John Opolot used to have a Centenary Bank savings account, but that was six months ago. Ever since he acquired a millet grinding machine on hire-purchase, the monthly bank charges are something he is keen to avoid.
"All my proceeds go to repaying the loan. I will not use my personal account until I am done with the repayments. It's impossible to save right now," he says.
"The bank requires that I deposit sh265,000 each month for a business account, but then that is what I spend on raw materials alone," he explains.
Opolot runs a peanut butter business and a food vending business to complement his earnings, but in the end, he barely saves a penny after family expenses and business reinvestments are taken from the profit.
Only 20% of the Ugandan population holds a bank account, according to the World Bank Global Financial Inclusion Indicators (Global Findex) 2011, effectively keeping lending rates very high.
The research offers the most comprehensive picture of how adults around the world save, borrow, make payments, and manage risk as it collects views from 148 countries.
Twenty seven million Ugandans are unbanked not only because of poverty, but the cost, travel distance, religious beliefs and amount of paper work involved in opening an account.
Asli Demirguc-Kunt, a co-author of the paper analysing Global Findex data, says lacking a bank account often forces savers to resort to risky measures, such as putting money under the mattress.
"That makes it harder to build up reserves, let alone use credit, insurance and other complex formal financial tools," she explains.
Demirguc-Kunt notes in the report that less than a quarter of adults in Africa have an account with a formal financial institution and that many adults in Africa use informal methods to save and borrow.
Similarly, the majority of small and medium enterprises in Africa are unbanked and access to finance is a major obstacle.
When compared with other developing economies, high-growth small and medium enterprises in Africa are less likely to use formal financing, which suggests formal financial systems are not serving the needs of enterprises with growth opportunities.
The problem of being unbanked is also linked to income inequality. The richest 20% of adults in developing countries are more than twice as likely to have a formal account as the poorest 20%, according to a Gallup survey.
The survey also showed that 61% of all account holders worldwide use their account to receive payments from an employer, the Government or family members living elsewhere, and that even among those who do have a formal bank account, only 43% use their account to save.
Women make up a disproportionately large share of the unbanked. For example, while 37% of women in developing countries have an account, 46% of men do. Also, women living below $2 a day are 28% less likely than men to have a bank account.
Melinda Gates, the co-chair of the Gates Foundation, the funders of the study, notes that financial tools for savings, insurance, payments, and credit are a vital need for poor people, especially women, and can help families and whole communities lift themselves out of poverty.
Nearly two-thirds of the unbanked cite poverty as the main culprit, but within that group, about a third of them also blame the cost of opening and maintaining an account or the banks being too far away.
"In Uganda, maintaining a checking account costs the equivalent of 25% of GDP per capita annually, and 54% of non-account holders cite cost as a reason for not having an account," the report states.
This means that Ugandans spend close to $4.2b (sh11.4 trillion) annually to access banking costs given Uganda's GDP of $16.81b at market prices.
Leora Klapper, the supervisor of the Global Findex, says these barriers may have proved to be excessive, especially considering that many people can only set aside a very small amount of money each month.
"Policy makers should take note that adults who save informally find the physical, bureaucratic and cost barriers to opening a bank account to be especially prohibitive," she says.
Few adults in developing countries use formal financial products to manage risk, yet more than 11% have an outstanding loan for emergencies or health-care needs, but more than 80% of these adults use only informal sources of credit.
Interestingly, a large portion of the outstanding loans in sub-saharan Africa are due to school fees at 8%, outstanding loans for funerals or weddings are reported at 3%, with most of the adults working in farming, forestry or fishing, only 6% of them have crop, rainfall or livestock insurance.
Robert B. Zoellick, the World Bank Group President, points out that providing financial service to the 2.5 billion people who are 'unbanked' could boost economic growth and opportunity for the world's poor.
"Harnessing the power of financial services can help people to pay for schooling, save for a home, or start a small business that can provide jobs for others...the more poor people are banking today, the more they are banking on their future," he said.