Determinants of credit access in Uganda

Abstract

This study examines the determinants of household credit access in Uganda using nationally representative data from the Uganda National Household Survey (UNHS) 2019/2020. A weighted sample of 13,645 households was analyzed using survey-adjusted binary logistic regression to estimate overall credit access and a multinomial logit model to distinguish between formal, informal, and no credit outcomes. Only 22.8% of households accessed credit, with 4.8% borrowing formally and 13.7% informally. Key determinants were education, income, household size, and VSLA/SACCO membership. Post-secondary education increased the probability of access by about 8 percentage points, while VSLA/SACCO membership had the strongest effect, raising access by 17.5 percentage points. Higher household income also increased access (marginal effect: 0.014). In contrast, older age (–0.088) and urban residence (–0.037) reduced the likelihood of borrowing. Regional disparities were significant, with households in Eastern Uganda more likely and those in Northern Uganda less likely to access credit. Robustness checks including alternative model specifications and diagnostic tests confirmed the reliability of the results. Key limitations include the cross-sectional design and limited capture of digital credit. The study recommends strengthening rural financial infrastructure, expanding digital and group-based lending, and promoting financial literacy to improve inclusive access to credit.