Financial Literacy became a major public policy concern in advanced, developing and low-income economies in the aftermath of the global financial crisis. Limited knowledge of Financial Literacy was identified as one of the factors that led to the global financial crisis.
As a result, Financial Literacy was adopted as one of the instruments in the toolkit for preventing financial crises.
According to the Bank of Uganda (BoU), financial literacy is defined as having the knowledge, skills and confidence to manage one’s finances well, taking into account one’s economic and social circumstances.
Financial literacy is about personal finance management and does not include how to manage a business. However, being able to manage one’s finances is an essential step towards starting or running a business.
It addresses the knowledge gaps surrounding making wise financial decisions thus empowering recipients to start at the household decision-making level and ultimately influencing significant economic stability given the domino effect of responsible financial management.
Uganda drafted a strategy for financial literacy in the country 2017-2022 which will help ensure that there is a more comprehensive, more sustainable and more effective range of programmes than has previously been the case and avoid unintended gaps and unnecessary overlaps.
The strategy, according to BoU aims to improve people’s knowledge and understanding but the ultimate aim is for people to behave in a financially capable manner.
While delivering his remarks at this year’s Annual Financial Inclusion and Financial Literacy Forum, Mr Michael Atingi-Ego, the Deputy Governor, provided the genesis of the National Financial Inclusion Strategy (NFIS).

“The Bank of Uganda and the Ministry of Finance, Planning and Economic Development launched the first National Financial Inclusion Strategy (2017– 2022), supported by the Alliance for Financial Inclusion in October 2017. The strategy provided for the convening of an annual financial inclusion forum as an avenue to share knowledge, discuss policy interventions and obtain stakeholder feedback on financial inclusion developments”, said, the Deputy Governor
Financial literacy can play a critical role in the attainment of the sustainable development goal (SDGs). These are a collection of 17 broad and interdependent global goals set by the United Nations in 2015 which cover social and economic development issues including poverty, hunger, health, education, climate change, gender equality, water, sanitation, energy, urbanisation, environment and social justice.
In addition, it provides knowledge, skills and confidence that lay the foundation for improving the livelihoods of Ugandans and therefore increasing access to financial services, which is the basis for enhancing financial inclusion and economic prosperity.
Empirical research suggests that there is a clear causal relationship between Financial Literacy and Financial Inclusion.
A report from BoU indicates that financial Literacy positively influences financial behaviour such as managing expenditures, planning for retirement, saving consistently and with a plan, stock trade and holding, wealth growth and management, entrepreneurship, better financial practices, prudent investment decisions and debt management.
Consequently, Financial Literacy has been identified alongside Financial Inclusion and Consumer Protection as a triad of variables that have a vital bearing on the stability of the financial system and by extension contribute to economic prosperity.
Financial literacy is relevant for everyone in modern society regardless of income level, education, age, occupation, graphical location, or gender. For example, everyone needs to understand how to make a budget, why and how to save, borrow responsibly and avoid becoming over-indebted, make informed choices between different financial products and services, and plan for old age.
Unfortunately, BoU reports that many people in Uganda do not have the knowledge, skills and confidence to be able to do these things. As a result, many of those who could afford to save do not do so, many people are heavily indebted and others are not benefiting from financial products and services which could help them to lead more prosperous lives.
According to the Finscope survey 2018, formal financial services uptake stood at 58% partly driven by digital payment systems; mainly mobile money. The major barriers to financial services uptake were insufficient money to justify uptake, limited awareness, and distance from a supervised financial institution, lack of identification among others
To measure the level of financial capability in the country, BoU carried out a Financial Capability Survey (FCS) in 2020 as an integral part of financial literacy strategy formulation and implementation.
The survey resulted in an overall score of 50.4 per cent, with a higher score for males (52.6%) compared to females (48.3%). The constituent contributions were financial behaviour, which weighed more than half of the overall financial capability score, while financial knowledge contributed nearly one-third of the score.
Financial attitude contributed one-sixth of the total score. As such, it was recommended that programmes to enhance financial capability should be directed towards a change in financial attitudes.
Challenges in conveying financial literacy
Low levels of literacy and numeracy compound the challenge of seeking to improve current levels of financial literacy. Another difficulty concerns the number of languages spoken in Uganda which means that any written or oral communication needs to be transmitted into a range of languages if it is to be accessible to the great majority of the population.
BoU notes that even people who have good financial management skills often find it challenging to manage their finances well. For those with few, if any financial management skills, tackling even relatively straightforward tasks, such as opening a bank account- can be overwhelming. People often find money issues confusing, daunting and worrying,
Additionally, many people are likely to recover from financial illness as more insurance firms and commercial banks continuously pass on key-turning financial knowledge of saving and investing in highly-rewarding ventures.
Samuel Matekha, the Head of Communications at Diamond Trust Bank, says many Ugandans are suffering financially because of not utilizing resources around them that can fetch additional income to their pockets.

“Think about it. A girl is earning 100,000 shillings and spends it on clothes and shoes, having no plan of investing this money and turning it into better value. How about if you got an insurance policy? How about opening a digital savings account in a bank?” wondered Matekha.
Matekha advises Ugandans to position themselves in opportune platforms having skilled entrepreneurs and investors that can help in building and executing innovative ideas. He encourages planning for time accordingly.
“Don’t wait for the job to pay you, build your finances and with a positive mindset, invest them once you earn,” says Markham.
Jane Amuge Okello, Operations Director at Uhuru Institute for Social Development notes that opportunities are got by the ready innovative humans who have embraced practical knowledge.
“There is a variety of things that can be invested in, like the Agribusiness sector, products in insurance, and small-scale businesses, among others. Let’s work and reduce income generation and transit to wealth creation,” says Amuge.