Poor Families Striving to Save for Their Children: Lessons From a Randomized Experimental Design in Uganda

Purpose: This study examines savings of participants in Child Savings Accounts set up for low-income families caring for HIV-orphaned and vulnerable children in Uganda. Using the randomized experimental study, we aim to (1) examine the extent to which families participating in a subsidized CSA program report more savings than their counterparts not participating in the program, (2) understand the extent to which families who participate in the CSA program report using financial institutions, specifically banks, compared with families who do not have a CSA, and (3) examine whether families participating in the CSA program bring new wealth/money into the CSA or whether they reshuffle current household assets.

Method: The study uses longitudinal data from NIH-funded cluster-randomized experimental intervention. The study collected 3 waves of data on 346 school-going AIDS-orphaned children (average age of 13 years old) and their guardians over the course of 24 months. In order to account for clustered repeated-measures nature of data, we used generalized estimating equation (GEE) models with schools treated as nested fixed effects and robust standard errors clustering on individual observations.

Results: First, Child Savings Accounts help poor individuals to save. Compared with families who did not have a CSA, a greater proportion of families with a CSA reported saving throughout the course of the intervention (odds ratio=2.3; 95% CI = 1.1, 4.6).

Second, we found gender to be an important factor affecting savings for both children and their guardians. Fewer females than males reported having money saved (odds ratio=0.45; 95% CI = 0.3, 0.7). In addition, female participants reported having smaller amounts saved than did male participants (B=-0.6, 95% CI = -0.9– -0.3, p<0.001).

Third, double-robust estimates of group differences in household assets illustrate zero intervention effect on participants’ household assets at 24 months. This may suggest that households saved new wealth, instead of merely reshuffling assets. The intervention did not decrease household assets, which may suggest that families saved through means other than selling household assets (e.g., poultry, bicycle) to deposit money into the CSA. This is an important finding, especially because the main policy question in research around matched savings is whether these accounts indeed help low-income families to accumulate assets. However, without in-depth information on families’ consumption and expenditure patterns and families’ financial management strategies, we do not know how exactly families saved money in the Suubi-Maka study, which is a limitation of the study.

Finally, our results point to significant school effects for some schools. This might be due to physical proximity of some schools to financial institutions or due to certain socio-economic characteristics of families whose children attend a particular school. Without further research, however, we do not know what exactly accounts for significant school effects on savings

Conclusions and Implications: CDA can be a vital and feasible tool for building assets and economically empowering poor families taking care of HIV-orphaned and vulnerable children.