- Title
- Microfinace and poverty alleviation in Uganda
- Creator
- Ben, Ssembajjwe
- Subject
- Microfinance -- Uganda
- Subject
- Economic development -- Uganda Economic assistance, Domestic Poverty -- Economic aspects -- Uganda
- Date Issued
- 2018
- Date
- 2018
- Type
- Thesis
- Type
- Doctoral
- Type
- DPhil
- Identifier
- http://hdl.handle.net/10948/23624
- Identifier
- vital:30588
- Description
- Microfinance began in Uganda in the early 1990s as a response to the failure by formal financial institutions to extend financial services to the poor because of the high transaction costs involved. These microfinance institutions provide financial and non-financial services to the poor in order for the poor to generate incomes and consequently alleviate poverty. The advent of microfinance institutions was not accidental but rather in response to the people’s needs and they have therefore been beneficial for the people of Uganda. Because of that, several MFIs have been initiated to help the poor. Although many services are provided, the study focused on credit services. As most of the MFIs have to balance the business goal of profit maximization and the social goal of poverty reduction, the main objective of this study was to explore whether microfinance in Uganda is an effective tool for poverty alleviation. The study was conducted in four districts, namely Mukono, Mpigi, Wakiso and Luwero. Using random probability sampling, a sample of 170 was drawn from a pool of 300 MFI clients. and all of them responded. MFI officials were also interviewed. A total 136 officials were obtained from 47 MFI branches. The study used descriptive methods of analysis, a Likert scale to derive means, as well as a Principal Component Analysis technique. Analysis of variance (ANOVA) was used to detect if there were any statistically significant differences among the demographic variables used in the study. A Probit Regression Model was used to determine the impact of certain variables drawn from Principal Component Analysis (PCA) on poverty in Uganda. The results obtained proved that MFIs in general are effective in combating poverty in Uganda. Variables that are significant in poverty reduction through loan use are land, education, employment, household incomes and occupations of the respondents, loan sizes and improved livelihoods. Despite the positive impact of MFI loans in Uganda, the MFIs are faced with a number of challenges. The results from the interviews with the MFI officials indicated that MFIs are challenged by increasing competition, bad debt, multiple borrowings by clients, and information asymmetry. The study recommended reduced interest rates on agricultural, education and business loans. The public must also be sensitised about borrowing and there should be increased monitoring and supervision of clients, improved assessment of creditworthiness, and government should ensure an enabling environment and encourage group loans. Effort should be exerted to create employment opportunities. The study also recommended improvement in market intelligence and to be alert in gathering information on client profiles. it was recommended that microloan insurance and savings must be encouraged, operational costs be reduced, portfolios be expanded to increase loans and outreach must be maximised. Lastly, the thesis put forward some potential areas for further studies.
- Format
- xxv, 276 leaves
- Format
- Publisher
- Nelson Mandela University
- Publisher
- Faculty of Business and Economics Sciences
- Language
- English
- Rights
- Nelson Mandela University
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