Where There is No Banker - Financial Systems in Remote Uganda

The authors state that the objective of this paper is to provide insight into the financial mechanisms that societies or groups develop in absence of formal financial institutions. For the purpose of the study, the authors chose Nakasongola and Mubende districts in Uganda.The sampling groups were chosen with the help of local council. Several research tools such as focus group discussion, preference ranking etc. were used for the purposes of the studying both savings and credit mechanisms. The paper examines how the savings and credit mechanisms affect and impact each other and how the inter-relationship has affected the usage level of each mechanism.

The paper states that some ways by which people save are:

• Hiding money at home;
• Buying cattle;
• Joining a saving group.

They use some of the following credit mechanisms:

• Taking loan from relative or friend;
• Going to a money lender.

One of the key findings stated in the paper is, although the sample group would like to have access to reliable, cost-effective and accessible formal financial institution, it will need to build its credibility over a long period of time.

The authors conclude by recommending the following to the microfinance institutions seeking to establish themselves:

• Create linkages to the existing informal mechanism e.g. using cattle as collateral;
• Invest in information and training strategies;
• Reduce cost of accessing financial services;
• Adopt multi-sectoral approach.