Micro Analysis of the Determinants of Household Savings: Empirical Evidence from Uganda

Abstract

The study examined the micro level determinants of household saving in Uganda using household level cross sectional data
obtained from Uganda National Household Survey (2009/2010) conducted by Uganda Bureau of Statistics. Prior to the
Ordinary Least Squares estimation, the study conducted preliminary analysis involving descriptive statistics and a correlation
matrix. The results from the OLS estimation reveal that, Income was the main determinant explaining the cross-sectional
variation of household savings in Uganda. The results show that household income, education of household head, spouse
education, gender, age, and household location (living in urban areas) are factors positively and significantly influencing
household saving. On the other hand, household size, marital status age square of household head and regional differences
negatively and significantly influence household saving. Considering the income factor, one way to improve the saving level is
by implementing policies that improve productivity and income of households. The government should also increase its
funding of the education sector not only to primary (UPE) and secondary (USE) but also tertiary institutions but also to the
adult education program that has been running for decades.