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African Crop Science Journal, Vol. 9. No. 3, pp. 549-565

GENDER CHARACTERISTICS OF RURAL FINANCIAL INSTITUTIONS
IN UGANDA

IJOYI FENDRU* and E. ADIPALA¹

Department of Agricultural Economics, Makerere University, P.O.Box 7062, Kampala, Uganda
¹Department of Crop Science, Makerere University, P. O. Box 7062, Kampala, Uganda

Received 12 March, 1996
Accepted 10 October, 2001

Code Number: cs01074

ABSTRACT

The objectives of this paper are to describe the types and socio-economic characteristics of rural financial institutions in Uganda and to describe gender differences between men and women in the use or non-use of these institutions (services). The paper first gives a brief description of the sample, and this is followed by background social, economic, and demographic characteristics of respondents. There then follows a discussion of the use or non-use of financial institutions by respondents, and respondents' perceptions about using financial services. Subsequently, there is a description of the characteristics of informal financial services such as borrowing, lending, saving and deposit activities, and the characteristics of informal financial groups (IFGS). Finally, the implications of the findings are discussed.Of the total respondents interviewed (527), 66 percent were women. Only 11 and 15% of women and men had bank accounts. A higher proportion of rural men (57%) than women (52%) borrowed from informal sources. The fundings indicate that there is limited access to and low level use of rural finances by both men and women. Most rural people tend to hold their savings in the form of non-monetary assets, but women tend to have greater ability and propensity to save than men.

Key Words: Gender differences, rural financing, Uganda

Résumé

Les objectifs de cet article étaient de décrire les types et las caractéristiques socio-économiques des institutions financières rurales en Uganda et définir des differences entre les hommes et les femmes dans l'utilisationn et la non-utilisation de ces institutions (services). L'article donne en premier lieu une brève description d'un échantillion, puis suivi d'une information sociale, économique et les caractéristiques démographiques des respondants. Ensuite une discussion sur l'utilisation et la non-utilisation des institutions financières par des respondants et enfin des perceptions des respondants sur l'utilisation des services financiers. Ensuite, il y a une description des caractéristiques des services financiers informels tels que les emprunts, les prêts, les épargnes et des mouvements de dépots et des caractéristiques des groupes financiers informels (IFGS). Finallement, des implications de ces résultats sont discutées. Sur le total des repondants interrogés (527), 66% étaient des femmes. Seulement 11 and 15% des femmes et des hommes respectivement avaient des comptes en banques. Une proportion importante des hommes ruraux (57%) plus que les femmes (52%) empruntaient à partir des sources informelles. Les résultats montrent qu' il ya des limites d'accès au bas niveau de l'utilisation des finances rurales ensemble pour les hommes et les femmes. La majorité de la population rurale a tendance à maintenir leurs épargnes sous forme des avoirs non monétarisés, cependant les femmes ont tendance à avoir une grande capacité et une expansion des épargnes plus que les hommes.

Mots Clés: Differences de sexe, financement rural, Uganda

INTRODUCTION

Most of sub-Saharan Africa is in a crisis, with a majority of the population living below poverty level. Recent financial reform programmes, especially those spearheaded by the World Bank and International Monetary Fund, which have "liberalised the economies", have tended to impact negatively on rural development programmes, making the rural poor, poorer (Crook and Manor, 1994). Carr (2001) describes the case of Malawi where as a result of financial reforms, fertiliser subsidies were removed, and maize production, the main food staple, declined by nearly 30%. The main victims were the rural population, who depend on agriculture for a living, and the urban poor, who depend on maize for food. To make matters worse, most of the reform programmes and formal banks (Hubner and Fischer, 1992; World Bank, 1993) have tended to focus on urban areas, leaving the burden of uplifting the rural communities to Non-Governmental Organisations (NGOs) and resourcefulness of the rural communities. The biggest bottlenecks though, is the absence of strong financial institutions, such as banks, to support rural transformation programmes. Inevitably, the rural communities rely on informal banking systems to fund their sustainance and development.

Informal financial intermediaries (IFIs) provide alternative financial services to the great majority of rural people who have virtually no access to formal institutions. IFIs in Uganda comprise of both individual and group agents. Individual intermediaries include relatives, friends, neighbours, and merchants, while informal financial groups consist of savings groups and rotating savings and credit associations (ROSCs). However, the gender characteristics of these groups have not been well described, although it is known that women tend to have more informal financial intermediaries.

