USAID PUSHES FOR RURAL MOBILE BANKS IN UGANDA

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Banking institutions have been urged to start rural mobile banking services to attract more people into the banking industry and help the country instil a savings culture; much lacking in Uganda.

The service that involves making banking transactions through a combination of banking technologies such as Point of Sales Services, Automated Teller Machines, Mini-ATMs (Movable ATMs) and mobile phones does not necessarily require bankers to visit banks.

During a half-day discussion at Hotel Africana on June 21, the United States Agency for International Development (USAID) through its affiliate; Rural Savings Promotion & Enhancement of Enterprise Development (Rural SPEED), called on local banks to adopt mobile banking technology especially in rural areas to ease money access.

The discussion was facilitated by Mr Richard Ketley, the Director of Genesis Analytics, a South African-based consultancy specialising in payments systems for emerging markets.

The discussions focused on the use of available technology to bring affordable banking services to Ugandans in rural areas.

The agency believes the development will help rural Ugandans by instilling a savings culture but importantly, help the country to raise investment funds accessible by the private sector, mobilised by the several banks in the country.

According to a recent Usaid-sponsored study on the possible strategies for an increase in rural access to the formal banking system using ICT solutions, it was found that customers in Uganda pay less to use an ATM than it costs banks to run them.

The study however, reveals that ATM charges are still too high for the majority of Ugandans and even more so, when factoring in the additional charges for using one bank's ATM card on another bank's ATM.

"Running an ATM is a lot cheaper than running a branch, but they are still too expensive for many people to use them regularly. We think the answer is to deploy smaller cheaper machines - so called mini-ATMs in many more locations". Ketley said.

The study sought to identify the demand for financial services in urban and rural, and key constraints to banks in meeting this demand.

  A review of the existing situation revealed that Uganda's current transactions banking environment is restricted to higher income consumers in major urban areas, mainly Kampala and that about 74 percent of the 6.3 million monetised working population do not have transactional bank accounts.

The study concludes that the above is a result of the high cost of infrastructure used by banks to acquire transactions as well as a lack of inter-operable bank networks, which reduces the volume of transactions, increasing transactions costs.

It suggests that banks could change this situation, increasing access to a further 2.6 million individuals (41 percent of the monetised workforce) by reducing cost of account opening by issuing standardized 'starter pack' bank accounts through a range of low cost distribution channels, providing clients with debit cards to transact across all bank and non-bank infrastructure, deploying low cost acquiring infrastructure (POS device/Mobile phone) and intermediating cash into accounts through Mini-ATMs located at cash rich wholesalers.

The Monitor