Financial Literacy: Empowering Individuals to Make Smarter Financial Decisions

The 2023 Financial Literacy Survey conducted by the Bank of Uganda revealed that  60% of Ugandans were unaware of key financial concepts such as budgeting, credit, and investment. With inflation rising and the cost of living increasing, it is crucial to understand how to manage personal finances effectively.

Across the globe, including in Uganda, we face a gap in understanding of personal finance. In the ever changing world, Inadequate financial knowledge is detrimental to our future especially financial prosperity and independence as this can lead to poor decision-making, such as accumulating debt, living beyond one’s means, or missing opportunities to save and invest for the future.

“Financial literacy is not just about balancing a budget, it’s about being equipped to make decisions that align with one’s long-term goals,” Joanita Nansubuga , the Head of Compliance at FINCA Uganda. “The ability to make informed choices around spending, saving, and investing can prevent people from falling into the trap of debt, and it can also help them build wealth,”  She added.

Several local organisations including; FINCA Uganda are working to promote financial education in rural communities and refugee settlements through workshops, digital business platforms, and community outreach helping them understand the basics of personal finance, entrepreneurship, and smart money management.

By teaching individuals how to create and stick to a budget, understand interest rates, save for emergencies, and make informed investment decisions, these programs equip people with the tools they need to achieve financial security, according to Nansubuga.

In Uganda, financial illiteracy is often compounded by factors such as limited access to formal financial services, lack of infrastructure in rural areas, and a general mistrust of banks and financial institutions. Furthermore, there is a tendency to prioritise immediate needs over long-term financial planning, which can hinder people from saving or investing.

One of the promising avenues for improving financial literacy in Uganda is technology. With the rise of mobile phones, mobile money platforms, and digital banking services, more people are gaining access to financial services that were once out of reach.

 In 2023, Uganda recorded a 43% increase in mobile money subscriptions, making it easier for individuals to save, send money, and access credit through their phones. 

“Through mobile money platforms like MTN Mobile Money and Airtel Money, people can now save, pay bills, transfer funds, and even access micro loans, all from the palm of their hands. These platforms are also becoming more integrated with educational resources that help users understand how to make better financial decisions,” said Nansubuga.

Digital platforms are increasingly being used to offer financial literacy courses and webinars. Platforms like Finscope Uganda and Money Management Hub provide accessible, interactive resources to educate individuals about budgeting, debt management, and investment strategies.

As the global economy continues to evolve, being financially literate will not only help individuals achieve personal goals but also contribute to the overall economic growth and prosperity of the nation.

The writer is  the Head of Compliance at FINCA Uganda.