Despite the Ugandan Government's considerable efforts to reform and develop the economy, Uganda remains one of the poorest nations in the world. Over 96 percent of the poor live in rural areas. One of the bottlenecks to development can be found in the positive yet unbalanced expansion of the banking sector. Around 1,500 institutions in the microfinance industry now provide credit facilities to eligible clients and fifteen banks provide professional services, mainly in the urban areas. However, for rural people, especially women and small-scale farmers, life remains a challenge. Insufficient access to appropriate financial services is one of their main problems. Accordingly, much still needs to be done to improve the Ugandan financial sector.

The Financial System Development Programme (FSD) began in 1998, financed by the German Ministry of Economic Cooperation and Development (BMZ). In 2002, the programme was extended with additional contributions from the Swedish Government and at this time the Swedish International Development Cooperation Agency (Sida) joined GTZ in its productive collaboration with the Bank of Uganda. The programme also involves other German agencies such as KfW Development Bank, the German Development Service (DED), the Centre for International Migration (CIM) and the Savings Bank Foundation for International Cooperation, as well as Swedish and international banks and development organisations.

The main purpose of FSD is to encourage a healthy environment for financial institutions and to increase efficiency in the financial sector. At the same time it improves access to financial services, especially for the poorer population. In this way, the programme makes a contribution to Uganda’s Poverty Eradication Action Plan (PEAP) by enhancing economic growth. Located at the Bank of Uganda, the primary partners in all the programme’s interventions are the bank’s departments of Supervision, Research and Domestic Financial Markets as well as the National Payment Systems Secretariat.