In this paper we examine the role gender plays in operation of the informal financial institutions, and whether or not this has any bearing on the abilities to save and invest in Uganda. Based on the outcome of the study, we explore possible policy interventions
.

Methodology

The data used in this paper were collected from an exploratory survey of a stratified random sample of 527 respondents in the districts of Arua and Mukono in Uganda during the 1992/93 agricultural season. Arua is situated in the North-western region on the Democratic Republic of Congo (DRC) and Sudan borders, nearly 500 kilometres from the capital city of Kampala while Mukono is located in the Central region only 25 kilometres from Kampala. These two districts were selected because they exhibit contrasting characteristics with respect to agro-ecological conditions, farming systems, predominant ethnic groups, degree of rurality, availability of communications services, access to markets, and level of economic development.
Twenty two villages (11 from each district) were randomly selected for the study. The size of the population of the survey villages varied widely from as few as 167 residents to as many as 3,124 people with a standard deviation of 800 and a mean and median of around 1,600 people. Also, the total sample of 527 respondents were more or less equally divided between men (53 percent) and women (47 percent). The equality in the sample was achieved through a process of random proportional gender sampling at the household level.

The sample was dominated by two major ethnic groups: the Lugbara in Arua and Baganda in Mukono. The Lugbara comprised nearly 50 percent (257) of the entire sample, while the Baganda accounted for another 32 percent (170). Together, the two ethnic groups constituted 82 percent of the total sample, and the remaining 19 percent consisted of minor groups including Basoga (6 percent), Kakwa (2 percent) and others (11 percent).

RESULTS AND DISCUSSION

Background socio-demographic chara-cteristics of the respondents. Of the total number of household heads (343) interviewed in this study, 66 percent were male and 34 percent female (Table 1). Previous studies (e.g., Jiggins, 1989) done in sub-Saharan Africa (SSA) have estimated the proportion of female headed households to be around 30 percent. About three-quarters (74 percent) of the sample were married, 82 percent (n=280) of the male respondents were married men compared to 64 percent (n=247) married women (Table 1). Contrary to popular misconception, more than two-thirds (68 percent) of the married couples were monogamous, whereas a relatively small proportion (32 percent) were polygamous marriages.
The survey identified three broad occupational categories into which respondents were grouped: farming, trading, and wage employment in the public or private sector. These are, however, not mutually exclusive and exhaustive categories, as a good number of respondents simultaneously engaged in two or three main occupations in varying degrees. As shown in Table 1, the greatest proportion of respondents (88 percent) who reported farming as a major occupation also mentioned trading and wage employment as their other main economic activities. Similarly, another substantial percentage of respondents (37 percent) who mentioned trading as their main source of income were simultaneously engaged in farming and wage labour. The remaining 21 percent of the respondents said they worked as wage earners as well as performed farming and trading activities to supplement their wages. Of the total sample (n=527), 239 (45 percent), 28 (5 percent), and 20 (4 percent) of the respondents reported farming, trading, and wage employment, respectively, as the primary sources of income for their households.

A slightly higher proportion of male respondents (90 percent) were involved in farming as their primary occupation as compared to female respondents (85 percent). Likewise, the proportion of men who were involved in wage employment as one of their major sources of income (35 percent) is close to that of women respondents (33 percent) who were also in the same occupation (see Table 1). Other studies (e.g., UNICEF, 1989) have estimated the proportion of women employed in the middle and lower levels of the formal sector to be much lower (as low as 16 percent). On the other hand, the proportion of women respondents (48 percent) engaged in trading as one of their major activities is twice that of men (27 percent) and also much higher than the overall percent of respondents who (37 percent) are in that category (Table 1). This is primarily due to lack of diversification and specialisation of economic activities.

With respect to educational background, respondents were grouped into four categories: those who have had no formal education (22 percent); those with primary education (P1-P7) (58 percent); 15 percent of the respondents had attained secondary education (S1-S6); and 5 percent had completed post-secondary or higher education. However, 46 percent of the 305 respondents who had gone to primary school dropped out before completion and a mere 11 percent actually managed to pass the Primary Leaving Examination. Even fewer respondents (20 percent) had gone through secondary and higher education.

The survey found that women without formal education out-number men in the same category by a ratio of 3:1. In addition, the proportion (52 percent) of men who had acquired some primary education was substantially higher than that of women (42 percent). Likewise, fewer women (8 percent) than men (14 percent) had completed primary education. This means that nearly 80 percent of the female respondents had no or little formal education compared to 68 percent of the males. Worse still, fewer than 10 percent of women had completed primary education compared with 17 percent of men. The proportion of women (2 percent) who had gone through higher education at the time of this study was also much lower than that of men (7 percent) (Table 1).

