Uganda’s Minister of Finance, Matia Kasaija has Wednesday in Kampala officially launched the shared agent Banking System which is an initiative of member banks of the Uganda Bankers Association (UBA) in partnership with other agencies to bolster financial inclusion in the country.
Addressing guests at the launch which took place at UBA headquarters in Muyenga Kampala, Kasaija said the Agent Banking is in line with government’s efforts to bring majority of Ugandans into the financial system, adding that many remained unbanked or under banked.
The electronic system is an extension of banking services outside the conventional banking branches, where a licenced and supervised financial institution contracts a third party or agent, who is approved by the Bank of Uganda (BOU) in December, 2017, to provide permitted financial services on its behalf.
The minister said the current situation where majority of Ugandan adults are unbanked is not good for the country’s development in terms of revenue collections as well as extending credit to the private sector.
The Agent Banking platform will enable 25 commercial banks in Uganda to extend their services to remote areas where they expect also to increase access, address cash challenges and provide a range of products and services that are expected to bring some of the rural people into the country’s financial system.
Seven banks are already connected on to the system. They are; Stanbic Bank, Barclays Bank, Bank of Africa, Diamond Trust Bank, DFCU Bank, Housing Finance Bank and GT Bank. 14 more banks in the country are at different stages of the integration process and securing the necessary regulatory approvals, officials say.
UBA and Eclectics International early last year signed an agreement where the latter was to design, develop, deploy and operate the inter-operable shared platform that connects all member banks to the agent network spread across the Country.
Supported with agents, the Agent Banking Platform is now expected bring the big percentage of the country’s informal sector into the financial system where monetary policy and targeted interventions can be directed.
The platform will enable all agents provide agent banking services to existing customers of all the UBA member banks as well as bring on board the unbanked, unserved and underserved segments of the population for financial services. Also under the arrangement, banks will continue to drive the recruitment of customers and marketing of their other products and services.
The benefits that accrue from the establishment of the shared Agent Banking Platform include increased points of presence at a reduced cost of expansion with opportunity to upgrade technology at minimal cost as well as job creation.
Speaking at the official launch, UBA Executive Director, Wilbrod Owor said the Agent Banking platform was a major achievement for the banking sector in the country. “This is a major milestone for the banking sector in Uganda. Extension of banking services and bringing on board the bigger proportion of our population to the formal banking system is the ultimate objective of this initiative.”
He added The Shared Banking System is part of the efforts to support the National Financial Inclusion Strategy that aims to bring more Ugandans into formal financial system.
The Acting CEO of new company-Agent Banking Company, Richard Yego said the agents being targeted are petrol stations, supermarkets, permanent mobile money agents, pharmacies, retail shops or hardware stores that are fully licenced and have been in existence for one year.
The Group Managing Director, Electics International, Paul Mbugua, said the system is a secure and “interoperable platform that will facilitate access to real time transactions. Explaining how the system works, he said it can be used for cash deposits, withdraws, bill payments among others.
The CEO and Country Manager of Diamond Trust Bank Varghese Thambi, said that the platform will help commercial banks in the country to complement each other in serving more customers. He said that 80 percent of commercial bank branches are within Kampala and surrounding areas, while 20 percent are outside Kampala.
The Managing Director of Bank of Africa, Arthur Isiko, said Shared Agent Banking is one of avenues of delivering cost-effective financial services and products to the public, adding that the new system will provide employment to Ugandans.
Deputy BOU Governor, Dr. Louis Kasekende said platform would lead to faster transactions, stating that Agent Banking is critical in addressing challenges of finance access.
He said the system would reduce operational costs of banks, which in turn makes the bank provide affordable services and products. Finance Minister said the system should bring down interest rates in the years ahead.
The Executive Director of Financial Sector Deepening Uganda (FSD), Jacqueline Musiitwa, while speaking at the launch of the platform lauded UBA for putting the system in place, saying it will helped deepen financial services in the rural areas of Uganda. She said PSD provided USD 1m in support of the project, pledging further cooperation to boost financial inclusion.
But Kasaija said that the launch of the platform requires sensitization of the public especially in the rural areas as well as ensuring that agents work closely with police to safeguard money.
That aside, minister Kasaija has lashed out at Ugandan who borrow money from backs and then fail to pay back, saying they are the reason why commercial interest rates in the country are high.
