The informal sector is the backbone of Uganda’s economy, powering livelihoods, fueling local commerce, and playing a crucial role in the country’s development.
These people work tirelessly every day to earn a living, yet most operate outside the formal financial system.
They earn daily incomes, often in cash, and many lack access to bank accounts, loans, insurance, and savings services.
Although the informal sector contributes significantly to the country’s economy and employment, financial exclusion continues to affect its growth.
A large number of workers in this sector keep their money at home, in their pockets, or in cashboxes under market stalls.
This method is risky and does not help them build financial stability. Without secure savings and access to affordable credit, it becomes difficult for informal workers to invest in their businesses or respond to emergencies.
Mobile money has become a game changer in recent years. It has allowed many people in the informal sector to store money safely on their phones, send and receive payments, and even access micro-loans.
In urban areas, boda boda riders are now using mobile money wallets to save part of their daily income. Instead of carrying cash, they can store it digitally and withdraw it when needed.
Some platforms even allow them to set aside a portion of their earnings daily and withdraw a lump sum at the end of the week. This method encourages saving and reduces the temptation to spend everything at once.
Market vendors, especially women, are also slowly embracing digital financial tools. Many now use mobile money and agent banking services to manage their daily sales.
Instead of hiding money under the stall or in a bag, they deposit it safely through mobile money agents. Others belong to local savings groups and SACCOs that use mobile phones to collect savings and give out loans.
These community-based models are helping vendors grow their working capital and improve their businesses.
In rural areas, smallholder farmers have traditionally been excluded from banking services due to distance from banks and seasonal income patterns.
However, some financial inclusion programs are introducing mobile apps and SMS-based tools that allow farmers to save, borrow, and access training on financial planning.
These tools are especially helpful during planting and harvesting seasons. Farmers can now borrow money to buy seeds and fertilizers and repay after selling their produce. This support helps them improve productivity and prepare better for future seasons.
Small and medium-sized businesses, including carpenters, tailors, and shop owners, also face challenges in accessing finance.
Many of them do not have proper business registration or financial records, which makes it hard to qualify for loans from traditional banks.
As a result, they depend on informal lenders or friends and family to grow their businesses. Some mobile money companies and fintech startups are now using mobile transaction histories to assess the creditworthiness of small businesses.
This approach is slowly opening up new financial opportunities for entrepreneurs who had been left out.
Despite the progress made, several challenges remain. Many people in the informal sector still fear formal banking because they think it is only for the rich or educated. Some find banking procedures too complex or intimidating.
Others live in areas without nearby agents or reliable mobile networks. Transaction fees for mobile money can also be high, especially for people with small incomes.
In some cases, users have lost money due to fraud, poor customer support, or lack of knowledge about how digital finance works.
Financial literacy remains a major barrier. While digital tools are available, many informal workers do not fully understand how to use them effectively.
Some people have mobile phones but only use them for calls and messages. They may not know how to open a mobile wallet, set a PIN, or avoid scams.
This limits the benefits of financial inclusion, especially among older people and those with low literacy levels.
The government and development partners are making efforts to close the financial gap. Uganda’s National Financial Inclusion Strategy is aimed at promoting the use of affordable and accessible financial services, especially among low-income and rural communities.
It also supports the expansion of mobile money, agency banking, and digital financial education. Financial institutions are being encouraged to create simple products that match the realities of informal workers.
For Uganda to achieve meaningful financial inclusion, the focus must remain on designing services that are easy to use, affordable, and relevant.
The informal sector is full of potential. If given the right financial tools, these hardworking individuals can grow their incomes, improve their businesses, and build better futures for their families.
Financial inclusion is not just about access, it is about empowerment and resilience for millions of Ugandans who form the backbone of the economy.