These results compare well with those published by the 1988-89 Uganda Demographic and Health Survey which reported that 40 percent of the women respondents had never been to school in addition to 43 percent with only some primary schooling. It also indicated that less than 20 percent women had secondary education and even much fewer still (3 percent) went beyond this level (Uganda Ministry of Health, 1989). Nationally, more than 50 percent of all women in Uganda have never gone to formal school. The rate of illiteracy and innumeracy is 50 percent higher among women than men (UNICEF, 1989)¹.
Gender differences become even more revealing when we consider rural-urban statistics in education. The proportion of respondents in rural areas without formal education (25 percent) was found to be 5 times higher than that in urban areas (5 percent). Interestingly, the proportions of rural men (71 percent) and urban women (70 percent) with some primary education are very close. However, the picture is different when we compare higher levels of education. The proportion of women with secondary (25 percent) and post-secondary education (8 percent) are considerably higher than those for rural men who have been to secondary school (14 percent) and higher institutions of learning (4 percent). Likewise, the proportion of female respondents who have had no formal education in rural areas (40 percent) is much higher than that for women without formal education in urban centres (98 percent). Furthermore, 25 percent of urban female respondents have been to secondary school, compared with only 11 percent of the women with secondary education in rural areas. This means that at the time of this study, the rate of illiteracy and innumeracy was much higher among rural women than men.

Respondents' use of financial services. Table 2 shows that few rural people actually make use of formal or semi-formal financial institutions, particularly banks. For instance, the survey found that only 13 percent and 2 percent of the respondents, respectively had accounts with banks and semi-formal financial institutions such as credit unions. The proportion of women who had bank accounts (11 percent) is smaller than that of men with bank accounts (15 percent). There were no female respondents with accounts in semi-formal financial institutions. The proportion of respondents who had asked for a bank loan in the past is small (5 percent). Fewer women (1 percent) than men (7 percent) have ever requested for a bank loan. Only about 48 percent of the few respondents who applied for bank loans were successful.

Male and female respondents in both rural and urban areas also exhibit substantial differences with respect to loan and saving characteristics. As shown in Table 2, there is a higher proportion of rural men (57 percent) than rural women (52 percent) who reported ever having borrowed from informal sources. While 13 percent and 3 percent, respectively of the urban and rural men who applied for formal credit were successful, no women applicant in rural or urban areas received any bank loan (Table 3).
It is also evident from Tables 2 and 3 that there were proportionately more male than female respondents who participated in saving and deposit activities both in rural and urban areas. Clearly, a large percentage of the respondents do not use formal or semi-formal financial institutions. Thus, 87 percent and 98 percent of the total sample respectively reported no bank deposits and no bank borrowing. Similarly, the great majority of men (85 percent) and women (89 percent) had no bank accounts.
When asked why these respondents had no bank accounts and no bank loans, they gave several explanations for this. A substantial proportion (45 percent) of non-bank customers reported they had no bank accounts because they kept their savings with informal money keepers (Table 4). This explanation was given by a much higher proportion of women (51 percent) than men (38 percent). About a quarter of the respondents (21 percent) confessed that they did not understand the operations, conditions, and uses of banks. This response was given by fewer women (18 percent) than men (24 percent). About less than a fifth (18 percent) of the respondents pointed out that neither banks nor credit unions were present in their areas. Another 16 percent of the respondents said they feared to deal with these institutions because the latter are inefficient, ineffective, corrupt, and serve only certain groups.

The majority of the respondents (58 percent) did not request for a bank loan because they were afraid of commercial loan conditions. Surprisingly, the proportion of men who feared bank loan conditions (75 percent) is substantially higher than that of women (62 percent) who gave the same response. Further, 47 percent of the respondents (35 percent and 42 percent of men and women, respectively) did not borrow from banks because they relied on their own personal or domestic savings. Another important explanation for not applying for a bank loan was the lack of awareness of loan conditions. This was reported by 8 percent of all non-users (16 percent men and 29 percent women).

From the foregoing results, it follows that a very large part of the agricultural sector neither depends on formal financing nor benefits from it. Reports on formal financial institutions in Uganda (e.g., Hubner and Fischer, 1992; World Bank, 1993) indicate that commercial banks in the country have historically focused on the provision of short-term credit for financing the processing and marketing of export crops and external trade, while leaving development finance and long term loans to the so-called development banks, which lack the necessary capacity.

