Microfinace and poverty alleviation in Uganda
- Authors: Ben, Ssembajjwe
- Date: 2018
- Subjects: Microfinance -- Uganda , Economic development -- Uganda Economic assistance, Domestic Poverty -- Economic aspects -- Uganda
- Language: English
- Type: Thesis , Doctoral , DPhil
- Identifier: http://hdl.handle.net/10948/23624 , 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.
- Full Text:
- Date Issued: 2018
- Authors: Ben, Ssembajjwe
- Date: 2018
- Subjects: Microfinance -- Uganda , Economic development -- Uganda Economic assistance, Domestic Poverty -- Economic aspects -- Uganda
- Language: English
- Type: Thesis , Doctoral , DPhil
- Identifier: http://hdl.handle.net/10948/23624 , 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.
- Full Text:
- Date Issued: 2018
Management and performance indicators of micro-finance institutions in Uganda
- Authors: Milly, Kwagala
- Date: 2011
- Subjects: Microfinance -- Uganda , Financial institutions -- Uganda -- Management , Management , Performance standards
- Language: English
- Type: Thesis , Doctoral , DPhil
- Identifier: vital:9273 , http://hdl.handle.net/10948/1641 , Microfinance -- Uganda , Financial institutions -- Uganda -- Management , Management , Performance standards
- Description: The purpose of this study is to examine how the management of micro-finance institutions in Uganda has affected the performance indicators of these institutions, and whether or not the management of these institutions is responsible for their failure. The need to carry out this study arose as micro-finance institutions in Uganda failed to attain their planned performance indicators, to such a degree that most of them closed down. Although at their inception there was considerable entrepreneurial activity supported by a highly favourable government policy environment, their closure soon after establishment raised concern as to what caused them to fail. This study was encouraged by the observation that most of these institutions failed to realise their performance indicators as planned, but the underlying cause was not clear. Thus, the study focuses on establishing stakeholder perceptions of the management of the micro-finance institutions, and the relationship between their management (planning, implementation of planned programmes, and control) and their performance indicators, following the rationale of the functional and contingency paradigms of the concept of management. The study examines the way management dealt with these institutions‟ internal and external environments to influence their ability to realise their planned performance. The study is conducted using positivistic research methodology. This involved a collection of quantitative data from a sample of 454 respondents, including 64 managers, 177 employees, and 213 clients. Structured questionnaires were used to collect the data, and purposive and convenience sampling were applied to select the respondents. The respondents were selected from 56 randomly selected micro-finance institutions operating in Central Uganda and representing 75 percent of the country‟s operational institutions by December 2009. The data were analysed using the narrative, chi-square test, the ANOVA, factor analysis, and correlation and regression methods of analysis aided by the SPSS programme. The findings show that 79.2 percent of stakeholders (managers, employees, and clients) perceived that the management of their institutions was not conducted well in terms of planning, plan implementation, and control. Eighty-one (81) percent of both managers and employees and 83.4 percent of clients held the perception that the institutions failed xvi to achieve their performance indicators as planned. Furthermore, 81.7 percent of both managers and employees described their institutions‟ internal environment as largely defined by unsatisfactory supervision, and 66.9 percent of them revealed that their institutions‟ external environment was defined by family relations. These relations adversely affected the ownership, decision-making, employee recruitment, and deployment in the institutions. The findings also show that there were significant positive but weak relationships between management (planning, implementation, control, and dealing with the internal environment and the impact of the external environment) and the performance indicators of the institutions. The management of the institutions realised only 24.8 percent of their predicted performance indicators. Of the 13 null hypotheses that were formulated for this study, seven were rejected and the alternative hypotheses were accepted, while six were accepted. All the dimensions of the management of the micro-finance institutions in Uganda need to be developed if the performance of the institutions is to be improved and sustained to desired levels. It is suggested that large performance improvements will be realised by ameliorating all the dimensions of the institutions' management, while placing more emphasis on improving the following dimensions: the organisation of the institutions; the managing of their internal environment and the impact of their external environment; the conduct of their internal concurrent control; and the planning of their performance indicators and marketing, involving all the stakeholders, in particular the managers, employees, clients, Government, and the Uganda Micro-finance Forum, where necessary. Further research is recommended into other factors affecting the performance indicators of the institutions, since none of the management functions had explained them properly.
