Financial institution and financial inclusion in rural Uganda: a case study BRAC Bank Uganda Limited

Abstract

The main objective of this study was to evaluate the impact of financial institutions on financial inclusion in rural areas of Uganda. This was achieved through the following specific objectives; to examine the accessibility of financial services by the rural people in Uganda, to evaluate the usage of products offered by financial institutions in reducing financial exclusion in Uganda and finally to examine the challenges faced by financial institutions in reducing financial exclusion in rural areas of Uganda. Simple random sampling was used to identify respondents for this study. 35 respondents from Buwama and 65 from Lukaya were selected. The study indicated that majority of people borrow money from financial institutions to start business or to grow and improve the existing ones. From the study, youth had more access to the Financial Institutions than others. In addition to usual financial products, financial institutions offer nonfinancial services such as scholarships and others to socially help these rural people in one way or another. From this study it was noticed that people in Buwama and Lukaya walk or travel very long distances to access any financial institution, also established that financial Institutions face several challenges to enable financial inclusion of people in rural areas and showed some of the differences and similarities of BRAC Bank Uganda and BRAC Bank Bangladesh where it originates from. Digitalization of institutional operations and review of policies by Bank of Uganda such as reduced taxation rates were recommended for institutions operating in rural areas.