Microfinance Institutions and Poverty Reduction in Rubirizi District, Western Uganda
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Date
2012-08
Authors
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Publisher
Kampala International University, school of masters in development studies
Abstract
Microfinance has been one of the strategies for poverty alleviation in developing
countries. Following the success of the Grameen Bank in Bangladesh, the
microfinance revolution has stormed the developing countries today. Although micro
credit programmes in Uganda date from 1980s, the proliferation of micro credit
scheme or microfinance institutions began after restoration of economic freedom in
the 1990s. Today, Uganda has several governmental and non-governmental
organizations offering financial services to the poor. Most of these institutions
operate localized and targeted programmes, and very few are operating at a
national scale, Microfinance institutions in Uganda are largely unregulated and their
programmes are not coordinated and accessibility to their services is not uhiversal to
the poor. With improvements in the policy environment, the Bank of Uganda (BoU)
has been established as a formal association of microfinance institutions with the
objective of developing, promoting, coordinating and regulating micro finance
activities among member institutions. However, the financial performance of
microfinance institutions and their impact on poverty reduction are not adequately
documented and known in Uganda, although the increase in micro credit
programmes has been remarkable. This thesis attempts to take stock of the
microfinance or micro credit revolution in Lubirizi District including assessment of
factors of success and failure in the delivery of financial services to the poor and the
efficiency and effectiveness of the existing institutional framework on poverty
reduction. The study based on the following objectives (1) to determine the
demographic characteristics of the respondents (2) to determine the, level of
performance of micro finance in the area under study (3) to determine the level of
poverty reduction and (4) to find whether there is a significant relationship between
the level of micro finance and poverty reduction. The study was based on the “joint
liability theory” by Fischer Ghatak (1999). A descriptive survey design was’ employed
in the study which descried the different variables in the study. A research sample
size of 151 was used selected using a random sampling technique. Chapter four
presented the finding of the study revealing that men were composed of the highest
number of respondents (58%), respondents aged between 35-51 composed of the
highest numbers of respondents (53°k), in terms of marital status married
respondents emerged the highest (35%) while in terms of educational qualification
certificate holders were the highest number of respondents (37%). The study
revealed that MFIs enhanced the capacity of individuals to access financial needs
ranked as 1 with a mean range of 3.42. The study also revealed MFI5 reduced
poverty through encouraging clients to be self employed. The study further rejected
the null hypothesis “there is no significant relationship between MFI5 and Poverty
Reduction”; therefore proving that there was a significant relationship between MFI5
and poverty Reduction
Description
A Thesis Presented to the Collage of Higher Degrees and Research (CHDR) Kampala International University Kampala, Uganda in Partial Fulfillment of the Requirements for the Master Degree in Development Studies
Keywords
Microfinance Institutions and Poverty Reduction, Rubirizi District