Kampala — Majority of Ugandans, contrary to reports, actually save a lot of money a new report by the Steadman Group has revealed however most of these savings are outside streamlined financial institutions, which is not health for the economy.

Such savings though, cannot be used to generate meaningful economic activity while at the same time cannot be supervised by the financial regulator.

The Steadman survey report states that most Ugandans who are currently saving mainly do so to meet household needs, emergencies, education (money for schools fees) and business investment.

Most of these the report says, is kept in secret places like under mattresses which the money cannot generate any interest for the owner. Presenting the survey results in a news conference at the Kampala Serena Hotel on August 16, the Research Manager of Steadman Group, Ms Nkwanzi Vivginia Isingoma said that the reasons why people don't save their money in the formal financial institutions is lack of financial institutions in the case of rural areas, and lack of awareness of the benefits of saving in a formal financial institution.

Overall according to the report , 71 per cent of Ugandans are currently, formally or informally with saving informally being more common than formal saving.

Rural lags behind

Ms Isingoma said their survey reveals that rural areas has a higher incidence of people saving in secret place at 74 per cent, while in the urban areas the percentage of those saving in secret places stands at 60 per cent.

The survey report reveals that 29 per cent of the savers in rural areas use informal groups, while 17 per cent save in Bank of Uganda regulated institutions and 18 per cent in other places such as friends and neighbours.

It further states that there are no significant differences between those saving for business investment between urban and rural areas. "Those saving for development purposes constitute only 19 per cent while 10 per cent save for business start up," reads the report.

The report's revelations come as a complete surprise to the financial commentators most of whom have held that majority of Ugandan do not save any money. Only 20 per cent of a total 2,959 respondents said they have never saved before with this figure divided as 22 per cent for rural respondents and 16 per cent for urban dwellers.

The survey titled; FinScope, and conducted from October to December 2006 by Steadman defines saving as, "keeping money aside to use later".

Ms Isingoma said that the FinScope Uganda study was a national (geographic and demographic) survey of the demand for financial services in Uganda, the ways in which financial services are used and the type of access Ugandans have to them.

Methodology

The study covered the demand, usage and access to all types of financial institutions, from commercial banks to village groups. It also addressed issues concerning the use of agricultural finance, money transfers, Ugandans' attitudes towards investing and saving and their experiences with the different types of financial institutions.

Mr Isingoma disclosed that an Advisory Committee, made up of representatives from the Bank of Uganda, UK's Department for International Development, Uganda Bureau of Statistics (UBOS), The Steadman Group, ministry of Finance, the World Bank and GTZ played a major role in the design of the survey, the sampling methodology and the design of the survey instruments.

Demystified myth

Mr Paul Rippey of DFID said the current high level of saving in Uganda indicates there is high saving culture among Ugandan nationals even the poor ones are willing to save except that they don't have where to save.

"There is myth that Ugandans don't have a saving a culture Ugandans have strong saving culture policy makers and the financial institutions need to do more to meet the saving demands of the people," he said. The survey was carried out by Steadman Group Ltd with technical assistance from the UBOS and the FinMark Trust.