Banks lack interest in rural areas because they often claim that rural people do not have the capacity to save and deposit with them. They fear that they cannot make lucrative profits in these areas due to high transaction costs of doing business there. Overall, commercial banks have made minimal contribution to crop finance. For example, in 1989 agricultural credit accounted for only 5 percent of the monetary agricultural GDP and a mere 2.3 percent of the total agricultural GDP (Yaron, 1990, 1991). The bulk of this credit was provided by foreign donors and most of it went to finance export crop processing and marketing and the remainder was used for production finance. For example, in 1989 processing and marketing credit accounted for 38 percent of the monetary cash crop agricultural GDP. Between 60 percent and 80 percent of the share of total crop finance consisted of marketing credit (Yaron, 1990).

A lion's share of the crop finance was advanced to the Coffee Marketing Board (CMB), co-operative unions, and private processors to handle coffee processing and marketing. In contrast, in the same year crop production finance accounted for only 1 percent of the monetary food crop agricultural GDP. According to Yaron (1990), the high and increasing share of crop marketing finance tends to be a reflection of the low turnover and inefficiency of credit.

Several factors are responsible for the minimal use of formal finance by the poor. The most critical of these include the location of financial institutions in distant urban centres which are far away from potential customers in rural areas; high borrowing and lending transactions costs; prohibitive bank loan collateral requirements; the preference of banks to put their funds in more secure investments that yield profitable and dependable returns; risks associated with carrying out financial transactions with a large number of poor customers who are widely scattered in rural areas which are not easily accessible; lack of public confidence in banks arising from currency depreciation and escalating inflationary pressures that caused serious losses of income and liquid assets across social groups; and the rather poor viability of the financial institutions themselves due to poor infrastructure, lack of managerial capacity and liquidity crisis. Overall, the financial system has a weak infrastructure with a sparse branch network, poor deposit facilities, a small volume of undiversified transactions, instruments, and products. The cost of intermediation for the entire financial system is estimated to be as high as 24 percent of the overall transactions costs (World Bank, 1993). In addition, it is extremely difficult for financial institutions to plan meaningfully, as statistics are woefully lacking and unreliable when available. The military, political, and social upheavals that afflicted Uganda in the 1970s and 1980s led to decimation of the data base and records, thereby leaving large gaps in statistics.

Respondents' perceptions about financial services. Respondents were first asked to express how concerned they were about getting into bank debt through commercial borrowing. The majority of the respondents (75 percent), i.e., 72 percent men and 78 percent women expressed great concern about bank debt. These high proportions are indicative of people's unwillingness to obtain commercial credit because they fear to get into debt. There was just about an equal proportion of men (12 percent) and women (13 percent) who indicated that they were somewhat concerned with bank debt. However, the proportion of male respondents who claimed that they were not concerned about bank debt (15 percent) was slightly higher than that of women (11 percent) in the same category.

Respondents were further asked to indicate specific attitudes regarding borrowing chances from commercial banks, use of credit, and bank debt. The responses were pre-coded on a three-point Likert scale and the results are summarised in Table 5. When asked whether they thought anyone could obtain a bank loan, 86 percent of the respondents disagreed with this statement, with a larger 6 percentage of men (93 percent) than women (78 percent) disagreeing with this statement.
Likewise, nearly 80 percent of the respondents stated that people like them had little chance of borrowing from a bank. Again, a higher proportion of men (84 percent) than women (71 percent) agreed that they had limited opportunity of borrowing from a bank. An overwhelming majority of the respondents (92 percent) disagreed with the statement that it is easy for anyone to satisfy bank lending conditions. While a large percentage of the total sample (81 percent) indicated that they were afraid to get a bank loan because they may fail to repay the loan, a much higher proportion of women (96 percent) than men (68 percent) perceived this problem. This substantial difference between male and female respondents' attitudes toward bank credit seems to indicate that women are more sensitive about getting into debt than men. It may also show that women are more risk averse than men.

