Financial Literacy and Livelihood Nexus in Uganda: Re-Thinking the Intervention Pedagogy

Abstract

This paper reports results of a survey that was conducted in central Uganda to examine the effect of financial literacy on livelihood levels. Specifically, the study investigated the effect of financial knowledge, behaviour, and attitude on livelihood levels; and the mediating effect of financial systems on the link between financial behaviour and livelihood levels. Data was collected using questionnaires and semi-structured interview questions from 196 respondents. The regression results revealed that a combination of financial knowledge, attitude, behaviour, and systems significantly explains 14% of the variance in levels of livelihood (Adj. R Square =.140; Sig 0.007). This means that a change in the financial literacy level will lead to a change in livelihood levels. Of all the financial literacy dimensions, the results indicate that financial attitude significantly predicts livelihood levels (Beta = 0.498, sig = 0.000). This implies that for livelihood levels to improve a positive financial attitude should be developed. When the mediation tests were conducted, it was clear that financial systems mediate the relationship of financial knowledge and behaviour and livelihoods (Sobel Z-Value of 2.35, P-value 0.011). Generally, a positive financial attitude and the effectiveness of a financial system play a key role in influencing livelihood levels. Thus, action based, and experiential learning pedagogies should be embedded in financial literacy training for participants to improve their livelihoods.