Six out of 10 Ugandans save for consumption, says BoU
Bank of Uganda says government is working on a number of initiatives that seek to support Ugandans to save for investment. PHOTO | FILE
Despite seven out of 10 Ugandans actually knowing the importance of saving, only six out of 10 adults save and mainly for food, according Bank of Uganda.
Speaking at the launch of the National Social Security Fund (NSSF) smartcard, Bank of Uganda deputy governor Michael Atingi-Ego, said according to Financial Capability Survey, which was compiled by the Central Bank, it was found that whereas most Uganda understand what saving means, almost half of the working population, which is about 22 million, have no formal saving mechanism.
Therefore, he said, the survey found that 44 percent of working Ugandans prefer to save through village saving loan association, which 42 percent save in saving boxes.
This, Mr Atingi-Ego said, is not only a safe way of saving, but sucks money out of the circulation system.
The survey also noted that 57 per cent of adults between 25 and 54 had saved in the last 12 months leading to the survey, however, majority of these, which represents 54 percent, had saved for consumption on specifically food.
The findings, he said reflect how Ugandans live, which as financial sector stakeholders, Bank of Uganda has an obligation to understand them in order to make better decisions as well as support the ongoing social transformation initiatives.
A number of social transformation initiatives, Mr Atingi-Ego said, have been formulated, which seek to transform at least the 54 percent of Ugandans who save to consume to save for investment.
According to the Financial Capability Survey, at least 25.4 percent of Ugandans save for investment while 21.7 percent save for school fees.
Similarly, 21.7 percent save for emergencies while 20.4 percent to invest into house or home ownership.
Mr Atingi-Ego said there was need for more innovation to boost financial capabilities of Ugandans, noting that innovations such as the social security smartcard have come at the right time because many of the social transformation initiative are seeking to leverage on technology to improve efficiency and customer experience.
Therefore, he said, Bank of Uganda is working on a number of areas that seek to make saving a way of life for Ugandans.
The Financial Capability Survey also indicates that 25.9 percent save to invest in agriculture, while 12.5 percent and 7.4 percent save to acquire assets and access to medical care, respectively.
Only 0.7 percent save to undertake planned leisure activities.
Interest earning
Mr Richard Byarugaba, the NSSF managing director, said the social security smartcard will enable NSSF members to remit contributions and use it to receive their benefits when they are due. He also noted that Ugandans should move on from saving money in boxes because, apart from being an unsafe way of saving, the money does not earn interest, yet its value keeps reducing as a result of inflation.
