Without a Bank Account
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Loading ...How many people do you think have a bank account in an average OECD country? Eighty percent? Ninety? I’m not sure what the number is exactly, but one thing I am certain about - its much more than in Uganda, where less than 10% of the population (2.4 million out of 30 million people) has a bank account.
Even though the majority does not participate in the formal finanacial system, this does not mean people don’t try and put away a little money, however.
According to the report, 71% of Ugandans save, with forms ranging from formal to informal methods like under mattresses or keeping money with friends. A high number of those who save (71%) use informal places like a secret place which they couldn’t disclose, while 27% use informal groups and 22% use financial institutions.
I remember the ridiculousness of a cash and carry economy in Russia in the 1990s. It was not only the poor who operated in cash after losing their savings and trust in the banking system after the collapse of the Soviet Union — it was also not uncommon to have cash transactions at higher transaction levels (buying cars, homes, machinery for business, etc.) Accompanying those transactions were crime, a lot of cheating, and lack of trust — all resulting in a wealth of unexploited economic opportunities.
Among the many downfalls of living outside of a functional financial system is that you can’t put your money to work. And while the numbers may not seem that important from the perspective of an individual (how much difference does a $100 bank account really make?), it does matter if you add it up across the economy - what you get is a lot dead capital out of work.
Of course, there is a bright side to not having a bank account in a developing country. At least, you are not going to lose your savings in a financial collapse (as long as you keep them in the right currency). But then again, are you really better off excluded from the financial system?
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