Determinants of Saving among Low-Income Individuals in Rural Uganda: Evidence from Assets Africa

Although research has shown that poor people in sub-Saharan Africa (SSA), including those living in rural areas save, little is known about the factors that influence saving and asset accumulation among this population. Using three theoretical perspectives on saving and asset accumulation, this study examines the broader determinants of saving and asset accumulation among low-income individuals in rural Uganda. Compared with the individual-oriented and sociological perspectives, institutional theory explains a large part of the variance in saving outcome among rural, low-income households. Wealth, proximity to financial institutions, financial education, and financial incentives are positively associated with higher saving performance. Findings suggest that poor people can and do save, particularly when institutional barriers to saving are removed. Institutional structures, which encourage low-income individuals to save, may contribute to a poverty reduction policy that shifts from just income supplementation to a more inclusive wealth promotion policy that assists people in creating their own pathways out of poverty.