Stakeholders calls for digitization of village savings, loan associations to drive financial inclusion
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Stakeholders have called for the urgent need to digitize Village Savings and Loan Associations (VSLAs) and other community groups as a way to drive financial inclusion in the country.
This call was made during a breakfast meeting at Hotel Africana, which focused on discussing insights from the recently concluded second National Microfinance and Savings Groups Conference and exploring strategies to enhance financial inclusion.
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Organised by Care International Uganda in partnership with the Ministry of Finance and Uganda Microfinance Regulatory Authority (UMRA), the discussions centered on how technological innovations can transform the operations of these grassroots financial institutions, ensuring sustainability and enhanced financial inclusion.
Participants highlighted that the digital shift is no longer optional but a necessity for VSLAs and similar groups to remain relevant.
They argued that integrating technology into these savings groups would streamline operations, improve transparency, and enhance access to financial services for millions of members.
Apollo B. Gabazira, the Country Director of Care Uganda, urged stakeholders to explore technology solutions to digitize community groups.
He specifically recommended utilizing the existing digital banking and payment community lending schemes like "Ensibuuko" app for this purpose.
"The future is digital and I don't think anyone who's working in an analog manner on paper today will be relevant in 5-10 years time. So given, this space is moving very fast, so could we look at technologies to digitalise community groups," he said.
He emphasized that maintaining their success requires collaboration in adopting proven and seamless technology.
Gabazira stated that this can only be achieved through collective efforts as stakeholders. He also challenged the team to ensure this digital tool is made accessible to the people.
Gerald Otim, the CEO of Ensibuuko, highlighted the importance of prioritizing digitization to enhance financial inclusion.
However, he expressed concern over the high cost of devices and expensive internet, noting that these challenges hinder the promotion of digital financial services.
In response to the high costs of devices, Mr. Moses Ogwapus, the Commissioner of the Macroeconomic Policy Department in the Ministry of Finance, said they need to identify those which are easy to deal with in terms of incentivizing like laptops, lpads and so forth.
He noted that removing taxes on smartphones does not guarantee a reduction in cost, as the benefits to the final consumer may not be clearly visible.
"The argument is that the prices tend to be stick and that has been proven from other similar actions that government has taken to remove taxes. I recall one time we had strong lobby from UN Women movement to remove taxes on sanitary pads and the prices went high. The speaker of parliament then, Hon. Kadaaga summoned the minster of finance to explain why the prices had gone hard. But the minster told her that the ministry doesn't control prices neither i control interest rates."
While presenting the resolutions from the second National Microfinance and Savings Groups Conference, Dr. Isaac Nkote from MUBS outlined a strategic plan to promote data analytics, artificial intelligence (AI), the Internet of Things (IoT), and machine learning.
He emphasized that these technologies would drive innovation and enhance flexibility, ultimately supporting data-driven decision-making.
He highlighted a key resolution to support and promote the innovation of locally developed apps, noting that this would result in user-friendly and cost-effective tools, applications, and services.
He added that the Ministry of Finance, UCC, NITA Uganda, and other apex bodies would spearhead these efforts.
During the meeting, stakeholders and the government were urged to prioritize the National Payment Switch, spearheaded by the Bank of Uganda.
It was noted that this initiative would help reduce the cost of mobile transactions while also promoting digital innovation.
Another key insight from the second National Microfinance and Savings Groups Conference was the discussion on the Savings Group Policy.
Stakeholders emphasized the need for its finalization, highlighting its importance in strengthening the sector.
In response to the outcry, Commissioner Moses Ogwapus, urged stakeholders to concentrate on developing a smart strategy instead of a policy, and to ensure that partners are committed to implementing the strategy.
He provided examples of government strategies that are working effectively and urged them to change their approach.
"We have the national financial inclusion strategy. Its not a policy yet butwe are implementing it. We have the domestic revenue mobilising strategy and so on."
He promised that government would review the document to assess whether the approach should be changed and, if necessary, convert it into a strategy for launch.
Additionally, Commissioner Isaac Ogupus, also emphasized the importance of collective efforts in addressing barriers and expanding opportunities in the sector.
"I hope that we shall explore options for collaboration and partnerships to carry out the sustainability of the financial inclusion program, emphasizing the importance of collective efforts in addressing barriers and expanding opportunities in the sector."
He urged stakeholders to focus on looking at opportunities for exploring engagement engagement in data management, knowledge sharing and learning to enhance the success of their interventions in the sector.
The commissioner also stressed that at the moment, they should focus on identifying avenues for leveraging information, expertise and mobilization of resources to ensure sustainability of their programs in the financial sector.
