A winning strategy for deepening financial markets in Uganda

Financial-sector deepening aims to improve access to, and usage of, financial services that are instrumental in improving the livelihoods of vulnerable and poor communities. It is the objective of financial-market facilitators, set up as Financial Sector Deepening (FSD) Trusts, to be active in a number of African markets.

The FSD approach is unique in prioritising interventions that are systemic, i.e. self-sustaining shifts in the market system rather than supporting individual market actors that require ongoing support. FSDs work at the “macro” level to create an enabling regulatory environment, at the “meso” level to improve financial and digital market infrastructure and information, and at the “micro” level to pilot and diffuse innovative financial-service models into the market.

Market facilitation is challenging for a number of reasons. It requires a large amount of information to ensure that interventions are targeted at the binding constraints preventing financial-sector deepening at each “level” of the market. These interventions also need to be targeted because market facilitators invest heavily in relationships to influence key market actors, and this requires time and committed resources. Lastly, market facilitators need to show that these targeted interventions do result in systemic change. The ultimate beneficiaries are the same groups of vulnerable consumers whom donors (who control much of development funding) care about. Genesis has partnered with FSD Uganda (FSDU) over the last two years to assist it with these three key challenges.

Our partnership began at a point where FSDU required a re-invigorated approach to facilitating financial-sector deepening in Uganda. We developed a vision and definition for financial inclusion in Uganda, reviewed the state of barriers to access and usage of financial services, identified key technology trends likely to reshape the prospects for financial inclusion in the coming years, and identified a high level list of strategic initiatives that FSDU should engage in to facilitate systemic change. This helped FSDU with the first challenge – ensuring that interventions are targeted at the binding constraints for specific beneficiaries.

We then helped FSDU develop a refreshed strategy for the next three years. We spent time with the FSDU team to understand its planned interventions, and engaged extensively with market actors in Uganda to test which of these interventions were likely to generate systemic change. The outcome was a concise and well-evidenced strategy document that provided FSDU with a clear vision and three workstreams that focused interventions at all levels of the market on generating impact on target beneficiaries. This helped FSDU with the second challenge – targeting interventions and resources where it can make the biggest impact.

With a refreshed strategy, we then assisted FSDU with a critical part of strategy execution related to fundraising. We helped FSDU develop a funding application for the Gates Foundation on the basis of the revised strategy document. We also developed a new fundraising strategy which helped FSDU identify new potential funders aligned to FSDU’s strategic priorities and provided actionable initiatives for FSDU to increase its presence in the donor market. This assisted FSDU with the last challenge – communicating the value of its work to secure donor funding.