By Ibrahim Kasita, The New Vision Uganda -

THE fear of saving money has kept many people under abject poverty.

Hajjat Janat Mukwaya, the minister for general duties in the Office of the Prime Minister, said a strong household saving rate is the creation of a strong economy, jobs, and ultimately lowers interest rates and inflation.

“While people want to borrow money, they still have a culture of fearing to save. People with periodic income should inculcate the saving culture in order to reduce the current poverty levels,” she said.

“This will increase the saving ratios that will allow the youth to partake loans that will enable them start small and medium businesses. This will allow them employ more people.”

The absence of a strong savings culture has put Uganda’s household savings rate to a dismal 1.5% to the national gross domestic product (GDP) – the market value of all final goods and services in a given year – the worst in the world.

While Australia, Japan, and the US all have household savings rates of under 4%, China boasts the highest in the world of 38%, followed by India 34.7%, and Turkey 19.5%.

“We need to get the message across to people that saving money is for their own financial security. Promoting a savings culture is not only important to ensure financial well being of Ugandans in the long term but it is also essential for the national development,” she said.

Government has established the Microfinance Support Centre (MSC) to facilitate access to affordable, sustainable and convenient financial and business development services for the active and productive Ugandans.

The centre’s operations in the last financial year, disbursed sh64b to 839 institutions. However, profits declined to sh129b from the previous sh141b.

Ruth Nankabirwa, the state minister for microfinance, however bemoaned the absence of regulations to protect savers from unscrupulous and fake institutions.

“We need a good regulator to regulate the over 1,000 microfinance institutions. The law is not intended to choke the institutions but regulate them,” she said.

Under the current arrangement, the SACCOs and all microfinance institutions are not regulated and are outside the Bank of Uganda’s oversight.

Most people have fallen victims to fraud as unscrupulous microfinance institutions walk way with people’s savings.

Dr Specioza Kazibwe, the MSC chairperson, pointed out specific key areas of intervention that includes regulations and supervision of rural finance institutions to safeguard members’ deposits.

The body has started new loan products targeting agriculture, environmental, special interest groups, commercial and businesses