Unlocking Long-Term Savings: The Role of Technology and Multistakeholder Collaboration in Uganda

Categories : Blog


Author: Digital Frontiers Institute

For many working adults in Uganda, their children are their retirement plan. According to the 2021 Uganda National Household Survey, only about 14% of, or one in ten working, Ugandans have a retirement policy, of which even fewer are active. Moreover, those with active retirement schemes are those employed in the formal sector with mandatory requirements to submit to a retirement scheme. In Uganda, where 80% of the working population is employed in the informal sector, there is a significant gap in retirement savings.

Many have blamed the absence of long-term savings on a poor savings culture. However, this observation is not reflected in financial inclusion data. According to the 2021 Global Findex data, 71% of Ugandan adults reported saving within the last 12 months, substantially higher than the 56% Sub-Saharan African average or the 44% average in low-income countries. By contrast, only 39% of Ugandan savers used an account, suggesting a high demand for savings as a financial service but a low usage of formal financial service options.

Others have suggested the lack of digital transformation among the Savings and Credit Cooperative Organisations (SACCOs), whom most Ugandans patronise, is another key challenge. The digitalisation of these SACCOs has been proposed as a solution to increase access and usage of financial services, including long-term savings. Technology would be essential in increasing consumer engagement, disseminating information and providing algorithm-based financial advice. It would also support enrolment and onboarding of customers, simplifying accounts and easing benefits administration.

However, a recent study conducted by FSD Uganda, in partnership with the Uganda Retirements Benefits Regulatory Authority (URBRA), to determine the feasibility of a national long-term savings scheme found there were additional considerations beyond technology that have to be made to encourage formal savings, especially among the informal sector. The study reviewed national pension schemes from neighbouring countries, including Kenya, Rwanda and Egypt. It also used key informant interviews with regulators and providers and a demand-side survey to determine the features of a savings scheme that would be attractive to the informal sector.

The study found that customers would require additional incentives to encourage the uptake of a long-term savings scheme. Some of these incentives included voluntary participation, a government co-contribution, flexible contributions, credit features and access to funds in emergencies. The findings suggest that rather than a silver bullet solution, developing a sustainable long-term savings scheme in Uganda requires a multi-stakeholder ecosystem approach.

Regulators must create a framework allowing scheme development with incentives to attract the informal sector. Given the social benefit and the significant operational cost associated with operating a scheme that allows for small, infrequent cash deposits accompanied by co-contributions, the government has a vital role in successfully implementing such a scheme. However, the private sector still needs to provide its skills and expertise in investing funds, and development partners in disseminating information and providing technical assistance or grants to set up this facility.

The suggestion is not without its challenges, as it requires significant cooperation across different stakeholders, substantial investment and a possible review of existing legislation. Additional challenges exist with a lack of trust in formal financial services. However, if successfully deployed, the value would mean increased social security and retirement savings for many currently vulnerable Ugandans. It would also result in a substantial pool of funds with which investment in productive assets can be made for the development of the Ugandan economy.

In conclusion, retirement savings in Uganda is still nascent. Ugandans, however, have a large appetite for savings facilities and would likely take up formal services if they met their actual needs regarding convenience, cost, and emergency access. While technology can resolve some of these challenges, a multi-stakeholder approach to developing the entire ecosystem is more likely to result in a successful national long-term savings scheme.


By Anthea Paelo

Intervention Manager Business Environment at Financial Sector Deepening Uganda (FSD Uganda)

DFI Alumni and Community Member


Established in 2015, Digital Frontiers Institute is a proud brand of Digital Frontiers. Learn more about the Certified Digital Finance Practitioner (CDFP) programme and find out how to enrol: https://cdfp.digitalfrontiersinstitute.org/