Rapid Assessment of the Feasibility of a National Long-term Savings Scheme
Uganda’s informal sector has shown a wealth of unrealised entrepreneurial potential. It ranked the third highest in (Global Entrepreneurship Monitor, 2014) due to 28% of adults owning or co-owning a new business. Though, the study did also reveal that Uganda had some of the highest rates of business discontinuation in the world.
Mobilizing savings is crucial for the welfare of Uganda’s informal sector workers. It offers advantages like capital accumulation, funding for productive investments in human and business capital, fostering enterprise growth, providing insurance against risks, and enhancing financial stability and livelihoods for households.
The informal sector in Uganda is not oblivious to the importance of saving. In the 2023 survey, it was uncovered that respondents actively saved for rainy days such as if they become incapacitated from work, face illnesses or other family emergencies that require financial aid. Despite the active saving behaviour and awareness of the importance of saving among individuals in the informal sector, there is still low adoption of long-term/retirement schemes. The National Financial Inclusion Strategy 2023 – 2027 (NFIS II) (NFIS, 2023) highlighted that Uganda’s retirement sector predominantly targets individuals who are formally employed, largely excluding the informal sector. When combined with the fact that they face uncertain employment and income, their exclusion from long-term/retirement schemes makes them more susceptible to poverty.