With respect to differential gender access to bank loans, 68 percent of all the respondents agreed that it is easier for men to obtain a bank loan, but a larger number of women (72 percent) than men (64 percent) perceived this to be the case (see Table 5). Furthermore, respondents were asked to express their perceptions about using bank credit for certain purposes. As shown in Table 5, a great majority of the respondents (90 percent) said it was 'a good idea' to borrow bank money for production. Whereas about two-thirds of all the respondents (61 percent) were of the opinion that it is risky to use bank credit to finance agricultural activities, the proportion of men who shared this viewpoint (74 percent) is close to twice that of the women (47 percent) with the same perception. On the other hand, a more or less equal proportion of all the respondents (82 percent), men (81 percent) as well as women (83 percent) indicated that it is a good idea to utilise bank credit for marketing or trading. However, the majority of men (88 percent) and women (74 percent) dismissed the idea of borrowing for consumption purposes. Similarly, both men (94 percent) and women (79 percent) did not consider it is wise to borrow money for festivities (Table 5). These responses indicate that both men and women have clear perceptions about the general problems associated with bank borrowing and credit.

Characteristics of informal financial intermediaries (IFIs). About 70 percent of the respondents owned some animals. Numerically, poultry is the leading type of livestock kept by the respondents (55 %) , followed by sheep and goats (45%) and cattle (22%). Traditionally, cattle are kept as physical assets or wealth, and are also used as a hedge against risk and inflation. However, local cattle or other types of livestock can not be pledged as security for commercial loans, because banks do not readily accept them as conventional collateral.

In order to characterise respondents' saving behaviour, they were asked to answer questions about their saving habits, purposes of saving, and reasons for not saving jointly with their spouses. The responses were disaggregated by gender so as to ascertain differences, if any, in saving behaviour between men and women. The results are shown in Table 6. About 75 percent of the sample responded that they did engage in saving activities. The remaining 25 percent of the respondents did not save at all. More women (66 percent) than men (59 percent) reported some savings, while fewer women (34 percent) than men (41 percent) reported no savings at all.

When asked why they saved, the 396 interviewees who responded listed meeting household expenses (51 percent), dealing with emergencies (39 percent), and investing in productive activities (38 percent). Two other important reasons for frequent saving mentioned by respondents were saving to pay school fees (21 percent) and enhancing household financial security (14 percent). Both men and women listed the same three top reasons for saving (Table 6). In comparison, however, women tended to be more concerned with saving for emergencies (43 percent) and household expenses (28 percent), while more men (22 percent) than women (12 percent) were interested in saving for investment purposes. On the other hand, an equal proportion of men and women (8 percent) were concerned with saving for household financial security.

As to whether or not respondents kept their savings together with their spouses, over a quarter (26 percent) responded in the affirmative, while nearly three-quarters (74 percent) said they had separate savings accounts. When probed to explain why they did not save jointly, a large proportion of both men and women (44 percent) gave lack of trust between the spouses as the primary reason. Other important explanations for keeping separate accounts were the prolonged absence of spouses from home, mentioned by 33 percent of the male and 29 percent female respondents, and guaranteeing personal financial security mentioned by 24 percent of men and 27 percent of women.

The survey information further revealed that 55 percent of all the respondents had borrowed from informal sources in the past year. A slightly higher proportion of men (57 percent) than women (52 percent) reported borrowing from informal lenders. Relatives, neighbours and friends accounted for 93 percent of the total number of informal loans. Relatives alone were responsible for 46 percent of all loans; friends and neighbours supplied another 47 percent, while merchants provided only 7 percent of the total number of loans. Generally, men averaged a higher number of loans than women both in rural and urban areas. Also, the mean total amount (value) of loans was greater for men (Shs. 68,699 or $57) than for women (Shs. 24,973 or $21). Furthermore, the average value of loans for rural men was about five times (Shs. 70,000 or $58) that for rural women (Shs. 15,000 or $13), while in urban areas men's mean amount of loans (Shs. 67,000 or $56) was twice that of women (Shs. 34,000 or $28) (Table 7). The maximum amount of loans taken by men in rural areas is seven and a half times (Shs. 3,000, 000 or $2,500) that granted to rural women (Shs. 400,000 or $334), while the maximum amount borrowed by urban men is two and half times (Shs. 450,000 or $375) the value obtained by their female counterparts (Shs. 200,000 or $167). Similarly, urban men had on average 5 loans, while urban women had an average mean of 3 loans.

The mean number of informal deposit transactions made by respondents in the past year was about 8. On average, female respondents made about 10 deposits, compared to 5 deposits by men. Also, women in both rural and urban areas, on average, had more deposits than men (Table 7). Conversely, men, on average, held greater amounts of deposits than women whether in rural or urban areas. The maximum values of men's deposits in rural areas (Shs. 680,000 or $567) and urban centres (Shs. 120,000 or $100) were even much greater (14 and 5 times higher) than the maximum amounts held by women.

