KAMPALA — Uganda’s insurance industry is increasingly being viewed as a critical driver of access to finance for farmers and small businesses, as regulators push for reforms aimed at addressing persistent financing gaps in the economy.
Speaking at the annual conference of the Insurance Brokers Association of Uganda on April 23, 2026, Augustus Nuwagaba said strengthening the country’s insurance systems could significantly reduce lending risks and improve access to credit for underserved sectors.
Nuwagaba noted that agriculture and small and medium enterprises (SMEs) remain the backbone of Uganda’s economy but continue to face limited access to formal financing due to high exposure to risks and low insurance coverage.
He explained that reliable insurance protection can serve as a safety net for both borrowers and lenders, enabling financial institutions to lend with greater confidence.
“Without effective insurance, banks are exposed to risks such as climate shocks, fire, theft and business interruptions, which often results in tighter lending conditions, higher borrowing costs, or outright denial of credit,” he said.
The Deputy Governor warned that weaknesses in claims settlement and limited transparency within the insurance industry continue to undermine public trust, ultimately affecting the availability and affordability of credit.
Uganda’s insurance penetration remains below one percent of GDP, among the lowest in Sub-Saharan Africa, limiting the sector’s role in economic risk management.
According to Nuwagaba, the low uptake of insurance is driven less by affordability and more by concerns over credibility, with many potential policyholders reluctant to buy insurance products due to fears that claims may not be honoured.
He argued that the lack of confidence in insurance has wider economic consequences because it weakens the link between insurance and financial inclusion.
To address the challenge, the Bank of Uganda is encouraging deeper integration of insurance products into agricultural and SME financing schemes.
Officials believe such integration could improve loan performance, reduce default risks, and allow banks and other financial institutions to expand lending to productive sectors.
Nuwagaba also called for stronger collaboration between insurers, banks and regulators, stressing that Uganda’s financial system functions as an interconnected ecosystem where weaknesses in one sector can affect the broader economy.
He highlighted ongoing cooperation between the central bank and the Insurance Regulatory Authority of Uganda to strengthen financial inclusion and improve sector resilience.
Insurance brokers were identified as key players in the reform process, particularly in designing products suited to the risk profiles of farmers and small businesses.
Nuwagaba urged brokers to prioritise client needs and support timely claims settlement, saying confidence in insurance products is essential for sustaining both lending and borrowing.
The conference also highlighted digital innovation as a major opportunity for expanding insurance access, especially among underserved communities.
Mobile-based insurance platforms, data-driven underwriting systems, and parametric insurance products were cited as potential solutions for delivering affordable coverage to smallholder farmers and informal businesses.
Despite the sector’s current limitations, regulators believe agriculture and SMEs represent significant untapped markets for insurers, especially as climate risks and economic uncertainties continue to grow.
As Uganda pursues higher economic growth and private sector development, policymakers say insurance must evolve beyond traditional risk protection to become a strategic pillar for financing productive sectors.
Regulators argue that improving trust, streamlining claims processes, and aligning insurance products with the needs of borrowers could help unlock much-needed capital for agriculture and small businesses — sectors considered central to employment creation and income growth.
