Digital Financial Inclusion and Individual Savings in East Africa: Evidence from Uganda, Kenya, and Tanzania

This study analyses the determinants of individual savings in Uganda, Kenya, and Tanzania using the Global Financial Inclusion (Global Findex) database 2021. The model integrates descriptive statistics, chi-square tests, t tests, ANOVA, and propensity score matching (PSM) to estimate causal effects while following the methodological guidelines of Rosenbaum and Rubin (1983).The study first documents strong associations between saving and a range of demographic, socioeconomic, and financial inclusion variables. Men, urban residents, higher-income and better-educated individuals, and those integrated into formal and digital financial systems (through account ownership, mobile phones, internet access, and digital payments) are significantly more likely to save and accumulate higher savings balances. The ANOVA results further reveal pronounced gradients in average savings across income quintiles, remittance channels, and modes of receiving wages, transfers, pensions, and agricultural payments, with account-based and digital channels consistently associated with greater savings.To address selection bias, PSM was employed to estimate causal effects. The results indicate that borrowing, remittances through formal or semiformal channels, and internet access significantly increase the probability of saving. Cross-country PSM estimates reveal that saving has a positive causal effect on income in Tanzania but not in Uganda or Kenya once financial inclusion and socioeconomic characteristics are controlled for. Regarding financial inclusion outcomes, saving has a clear causal link with borrowing in Uganda and a weak causal effect in Kenya but no robust causal impact on internet access, account ownership, or digital payment use in any of the countries after matching. In Kenya’s more mature digital ecosystem, digital payment usage itself has a strong causal effect on saving.Overall, the findings underscore the central role of digital and formal financial infrastructure, income, and labor market attachment in shaping savings, consistent with foundational theories such as the permanent income hypothesis (Friedman, 1957) and life cycle hypothesis (Modigliani & Brumberg, 1954). Policy priorities include expanding inclusive digital finance, promoting account-based payment channels, and designing country-specific strategies that leverage the complementarities between saving, borrowing, and digital financial inclusion.