In a provocative departure from traditional financial advice, prominent economist John K. Walugembe has ignited national discussion by suggesting that the relentless push for the poor to "save" may be fundamentally flawed.
Speaking on his weekly podcast, Walugembe asserted that for those living in subsistence conditions, saving is often impossible and potentially harmful.
"If you are poor, don’t save," Walugembe said bluntly. "What are you saving? Because even if you save 100 shillings, you will eventually still eat it. You cannot save what you need for today’s survival."
Walugembe’s argument centers on disposable income. According to him, saving is only possible when an individual has "excess" income—a luxury that many in the current economic climate do not possess.
When a household earns less than the cost of basic nutrition and shelter, attempts to save can create a "survival deficit," forcing withdrawals from any meager savings just to stay alive.
To illustrate, Walugembe drew parallels with traditional African societies and the historical use of granaries.
"The concept of saving has always existed for those with excess," he explained. "In the past, families used granaries to store food for future famine or scarcity. But you only put grain in the granary after the family had eaten and was full. You didn’t take the last handful of seeds from a hungry child to put in the granary. That isn't saving; that's starvation."
Walugembe’s remarks critique financial literacy programs that emphasize frugality over productivity. He argues that the priority for the poor should be increasing earning capacity rather than trimming essential consumption already at a bare minimum.
"First work and make money, because even when you say you have 1000 and you are saving 100 of it, for 10 years, it is immaterial," he said.
Key takeaways from Walugembe’s perspective include:
- Saving requires a surplus: You cannot store what you must consume to survive.
- The "Cycle of Retrieval": Saving tiny amounts while in debt or hunger leads to constant withdrawals, yielding no long-term benefit.
- Focus on income: The priority for the impoverished should be increasing earnings rather than hiding small amounts of money.
Walugembe’s stance challenges conventional financial norms and reframes the debate on how best to support low-income households in achieving economic stability.
