but consistent between urban (34 per cent) and rural areas (35 per cent).
The biggest source of loans are informal savings groups (30 per cent of those taking a loan) and Savings and Credit Cooperatives (SACCOs; 23 per cent).
Most loans are taken either to invest in a business venture (33 per cent) or spend on school fees, education or training costs (33 per cent).
Owning a mobile money account
According to the survey, a clear majority of citizens (68 percent) make use of mobile money services. But this is higher in urban areas (82 percent) than rural (63 percent). The figures are slightly higher among men (71 percent) than women (66 percent).
“There is no clear link between age and the use of mobile money, but wealthier citizens are more likely to use such services (87 per cent) than the poor (48 per cent),” the report says, adding that mobile money services are dominated by MTN Mobile Money: just over half the adult population interviewed (54 per cent) report using MTN. This is followed by Airtel Money (25 per cent). Other mobile money services have very low reported user levels.
The most common use of mobile money services is to send and receive money and Six out of ten citizens (62 per cent) report using mobile money for this purpose. A significant number (26 per cent) also use the service as an alternative bank account – a simpler way to keep money safe. Further, one out of ten citizens (9 per cent) report receiving their salary or wages through mobile money services.
One out of three citizens (32 per cent) report having borrowed money or airtime from MTN extra, and one out of four (25 per cent) has done so from Beerako.
A clear majority of citizens are satisfied by the value for money offered by mobile money services. Just under half (46 per cent) say the price is just right, and one out of five (22 per cent) say it is so cheap as to cause doubts about the quality of the services offered. One out of three say the service is too expensive (32 per cent).
The report notes that the rapid take-up of mobile money services since their launch in Uganda in 2009, rising to 68 percent of the population in just eight years, can be contrasted with the slow or stagnant take-up of bank accounts.
Access to mobile money services outpaces not just formal banking, but other forms of financial products as well. While two out three citizens (68 per cent) make use of mobile money services, less than one out of six has a debit card (14 per cent) or an account with a SACCO (14 per cent), and less than one out of twenty has an account with a Microfinance Institution (4 per cent), a pension (2 per cent), insurance product (2 per cent) or credit card (1 per cent).
People considered financially included by the survey are those who have an account with either a bank, SACCO or Microfinance institution (MFI), or use mobile money services. Three out of four citizens (73 per cent) are financially included using this definition; made up of three out of ten (28 per cent) who have an account with a bank, SACCO and/or (MFI and a larger proportion (44 per cent) who have no accounts with any of these institutions but who do have a mobile money account.
Financial inclusion is slightly higher among men (75 per cent) than women (71 per cent), and substantially higher in urban areas (85 per cent) than rural (68 per cent). The young and old are less likely to be financially included than those aged between 25 and 54, and there is, unsurprisingly, a strong link between wealth and financial inclusion.
Two groups are particularly dependent on mobile money services to increase their financial inclusion: women and the young. Both groups have very low levels of access to formal financial institutions (banks, SACCOs, MFIs), but to some extent make up for this gap through higher levels of access to mobile money.
The report says: “We are still in the relatively early stages of mobile money uptake and we do not yet have a clear sense of the possible implications of a population that is primarily financially included only through mobile money.” What are the long term implications for the country’s overall banking sector? It asks. Are mobile network operators best placed to manage so much of the nation’s money? Is there a connection between greater financial inclusion and food security?”
It calls for the tackling of the above questions. “These are some of the questions that are worth exploring as part of Uganda’s public policy discussions,” it says.