Determinants of rural housheold financial savings in Bungatira sub-county, Gulu District.

Abstract

There has recently been an upsurge of interest among development economists, governments, and international donors to increase financial savings in least developing countries (LDCs), particularly in rural areas and from non-wealthy households. This is because financial savings plays a key role in eradicating household poverty given that it’s the surest way of increasing household income particularly when these savings are invested, ultimately resulting into improved quality of life of people in rural communities. Despite the government’s efforts to improve the mobilization of financial savings from the household sector through initiatives like the rural speed campaign of "Save Today, Better Tomorrow" and "Wise Saving and Better Living, financial saving especially from the rural household sector and the non wealthy is still low (CGAP 2006). Hence, this study therefore seeks to find out the main determinants of rural household financial savings in Bungatira Sub-county, Gulu District. The findings of the study will assist policy makers in formulating policies aimed at stimulating and increasing household financial savings especially among the rural households in Uganda.

The study used Cross-Sectional data and a modified Wai (1972) Savings Framework in exploring the determinants of rural household financial savings in Bungatira Sub-county, Gulu District. A sample of 120 household heads was selected through simple random sampling method.

The major determinants of rural household financial savings were found to be Income, Dependency ratio, Secondary education, and Tertiary education. Furthermore, spending less than 30 minutes and between 30 minutes and one hour to access financial institutions was also found to determine household financial savings.

The following policy recommendations were suggested; Improvement of agricultural sector in the rural areas since it’s the main source of income for rural households, Promotion of policies that are aimed at reducing number of household dependents such family planning, Promotion of policies aimed at reducing illiteracy like USE, Improving access to financial institutions and encouraging mobile phone banking in rural areas, Strengthening of informal credit groups through capacity building and credit assistance