70% of Ugandans spend more than they earn 

Majority of Ugandans now depend on family, friends, and borrowing, among others to meet day-to-day needs. Photo / File 

What you need to know:

  • A survey, funded by Bank of Uganda indicates that at least 17.2 million Ugandans out of the 24.6 million adult population, rely on family and friends, personal savings, and borrowing as a coping mechanism to manage shortages

Seven out of every 10 Ugandans spend more than they earn, according to a survey by Financial Sector Deepening Uganda. 

The survey, codenamed FinScope Uganda 2023 and funded by Bank of Uganda, aBi Finance and the Bill & Melinda Gates Foundation, found that 70 percent of Ugandans operate a personal budget deficit, which in essence means that they need more money than they earn to cover shortages. 

Thus, the survey noted, more Ugandans rely on family and friends, personal savings and borrowing as a coping mechanism to manage their deficits than was the case in 2018. 

The survey, which sampled 3,176 Ugandans, is a representation of at least 24.6 million adult Ugandans, which therefore, means that of the 24.6 million adult Ugandans, 17.2 million spend more than they earn. 

In the five years to 2023, Uganda’s adult population, which the survey puts at 16 years and above, has grown significantly from 18.6 million in 2018 to 24.6 million.  

The survey was conducted in three stages across the country with the support of enumerators from Uganda Bureau of Statistics and Bank of Uganda. 

The findings are classified under financial well-being or health, which defines the extent to which a person or family can smoothly manage their financial obligations and have confidence in their financial future. 

Financial well-being is covered by four elements, among which include financial management (capacity of an individual to meet day-to-day financial obligations and consumption needs), resilience (capacity to absorb and recover from financial shocks), goals (planning for the future and ability to reach future goals) and confidence (feeling secure and in control of finances). 

The survey further reveals that in terms of financial resilience, more Ugandans, which translates to 90 percent were between 2018 and 2023 experienced an unexpected expense compared to just 34 percent in 2018, which has exposed them to economic vulnerabilities and shocks.  

Ugandans have in the last five years faced several challenges, occasioned by the impact and after-effects of Covid-19, worsened by economic shocks resulting from the Russia-Ukraine conflict. 

The survey identified sickness as the biggest challenge to financial resilience, followed by agricultural risks and theft, noting that majority of Ugandans have had to deplete their savings to manage shocks, while others have had to sell an item or personal property or borrow to cope. 

The findings further indicate that whereas the number of adult Ugandans relying on their children for their future has greatly reduced, more than 70 percent have no concrete long-term financial plans, which exposes majority of the elderly population to basic age-old challenges with no means of resolving them.  

The situation is further worsened by the absence of a pension income among many elderly Ugandans, the majority of whom cannot work nor have a strong social capital to survive in old age. 

Therefore, the survey noted that because of the above challenges that Ugandans have encountered in the five years to 2023, very few are confident of their financial situation, with only 11 percent feeling satisfied, while 89 percent are not. 

The FinScope 2023 survey sought to track overall trends in financial inclusion to provide information on how the landscape has changed since 2018, provide insights that could be utilised at policy and market levels to deepen financial inclusion and describe the financial service needs of the adult population aged from 16 years and above.