The International Fund for Agricultural Development (IFAD), Postbank of Uganda (PBU) and Posta Uganda on Thursday, has signed a grant agreement of Euro 465,000, aimed at expanding the role of postal networks in the delivery of remittances and access to financial inclusion across the country.
The new project, “Scaling Up Remittances and Financial Inclusion in Uganda,” will provide remittances services in poor rural communities as well as in refugee settlements, many of which are taking in those fleeing conflict and food insecurity in neighbouring South Sudan.
The IFAD grant agreement for Euro 465,000 was signed by Adolfo Brizzi, Director of IFAD’s Policy and Technical Advisory Division, in the presence of Alex Kayaayo, Executive Director of Postbank Uganda. The signing took place following the Global Forum on Remittances, Investment and Development, held 15-16 June at UN headquarters in New York.
Rural Post Offices to Expand
Under the agreement, Postbank 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 specialised training. By March 2019, the project aims to increase the number of remittance recipients it serves by 50,000. In addition, it expects to provide remittance delivery services to 20,000 refugees as well as training in financial literacy.
In a country where the cost of sending and receiving remittances is still very high (above 12 percent), the new project aims to reduce transaction costs of sending money home to 3 percent (the Sustainable Development Goals target) and eliminate all corridors (for example between the United States and Uganda) above 5 percent. It also expects to increase accessibility to remittance-linked financial products and services.
Globally, about 40 per cent of remittances is 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.
The 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 Capital 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 the delivery of remittances and access to financial services.
Over the last decade, IFAD has piloted over 50 programmes to leverage the impact of remittances in rural areas in more than 40 developing countries, helping to aid the flow of funds and giving families more options to invest their money and create opportunities for business development and employment.