Post Bank, IFAD to boost financial inclusion services in rural areas

By Namugerwa Martha

The International Fund for Agricultural Development (IFAD), Posta Uganda and Post Bank of Uganda have signed a grant agreement of anew project aiming at expanding the role of postal networks in the delivery of remittances and access to financial inclusions across the country especially rural areas.

The agreement for the new project was signed at the UN headquarters in New York , USA, by Adolfo Brizzi, the Director of IFAD’s Policy and Technical Advisory Division and Alex Kayaayo the executive director of business growth in Post Bank under a theme “Scaling up Remittances and Financial Inclusion in Uganda,” which is going to provide remittances services in poor rural communities as well as in refugee settlements, who are constantly fleeing conflict and food insecurity in the neighbouring South Sudan.

While talking at the agreement signing event, Kayaayo said that they are grateful to IFAD for the project because it’s going to empower Uganda’s communities in increasing food security and reducing poverty especially in rural areas where the majority of poor people live.

“Under this agreement, Post Bank Uganda will leverage Posta Uganda’s broad network of rural post offices to expand access to financial services for the rural population. The post offices will be equipped with modern digital and mobile technologies for remittance delivery and financial services transactions, and postal staff will receive specialized training. By March 2019, the project will increase the number of remittance recipients it serves by 50,000. In addition, we expect to provide remittance delivery services to 20,000 refugees as well as training in financial literacy,” Kayaayo said.

He added that this new project is also aiming at reducing transaction costs of sending money home to 3 % as a sustainable development goal target especially in rural areas where the cost of sending and receiving remittances is still very high almost above 12%.

“Our sustainable development goals target is to eliminate all corridors (for example between the United States and Uganda) above 5 per cent, and we also expect to increase accessibility to remittance-linked financial products and services,” Kayaayo added.

However, this new project is an outcome originating from the African Postal Financial Services Initiative, a program managed by IFAD jointly with the World Bank, Universal Postal Union, United Nations Capitol Development Fund, and World Savings Banks Institute and co-financed by the European Commission. The Initiative helped expand the role of postal networks in 11 African countries in delivery of remittances and access to financial services.

Additionally, globally, about 40 per cent of remittances are sent to rural areas where the majority of poor people live. This money is spent on food, health care, better educational opportunities and improved housing and sanitation. Remittances are therefore critical to help developing countries achieve the Sustainable Development Goals.