Analysis of savings function in Uganda

Abstract

This study analysed the determinants of saving rate in Uganda over the period 1980 to 2020 using annual data. Time series econometric techniques were used including unit root tests, co-integration and the model was estimated using OLS estimation procedure. The results show support for the influence of income/growth, interest rate, inflation, imports and exports on the saving rate for Uganda. Income remains the most important determinant of national saving. However, policy makers seeking to promote saving through increasing income, for example by reducing taxation of incomes, should be careful since an increase in income increases the capacity for consumption as well as saving. However, policy makers also need to consider other shorter-term motives for saving that will improve the investment performance of the economy. Prudent macroeconomic policy and strategies that promote exports and control inflation would boost savings in Uganda.