Assessing the determinants of saving behaviour: evidence from rural farming households in Central Uganda

Abstract

Savings play a significant role in any country’s economic development. Notably, because farmers tend to have seasonal income from their farming activities, they also tend to be highly vulnerable to poor saving habbit than other occupations, such as those in formal jobs. However, farmers who save part of their income for subsequent production can purchase farm inputs in time as they wait for the onset of rain. Reportedly, there has been poor saving behavior among farmers in sub-Saharan Africa. Therefore, this study aims to determine the factors responsible for farmers’ saving behavior. Descriptive and econometric (binary logistic model) analyses were employed to achieve the objectives of the study. The results indicate that the majority of farmers saved on a monthly and weekly basis. The results of the binary logistic regression model analysis showed that age, marital status, gender, experience, group membership, distance to the markets and markets, farm income, and farmers’ sub-counties of residence had a significant influence on farmers’ saving behavior. From the results, policy measures to increase the rate of savings include the employment of more extension personnel to reach as many farmers as possible. Government and extension agents should target female and less experienced farmers through adult-based education programs because they are vulnerable to poor saving behavior. Farmers should join farmer—based groups and cooperative societies, in which saving information is disseminated. The government, non-governmental organizations and financial institutions should offer financial literacy training on savings to smallholder farmers.