Abstract:
To promote savings groups (SGs), which are important in promoting financial inclusion among
smallholders, it is imperative to understand the factors that affect participation in these SGs
and the associated impact in the context of Uganda. This study determined the factors
influencing participation in SGs. The study put particular emphasis on the use of SGs as a form
of fully-fledged financial services provision to access agro-inputs. The study, therefore,
additionally, determined the impact of these SGs on the expenditure on agro-inputs. The study
used data collected through a cross-sectional survey from 249 participants. These participants
were drawn from Sironko district, Uganda, East Africa. The study employed a Probit model to
investigate the determinants of participation and intensity of participation. To estimate the
impact of SGs on expenditure on agro-inputs, average treatment effects on the treated (ATT)
were calculated after discounting the selection bias between the SGs’ members and non-
members.
Averagely, SGs incurred 40% of all expenditure on Agro-inputs by SGs’ members. SGs’
members were significantly higher than non-members as regards total expenditure on agro-
inputs, per capita expenditure on agro-inputs, and proportion of income spent on agro-inputs.
ATT was insignificant and tends to be negative.
The main factors that significantly and positively influenced participation included the sex of
the head of the household, having a child in secondary school, the number of years in education,
the number of dependents, income (in a quadratic form), activity in non-SGs group settings.,
trusting members in the SGs, and satisfaction with loan amounts accessible from the SGs. The
main factors that significantly but negatively influenced participation include agriculture as a
v
main income source and requirement for support to participate in the SG. Within SGs, being
female; number of dependents; receiving a government subsidy; share-out of savings between
January and March; and frequency of getting SGs loans the previous year increased the
frequency of getting loans. The frequency decreased for participants who were active in
RoSCAs and had agriculture as their main source of income. Savings were encouraged by years
in education; income and activity in non-SGs group settings. Savings lowered when the
participant was female; rented farming land; active in RoSCAs; required support to participate
in SGs; share-out of savings between January to March; and the number of loan sources.
Important factors that can be addressed at policy level include support for the SGs in the form
of training members in SGs’ models, adding to the loans pools; and encouraging activity in any
community group setting.