Informal borrowers used their loans to finance both production and consumption activities. Most respondents (65 percent) used loan funds to purchase consumer goods and services. However, the highest proportion of respondents (34 percent) borrowed funds in order to finance productive activities, 32 percent used their loans to offset household expenses, and 20 percent obtained credit to deal with emergencies (Table 8). Other frequently cited uses of consumer loans were meeting personal needs (15 percent) and paying for school fees (9 percent). More women (38 percent) than men (28 percent) used their loans for production purposes. In contrast, a greater proportion of men (71 percent) than women (61 percent) bought consumer goods with their borrowed money. However, men and women were more or less evenly distributed on the use of borrowed money to meet household expenses (28 percent and 27 percent) and pay for emergency needs (20 percent and 18 percent) (Table 8).

Characteristics of informal financial groups (IFGs). A sub-sample of 70 members were interviewed in order to explore the general IFG membership characteristics and the results obtained are reported in Tables 9, 10, 11 and 12. Informal financial group members belong to two main types of group savings that tend to occur commonly in the country: savings groups and rotating savings and credit associations (ROSCAs). Savings groups predominate, as they constitute about 63 percent of the total membership of IFGs. These groups are comprised of accumulating or savings associations (19 percent) and saving and credit association (44 percent) (see Table 9).

Membership composition of a given group is based on a set of varied personal and social characteristics of individual members (Slover, 1991). The composition of IFG membership tends to be homogeneous with respect to such characteristics as gender, age, education, occupation, income, community, ethnicity, geographical location, and religion but is heterogeneous in terms of socio-economic status (Cuevas and Graham, 1988; Slover, 1991). This means that various IFGs are composed of people who are socially connected by various common bonds such as sex, education, occupation or income, region, ethnicity, and religion. In his study, Slover (1991) cited occupation, community, and ethnicity as the main characteristics that bonded group members together, while gender and religion did not contribute much to the common bonds.

There is a fairly wide variation in the membership size of IFGs reported by respondents (see Table 11). Of the 70 members interviewed, over a third (37 percent) of them were in IFGs with 10 or fewer members, while 23 percent belonged to groups having 11-20 members, and another 40 percent were in IFGs with more than 20 members. Thus, over two-thirds (63 percent) of the IFGs had over 11 members. Rotating savings and credit associations were generally smaller than savings groups with an average membership size of 6, and ranging from as few as 2 to 11 members (Table 12).

According to the World Bank (1993), ROSCAs in Uganda have much larger memberships than elsewhere, ranging from 25 to 50 people. The results obtained in this study, however, show that about 40 percent and 73 percent of the entire ROSCA membership consisted of 5 or less and 10 or fewer members, respectively. Savings groups in Uganda, on the other hand, have larger memberships, ranging between 2 and 26, with an average mean of 11 members. Compared with ROSCAs, about 84 percent of all savings groups have greater than 10 members with nearly 60 percent of them exceeding 20 members. These results are strikingly similar to the findings of previous studies done in sub-Saharan Africa (e.g., see Bouman, 1977; Slover, 1991).

Similarly, IFG membership sizes reported in the literature in different parts of the world range from as few as 5 members to as many as 152 people (Bouman, 1977; Seibel, 1986). For sub-Saharan Africa the membership size of IFGs has been estimated to vary between 10 and 152 patrons (Bouman, 1977; Seibel, 1986).

Group composition is either based on separate or single social bonds, or transcends several types of bonds. For example, the membership of a group may be made up of single or mixed sex participants (see Tables 11 and 12), or people from the same occupation or same locality. It is not uncommon for a person who belongs to one type of group having one set of goals to be simultaneously a member of another kind of group with quite a different set of objectives. There are a number of differences between men's and women's groups with respect to the place of social bonds (affective/emotive ties or social solidarity) in group formation and patrons' socio-economic activities.

Purely male groups are fewer in number and tend to be smaller than all female groups ( Table 12). They also have multi-village memberships, concentrate their efforts on mainly economic projects, and reinvest their savings into income-generating activities. In contrast, all female groups are larger in size, are more numerous (25 or 36 percent), and consist primarily of village residents, but engage in both economic and extra-economic community-oriented activities such as health, social welfare, and handicraft works that do not have readily available markets.

