Nairobi — About two-thirds of Ugandans do not have access to financial services of any kind, making them - along with Tanzanians - the most financially "unserved" people in the East Africa, says a survey.

However, Ugandans know the value of saving, with 79 per cent agreeing to the statement, "Saving can alleviate poverty," while 64 per cent agreed to "try to avoid taking loans as much as possible."

According to the National Survey on Access to Financial Services in Uganda, only 38 per cent of Ugandans have access to financial services unlike Kenya, where 62 per cent of the population have access to financial services.

Of the 8.1 million Ugandans with access to financial services, 18 per cent have access to formal financial institutions like commercial banks, microfinance institutions or credit institutions; three per cent are served by semi-formal institutions like savings and credit co-operative societies, while 17 per cent go to informal groups.

In Tanzania, according to the results of a similar survey carried early this year by the Steadman Group, only nine per cent of the adult population - comprising more than 21 million people - had a bank account, while 27 per cent had never heard of a savings account.

These results, according to Adrian Stone of the UK's Department for International Development (DfID), provide a plausible explanation for the current growth patterns in the East African region.

He said that limited access to financial services in Uganda, for instance, has been a major "brake on economic growth."

"There are people who can't take advantage of investment opportunities because they don't have access to financial services," he added.

DfID's Financial Services Deepening Project sponsored the Ugandan study through Finscope Uganda Survey.

According to the survey, those living in rural areas are more likely to be without financial services than those living in urban areas, with men more likely to have access than women.

The principal barrier to using formal and semi-formal institutions is 'lack of money,'" concluded the Steadman Group.

The reasons given also varied, with 54 per cent of the respondents saying they don't have enough to save; 49 per cent say they earn too little to open and maintain an account; and 45 per cent not having a regular income.

It was also found that there was a high correlation between literacy and the use of financial services.

"People who can read and write are much more likely to use financial institutions of all types," said Finscope Uganda.

In Uganda, the surveyors looked at savings, investments, borrowing and loans, informal financial groups, risk management and insurance, money transfers and agricultural financing.

The survey showed that few Ugandans save their money in formal financial institutions.

The majority (71 per cent) of those saving, especially in rural areas, told the surveyors that they keep their savings in "secret" places.

Respondents said they save and borrow mainly to pay for day-to-day expenses like food and shelter, for emergencies and to pay school fees. Sadly, few talked of borrowing to invest in business.

According to the findings, only 50 per cent of the Ugandans who have access to banks have ever borrowed money; 33 per cent of these have outstanding loans. Even then, informal lending is high, about 62 per cent of the loans.