Know your options
Do you need a place to save your money? Do you need to borrow money? Do you need to send money to a relative in another country? Do you need a very secure place to store something valuable? If you answered “yes” to any of these questions, you need a Financial Institution or a bank; most people do. Financial Institutions are essential in our societies to ease the flow of money in financial transactions that occur at all levels, from the individual saver to the giant corporation.
Banking and financial services allow individuals to deposit funds, transfer money and complete transactions in a secure place with fair terms. Knowing how financial institutions operate and what services they provide is crucial to making the most of your money. Before delving into the nitty-gritty of how financial institutions function, it’s important to understand Uganda’s Financial Institutions and what services they offer:
Uganda’s financial sector is composed of formal, semiformal and informal institutions.
- The formal institutions include Banks, Microfinance Deposit-taking institutions, Credit Institutions, Insurance companies, Development Banks, Pension Funds and Capital Markets.
- The semi-formal institutions include Savings and Credit Cooperative Associations (SACCO) and other Microfinance institutions
- The informal ones are mostly village savings and loans associations.
If you can, save with and borrow from financial institutions, which are regulated and supervised by the Bank of Uganda. The advantages for you in saving and borrowing with these financial institutions are:
- Bank of Uganda’s objective is to ensure the financial soundness of financial institutions. This means that Bank of Uganda checks on financial institutions to make sure that your money is safe with them.
- To further protect your savings, all savings in financial institutions regulated by Bank of Uganda are insured and protected up to UGX 10 million per account by the Deposit Protection Fund of Uganda.
- Bank of Uganda developed the Financial Consumer Protection Guidelines to ensure that regulated financial institutions treat their customers fairly. For example, financial institutions have to explain to you everything you need to know about their services and products.
If there are no regulated financial institutions nearby or they don’t serve your needs, you have other options to choose from:
- You can take a loan from a licenced Microfinance Institution (MFI) which is not regulated by the Bank of Uganda
- You can join a SACCO, save with it and take a loan from it.
- You can save and borrow with a Voluntary Savings and Loans Associations (VSLA)
- You can also save with a Rotating Savings and Credit Associations (ROSCA)