Ugandans reluctant to save money

November 3, 2017 in Finance, Financial Services by Editor

November 3—Most Ugandans do not save, because they feel there is not enough money left over after spending on household essentials, paying utilities and covering other expenses like education and health, but Bank of Uganda (BoU) officials think people can do better if they try harder.

James Ssettimba, the deputy Director, Financial Inclusion Division at BoU said recently, “Putting aside money for future use is the only guarantee that one could have to meet their financial needs in future without difficulty. The little money saved today could help you in case you receive any emergency in future that needs immediate money. Then one doesn’t need to run to loan sharks to get emergency funds at very unfair terms.”

He was speaking at an event to mark World Savings Day.  According to BoU officials, compared to neighbouring countries like Kenya and Rwanda, Uganda’s’ saving culture is poor. Having high gross domestic savings was key in the industrial transformation of several East Asian economies during the 1980s and 1990s. Governments could tap into these funds and pay for major infrastructure development. Uganda’s gross domestic savings to GDP ratio is in the range of 13% to 15% but, figures of 25% and above are considered the most ideal.

The main reason that most Ugandans give is because they do not earn enough money to cater for their everyday needs and also put aside a surplus as savings. Others still mistrust banks and prefer to keep their money at home or use it to buy land or start up a business.

Ssetimba said, “It is important that one saves money in a secure institution that is regulated by the central government so that in case the institution fails, their savings are secure and they do not have to lose out.”

“When you save with a bank or any institution that is registered with us, in case it is dissolved due to financial challenges, your savings are still accessible and secure at all times. That is why we urge Ugandans to resist from saving with small village groups that are not registered, because in case of loss, there is no law that guarantees that your money will be secured,” he said.

Different financial institutions took the opportunity to set up stalls and have their staff engage with members of public about the different savings products and how easily one can open one.