However, mixed-sex groups dominated by males have larger membership sizes than purely men's groups. Likewise, they are more numerous, as they constitute 33 percent of the total membership relative to female dominated mixed groups which make up only 11 percent of all IFGs (Tables 11 and 12). There are also a few groups (6 percent) with equal sex composition in their membership ranks. It is not clear from the survey why some groups are all male or all female. Some researchers (e.g. Slover, 1991) have suggested that single-sex groups enable their members to maximise membership information, as homogeneous groups have a greater information advantage or possess more perfect knowledge over heterogeneous groups. He has also suggested that members of single-sex groups may enjoy a higher degree of trust than mixed groups.

Whereas gender plays a key role as a factor of primary group affiliation, both among men and women, male groups tend to be more discriminatory with respect to membership recruitment. According to Tripp (1994), primary affiliation through formation of effective ties is not the driving force behind the initiation and endurance of women's groups in Uganda. This is because female members' primary motive for coming together is economic survival and improvement of social welfare through mutual support activities. In contrast, she claims that men's groups are often based on sectarian considerations such as ethnicity, clanism, region, partisanism, class, and even religion. This is typical of men's cultural and burial groups (e.g., "Munomukabi" groups in Buganda) whose members are brought together by descriptive affiliations based on primary affinity such as kinship. Even men's groups that are formed primarily for economic purposes still tend to base their membership recruitment on certain kinds of discrimination.

According to Tripp (1994), purely women's groups, especially in urban areas, are more encompassing as the composition of their memberships usually cuts across occupational, ethnic, political and religious boundaries. In practice, women generally reject male-dominated sectarian associations. Tripp(1994) reported that the membership of a typical non-sectarian female association consists of women from different ethnic groups, political persuasions, religious convictions, educational levels, and occupational status. She found only a few women's groups in Kampala city that were based on purely ethnic ties. She goes on to point out that even in rural areas female savings clubs include members from various groups. Our survey results confirm these observations.

Female IFGs tend to be further bonded together by occupation and residence. Women find it much easier to come together and get along with one another because they are often restricted from joining male groups that are formed around some primary affinity such as savings clubs or affiliates of larger already existing bodies like church groups, viz. Mothers' Union, which may be composed of women from several different ethnic groups, various religious affiliations, as well as diverse types of occupations and remuneration levels. Such groups are formed by women of diverse backgrounds and transcend affective relationships, including work mates, business associates, neighbours, friends, and others, thereby providing a new lease of life for the community.

Discussion and policy implications

Findings of this study indicate that there is a limited access to and low level of use of rural finance by both female and male respondents. The majority of the men and women who use informal financial arrangements have virtually no access to formal financial institutions, but there are a few people (mainly men) living largely in urban areas who use both types of finance. The overall proportion of male respondents with bank accounts is very small (13 percent), while those men who hold deposits with semi-formal institutions form miniature proportions.

The number of male respondents who have requested and obtained bank loans constitute even smaller proportions (5 and 2 percent) of the total sample. Virtually, no female respondents applied for and obtained any bank loan, or had any deposits or savings with either formal or semi-formal institutions. Clearly, the formal financial sector does not cater for the credit and savings needs of poor people, particularly of women. The pronounced absence of formal financial institutions in the rural economy has consequently reinforced the critical importance of the informal financial sector for the well-being of rural households, especially female-headed families.

The results further reveal that most rural people tend to hold their savings in the form of non-monetary assets such as various types of livestock, stocks of harvested or standing crops, and stored inputs. Although some people hold their savings in monetary assets, these savings are small. Recent studies done in Tanzania (Temu and Hill, 1994) and Gambia (Zeller et al., 1994) also report that both means of savings are widely practised by rural people. The tendency of rural people to hold most of their assets in physical rather than liquid form has resulted, among other things, from lack of commercial deposit or savings facilities and incentives, as seen above. Likewise, this is associated with the loss of popular confidence in the banking system due to currency reform (devaluation), inflation, and negative real interest rates coupled with mismanagement and corruption perpetuated by bank officers.

It is also evident from the results that both men and women are willing to save and do save even from their low incomes. Most respondents (75 percent) reported either saving regularly or whenever their income and expenditure budgets permitted them to do so, although the savings tend to be small. A higher proportion of women (66 percent) than men (59 percent) reported some savings. Also, female respondents both in rural and urban areas made many more deposits than male respondents, but the average value of men's savings was higher than women's. These differences imply that women are more conscientious and concerned about the welfare of their families than men, as suggested in the Women in Development literature (see Blumberg and Clark, 1989). However, these results are contrary to the Women in Development literature which asserts that women tend to spend a larger proportion of their income on household welfare than men.

