Making a culture out of saving money

In a country whose citizens’ saving culture is in its adolescence, with only 54 percent of Ugandan adults saving an average of Shs6,000 (2018 Finscope Report respectively), commemorating World Savings Day provides a great opportunity to highlight why saving money is essential.

Saving money enables you to invest, and put your money to work so that it generates income and appreciation.

 From asset accumulation to taking up investment products from fund managers, there are varied investment opportunities to choose from.

When you save money, your credit score improves. For people who don’t have assets to use as collateral when in need of loans, saving money accumulatively will help improve your credit score because it means that you are more likely to pay back. This is why it is common for savings and credit cooperatives to give credit whose value is twice or thrice your saving balance. 

The post-Covid-19 pandemic effects demonstrated the importance of saving for emergencies. Saving money enables you to deal with uncertainties better and reduces one’s economic vulnerability. 

The 2020 Covid-19 Finscope report, which identifies financial service needs and the gaps in financial service provision, showed that 57 percent of Ugandans would not be able to sustain their lifestyle after just one day of lockdown.  A total of  81 percent would not be able to sustain it after 15 days. This lack of financial preparedness is partly because of the poor saving culture. 

For some individuals, especially those in rural areas and people without steady incomes, despite the multitude of benefits, there just isn’t any money to save after spending on the basics. 

Therefore, as advocates of financial inclusion, the Financial Sector Deepening (FSD) Uganda has transitioned from viewing access to financial services as an end, to viewing it as an enabler. 

Financial services include savings, credit, payments, and insurance. The financial inclusion efforts now go beyond individuals and businesses opening bank accounts to leveraging finance services to increase productivity, incomes and employment, access to basic needs and overall economic growth. 

By leveraging finance services to increase productivity, we are supporting financial service providers such as banks, insurance companies, and financial technology companies to design related products that enable people increase incomes and opportunities to access and utilise financial services such as saving money.

To advance these efforts, in 2019, Opportunity Bank rolled out a group loan product that enabled Christine Abur, a small-scale farmer in Kiryandongo District in northwestern Uganda rent farming land that enabled her to increase her productivity and income.

Sharing learnings from interventions such as these with other financial service providers serves as a benchmark to extend similar services to the wider population. 

Just like a group loan product was developed to enable Abur to increase her productivity, financial service providers  should design or enhance their various products to enable the different categories of clients, especially those at the bottom of the pyramid to access basic services such as health, education, and housing. 

Ultimately, an increase in income for individuals and businesses stimulates active participation in the financial market by transacting to meet different needs. This is bound to see an increase in the number of people saving money and the amounts being saved.

Ms Carolyne Ariokot is the intervention manager for micro, small and medium enterprises finance at the FSD Uganda.