Development finance instruments


Development Initiatives’ Africa Hub and Development Research and Training (DRT) are convening the next Africacounts Roundtable Forum. The object of the roundtable is to bring together stakeholders to discuss the various instruments of development finance that exist in Uganda. It aims to specifically create an understanding of how the different mix of instruments impacts differently on development outcomes but more importantly how these instruments can work to have more inclusion of the poor.

Date: 10 July 2014

Location: Kampala, Uganda

Background

At the UN Conference on Sustainable Development (Rio+20) held in 2012, Member States called for the prioritization of the sustainable development agenda and the effective allocation of resources for it in accordance with national priorities and needs, while launching efforts towards mobilisation of resources from a variety of sources and its effective use for sustainable development. In their communiqué ‘The future we want’ the UN general assembly recognised that poverty eradication is the greatest global challenge facing the world today that needs to be addressed as a matter of urgency. In this respect, international, regional and national financial mechanisms are all important in contributing to poverty eradication. Emphasis is given to instruments that are accessible to sub-national and local authorities as they are seen to be more likely to reach the poor- these instruments need to be recognised, implemented and strengthened.

In Uganda, the 2013 financial access survey revealed that 85% of the population was served by financial institutions.  While this is an increase from the 2007 survey, it still shows that there exists a population (15%) that has no access to either formal or informal financial institutions. Furthermore, the poorest population remains excluded from such instruments and this is evidenced by their geographical location (most are from Northern Uganda), most live in the rural areas and most belong to the lowest income quintile.

In order to better chart out the eradication of poverty for Uganda, it is important to understand how the different development finance instruments can work together to reach the poorest and reduce inequality in the country.

Objectives

  1. To understand the various instruments for development finance that exist in Uganda
  2. What could explain why the existing instruments still do not reach the poor as much as it should?
  3. How can each of these instruments work together to be more inclusive and reach the poor?
  4. What role does the government, development partners, civil society, private sector and financial institutions need to play to ensure that the instruments of development finance in Uganda are more inclusive and reach the chronically poor? 

Notes

Africacounts roundtables are multi-stakeholder forums designed to stimulate constructive dialogue and effective partnerships amongst civil society, media, government and academia to influence resource allocation and prioritisation of poverty eradication in the East African region.

Financial institutions were grouped into four categories:

  • Formal, referring to all institutions regulated by the Bank of Uganda.
  • Non-bank formal financial institutions: legally constituted savings and credit cooperatives (SACCOs) and microfinance institutions (MFIs), money transfers including mobile.
  • Informal: money lenders, including village groups, investment clubs etc.
  • Excluded: those that do not use any of the above categories.