- Full Text:
- Date Issued: 2011
- Authors: Milly, Kwagala
- Date: 2011
- Subjects: Microfinance -- Uganda , Financial institutions -- Uganda -- Management , Management , Performance standards
- Language: English
- Type: Thesis , Doctoral , DPhil
- Identifier: vital:9273 , http://hdl.handle.net/10948/1641 , Microfinance -- Uganda , Financial institutions -- Uganda -- Management , Management , Performance standards
- Description: The purpose of this study is to examine how the management of micro-finance institutions in Uganda has affected the performance indicators of these institutions, and whether or not the management of these institutions is responsible for their failure. The need to carry out this study arose as micro-finance institutions in Uganda failed to attain their planned performance indicators, to such a degree that most of them closed down. Although at their inception there was considerable entrepreneurial activity supported by a highly favourable government policy environment, their closure soon after establishment raised concern as to what caused them to fail. This study was encouraged by the observation that most of these institutions failed to realise their performance indicators as planned, but the underlying cause was not clear. Thus, the study focuses on establishing stakeholder perceptions of the management of the micro-finance institutions, and the relationship between their management (planning, implementation of planned programmes, and control) and their performance indicators, following the rationale of the functional and contingency paradigms of the concept of management. The study examines the way management dealt with these institutions‟ internal and external environments to influence their ability to realise their planned performance. The study is conducted using positivistic research methodology. This involved a collection of quantitative data from a sample of 454 respondents, including 64 managers, 177 employees, and 213 clients. Structured questionnaires were used to collect the data, and purposive and convenience sampling were applied to select the respondents. The respondents were selected from 56 randomly selected micro-finance institutions operating in Central Uganda and representing 75 percent of the country‟s operational institutions by December 2009. The data were analysed using the narrative, chi-square test, the ANOVA, factor analysis, and correlation and regression methods of analysis aided by the SPSS programme. The findings show that 79.2 percent of stakeholders (managers, employees, and clients) perceived that the management of their institutions was not conducted well in terms of planning, plan implementation, and control. Eighty-one (81) percent of both managers and employees and 83.4 percent of clients held the perception that the institutions failed xvi to achieve their performance indicators as planned. Furthermore, 81.7 percent of both managers and employees described their institutions‟ internal environment as largely defined by unsatisfactory supervision, and 66.9 percent of them revealed that their institutions‟ external environment was defined by family relations. These relations adversely affected the ownership, decision-making, employee recruitment, and deployment in the institutions. The findings also show that there were significant positive but weak relationships between management (planning, implementation, control, and dealing with the internal environment and the impact of the external environment) and the performance indicators of the institutions. The management of the institutions realised only 24.8 percent of their predicted performance indicators. Of the 13 null hypotheses that were formulated for this study, seven were rejected and the alternative hypotheses were accepted, while six were accepted. All the dimensions of the management of the micro-finance institutions in Uganda need to be developed if the performance of the institutions is to be improved and sustained to desired levels. It is suggested that large performance improvements will be realised by ameliorating all the dimensions of the institutions' management, while placing more emphasis on improving the following dimensions: the organisation of the institutions; the managing of their internal environment and the impact of their external environment; the conduct of their internal concurrent control; and the planning of their performance indicators and marketing, involving all the stakeholders, in particular the managers, employees, clients, Government, and the Uganda Micro-finance Forum, where necessary. Further research is recommended into other factors affecting the performance indicators of the institutions, since none of the management functions had explained them properly.
- Full Text:
- Date Issued: 2011
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