Explaining Poverty in Uganda: Evidence from the Uganda National Household Survey

Abstract

The broad aim of the research was to establish a tool for identifying cost effective poverty alleviation strategies in Uganda. The objectives were to test hypotheses on causes of poverty in Uganda and to develop a poverty simulation model for policy analysis. Data for 9,710 households from the 2002/2003 Uganda National Household Survey (UNHS) was used to estimate a semi-log econometric model. The model included 19 households level characteristics and 8 community level characteristics as explanatory variables. The dependent variable was the natural logarithm of household consumption per adult equivalent. The model was estimated at both national and regional (5 regions) by weighted least squares with robust variance. The results identified 8 particularly promising poverty reducing policies namely: expansion of formal employment, secondary education, reduction in population growth, rural electrification, off-farm activities, collateral free credit, telephone services and reducing distance to community services. The study highlights the policy implications of the results.