70% Ugandans survive on borrowing - FSD Uganda Study

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By Arthur Moses Opio

We all read that statement that was screaming on the Daily Monitor news paper on 15 April, 2024. The report is based on a study by FSD Uganda and it said, "Seven out of every 10 Ugandans were operating a personal budget deficit(needing more money to than they are earning to cover their personal budget" Now, 70% is huge. What are the 30% doing that the 70% aren’t doing? The report continued to say, "More Ugandans are relying on their family and friends, personal savings, and borrowing to manage their budget deficits than was the case in 2018."

What’s notable in this, is that Ugandan’s have personal savings and compared to 2018, 60% of Ugandans are now saving which is a good thing. In their 2017 SDG report, Afro Barometer said, "Ugandan’s saving rate was at 12% compared to Kenya(23%), Rwanda (18%) and Tanzania (13%)" Generally we have been doing badly. I need to find out what our stand is currently but an improvement of 60% should be applauded. 

But saving is not enough, it is the first step. Even if savings is up. Finscope report says, "Most Ugandans are not managing their budgets well." and failure to manage picks into things like extensive borrowing to meet a budgeting deficit as stated above. If you are lucky to have personal savings that is good, then the only worry is that you are probably eating into your wealth building tool. Savings should be categorised, emergency savings and investment savings. 

You can make and save money, but if you are having more months than money, the problem is not the income. It's your money management. We have to develop high income skills levels to enable us manage this money resource well. 

Paul Busharizi once wrote an article titled, "Perpetuating the poverty among the elite" and said, "There is the Urban legend of the manager who cannot make his salary stretch to the end of the month, while his driver who earns a fraction of his salary, not only gets to the end of the month, but has enough left over to invest in his growing empire of mizigo rentals." He further said, "The difference between the two men is that the boss is focused on consumption lifestyle while the driver is focused on investing. And that is the crux of the matter. There are only two ways to spend your money, you either “eat” it or invest it."

There is no doubt economic times are hard but we have to be smarter. Money management is a skill that we all must harness. Even if we are doing fairly well, we must keep learning to avoid slipping back. So manage whatever little  money you have well. It's a much needed skill. We are all victims of poor financial management but we can be better.

So these are some of the things the 30% are doing:

1. They have financial goals.
2. They have a financial plan.
3. They have a budget.
4. They track their expenses
5. They live below and within their means
6. They are investing in appreciating assets like Bonds, Treasury Bills, Fixed Deposits, Unit Trusts that offer at least 10%. They know there is a limit to how much they can cut their expenses, so they focus on increasing their means.
7. They are involved in producing goods and services. If they aren’t directly producing, they own shares of companies that are producing goods and services.

So once again, I remind us, let us build that emergency fund. UGX 1,000,000 is a good target to begin with. In case of a challenge, you will have that as your first rescue point. It is your fire extinguisher, you need it badly, I badly need it. 

Don’t ignore the power of putting 10,000 UGX aside, if you do it for 7 days, that’s already 70,000 in your emergency pot. XENO CIS allows you to save as low as 10,000 UGX, you can dial *165*5*7# my referral code is XENO84105. 

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