Microeconomic Determinants of Individual Saving Participation and Income Outcomes in Uganda, Kenya, and Tanzania: Evidence from Propensity Score Matching
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Abstract
Despite sustained economic growth and rapid financial-sector digitisation in East Africa, individual saving participation remains uneven, raising important questions about both the factors that enable saving and whether saving itself translates into improved economic welfare. This article examines the microeconomic determinants of individual saving participation and estimates the conditional effect of saving on income in Uganda, Kenya, and Tanzania. Using individual-level data from the World Bank Global Findex 2021 database, the study combines binary logistic regression with Propensity Score Matching (PSM). The logistic models identify socioeconomic, labour-market, remittance, financial-access, and digital-connectivity factors associated with saving participation, while PSM constructs comparable groups of savers and non-savers and estimates the Average Treatment Effect on the Treated (ATT) for income.
The findings reveal important commonalities and cross-country differences. Borrowing behaviour and internet access are positively associated with saving participation across the three countries. Remittance channels are especially important in Uganda and Tanzania, while digital-payment use is positively associated with saving in Kenya and Tanzania. Labour-market inactivity is negatively associated with saving participation in all three country-specific final specifications. The conditional income effect of saving is heterogeneous: after matching, the ATT on individual income quintile is statistically insignificant in Uganda (0.1399; t = 0.76) and Kenya (0.2496; t = 1.38), but positive and statistically significant in Tanzania (0.5598; t = 3.12).
Overall, the results show that saving participation is shaped by active financial engagement, labour-market participation, remittance flows and digital connectivity rather than financial access alone. They also show that higher raw income among savers partly reflects selection and that the remaining matched relationship varies across countries. Policies should therefore integrate savings mobilization with productive employment, responsible credit, digital connectivity, remittance formalization and pathways that convert accumulated savings into productive investment.
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References
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