Effects of Financial Incentives on Saving Outcomes and Material Well-Being: Evidence From a Randomized Controlled Trial in Uganda

The use of savings products to promote financial inclusion has increasingly become a policy priority across sub-Saharan Africa, yet little is known about how families respond to varying levels of savings incentives and whether the promotion of incentivized savings in low-resource settings may encourage households to restrict expenditures on basic needs. Using data from a randomized controlled trial in Uganda, we examine: (1) whether low-income households enrolled in an economic-empowerment intervention consisting of matched savings, workshops, and mentorship reduced spending on basic needs and (2) how varied levels of matching contributions affected household savings and consumption behavior. We compared primary school-attending AIDS-affected children (N = 1,383) randomized to a control condition with two intervention arms with differing savings-match incentives: 1:1 (Bridges) and 1:2 (Bridges PLUS). We found that: (1) 24 months post-intervention initiation, children in Bridges and Bridges PLUS were more likely to have accumulated savings than children in the control condition; (2) higher match incentives (Bridges PLUS) led to higher deposit frequency but not higher savings in the bank; (3) intervention participation did not result in material hardship; and (4) in both intervention arms, participating families were more likely to start a family business and diversify their assets.