On October 26, 2017, the Ministry of Finance, Planning and Economic Development (MoFPED) and Bank of Uganda (BoU) launched The National Financial Inclusion Strategy (NFIS) 2017-2022. The comprehensive strategy seeks to reduce financial exclusion from 15% to 5% by 2022 by ensuring that “all Ugandans have access to, and use of, a broad range of quality and affordable financial services which helps ensure their financial security.”
This strategy is particularly important, given that financial exclusion — lack of access to formal savings, credit, payments and insurance products — is one of the biggest inhibitors of economic growth in sub-Saharan Africa.
Consequently, the promotion of financial inclusion is critical to ensuring inclusive economic growth; creation of opportunities for all segments of the population and the distribution of growth dividends both in monetary and non-monetary terms, fairly across society.
For the insurance industry, this is particularly important given that insurance penetration is still below 1%. Good execution of NFIS will stimulate our industry, which last year only grew by a mere 3.71% compared to 21.68% growth in 2015; from Shs612.1 billion in 2015 to Shs634.8 billion in 2016.
Speaking of good execution, our existing insurance laws have some good provisions necessary to stimulate the sector, if they are enforced by the sector regulator with the support of other government agencies.
For example, Section 3 (2) of The Insurance Act stipulates that: “No person, other than a person licensed as an insurer under this Act, shall issue any insurance policy on—
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(a) Persons who at the time of effecting a contract are residents of Uganda;
(b) Goods or assets situated in Uganda;
(c) Ships, aircraft or other vehicles registered in Uganda; and
(d) Goods imported from other countries except personal effects and donations.