Alvin Peter Ariho2026-04-212026-04-212026-04-14https://hdl.handle.net/20.500.12311/3242UNDERGRADUATEThis study analyses the role of household borrowing in the process of consumption smoothing during food-insecurity shock in Uganda based on the results of the Uganda National Household Survey (UNHS 2023/24). The comparison of the total consumption and food consumption uses as a welfare measure which includes the debt intensity, asset ownership, demographic properties and place of residence. The measure of food insecurity is based on a binary shock variable, and also a severity index based on the Food Insecurity experience scale. The survey-weighted regression models used are based on robust standard errors, descriptive statistics and subgroup analyses of differences between urban and rural and asset-based. The results show that food insecurity shocks have a negative effect on household consumption, with severity-based estimates indicating that households experiencing food insecurity record approximately a 32% reduction in consumption levels. In addition, borrowing is positively related to consumption levels, where an increase in debt intensity is associated with about a 3.6% to 5.6% increase in household consumption, suggesting that credit helps relax short-term liquidity constraints. However, when examining the consumption-smoothing role of debt, the interaction between food insecurity shocks and borrowing is negative and statistically significant, indicating that borrowing does not effectively offset the adverse effects of shocks and instead reflects distress borrowing in many cases. Furthermore, this relationship varies across household groups, with rural and low-asset households experiencing stronger negative interaction effects, while urban and more asset-endowed households show weaker or insignificant effects and are therefore more resilient. The study concludes that credit alone is insufficient to cushion the vulnerable households in times of food-insecurity shocks and that credit can only help to support the short-term welfare. In order to achieve sustainability in consumption in Uganda, it is necessary to strengthen social protection and asset-building policies. Keywords: Consumption Smoothing, Household Debt, Food Insecurity, Welfare, Uganda.enDissertation