In addition to monetary savings and loans, rural people may even draw on their physical assets in order to enhance their households' consumption during hard times. According to Zeller et al. (1994), during such periods rural households in general use both their physical and liquid assets as a mechanism of self-insurance to hedge against future food and other forms of insecurity. Similarly, Townsend (1994) has found exchange of gifts among villages in Southern India to play an important role in smoothing income fluctuations. These researchers argue that apart from personal or household savings and informal borrowing, rural people need commercial credit to boost their consumption smoothing strategies and hence increase their capacity to bear risks. That is, households use informal credit to smooth their annual income fluctuations and seasonal shortages of food stuffs as well as to finance productive activities.

The foregoing results suggest that women may be saving and investing more than men because they are more concerned about their households' long-term food and financial security than men. When the non-borrowers (45 percent) were asked to explain why they did not borrow, they provided a number of reasons. The most common explanation was the inability to repay loans (37 percent of the non-borrowers). This was also the reason most frequently given by both men (35 percent) and women (40 percent). The fear of debt was the second main reason for not borrowing and was mentioned by 26 percent of the respondents. But there were proportionately more women (27 percent) than men (24 percent) who gave this explanation.
Since early 1970s men's incomes in the formal sector have declined, as a result of political instability coupled with economic repression in Uganda. This has exerted mounting pressures on Ugandan women to use alternate (non-traditional) sources of household sustenance, mainly in the informal sector, where they had been pushed by male and state discrimination. As such, women, more especially in urban areas, are using rising proportions of their incomes to meet household expenses for food, clothing, health, and educational expenses (Tripp, 1994) which used to be provided by men and the state.

The results furthermore indicate that poor people save for rational socio-economic reasons. As in the case of informal credit, most of the respondents reported using their cash savings for purposes of smoothing consumption such as during family emergencies (death, funeral rites), paying school fees and meeting household expenses, but a substantial proportion of savings are also used for investement activities like production and trade. Men and women also differed with respect to their primary motives for saving. Proportionately, more men (22 percent) than women(12 percent) saved for investment purposes, while more women saved for meeting family emergencies (43 percent) and household expenses (28 percent).

Important policy implications emerge from the results of this study. First, there is an urgent need to establish effective facilities for rural people to deposit their savings as well as opportunities for them to invest these savings into productive activities. In this regard, development finance planners and policy makers need to recognise a growing body of empirical evidence which indicates that poor people in general and women in particular are able and willing to save when they are availed the necessary opportunities (Lipton, 1988; Morris and Meyer, 1993). This calls for incentive economic programmes to mobilise saving, lending, and investment capacity in the rural economy. A minimal solution to this problem is to provide effective and efficient facilities as well as a safe socio-economic environment for savers, borrowers, and investors in the rural areas.

Second, available research evidence clearly indicates that rural people require credit to simultaneously meet both their households' production and consumption requirements. This means that the theoretical distinction between production and consumption activities is not practical. Because of its fungibility, credit used for consumption purposes also does contribute to productive activity (Adams, 1978; Adams and Vogel, 1986; Adams and Fitchett, 1992; Zeller et al., 1994). In practice this means that for credit programmes to work more effectively and efficiently, loans should be advanced to both small-scale male and female borrowers both for production and consumption purposes, including smoothing household income fluctuations and seasonal food shortages.

Third, administrators also need to take cognizance of research evidence showing that women tend to have greater ability and propensity to save than men (Cuevas et al., 1990; Morris and Meyer, 1993). It has been demonstrated by previous research (see Morris and Meyer, 1993) that generally women have better repayment records than men. This evidence calls for women's special credit and savings needs to be seriously taken into account by formal financial institutions. Likewise, policy makers and planners should pay more attention to women' needs for financial services by translating rhetoric into action in gender-aggregated rural development programmes.

Finally, policy makers should consider using informal financial intermediaries as conduits for delivering badly needed financial services to rural people. In particular IFGs should provide a viable vehicle for this purpose. The experiences of the Grameen Bank in Bangladesh and other successful experiments in other East Asian countries demonstrate the feasibility and viability of the group based approach to the provision of financial services to poor people. The current Government policy of extending soft loans to rural communities through the "Entandikwa scheme", if properly managed, is a step in the right direction (Ministry of Finance and Economic Planning, 1995).

REFERENCES

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