Microfinance institutions and poverty alleviation in Uganda :

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Kampala International University, College of Economics and Management
The purpose of the study was to establish the relationship between microfinance services and poverty reduction in Mbarara Municipality. The objectives included to examine the effect of microcredit on poverty reduction, to determine the effect of microfinance savings on poverty reduction and establish the effect of microfinance social services on poverty reduction in Mbarara Municipality Somalia. The study was based on selected microfinance institutions in Mbarara Municipality Uganda plus some selected respondents from Mbarara Municipality. The study employed a descrz~tive research design and majorly quantitative. The descriptive design was selected in this study because it allows the researcher to gather numerical data. The data was collected from the employees of the selected banks and customers. The data was collected through the research questionnaires from 80 respondents. The findings on the first objective provided that microcredit had a 25.5% effect on the poverty reduction in Mbarara Municipality. Regarding the effect that microfinance saving services have on poverty reduction, findings suggested a positive effect. The summarized regression results are clearly indicative of the fact that proper microfinance help in improving the odds of poverty reduction. On the second objective, microfinance saving had a 31.8% effect on the poverty reduction in Mbarara Municipality. The R-Squared coefficient denotes a low amount of influence that savings services have on poverty reduction while the third objective microfinance social services had no influence on poverty reduction. The study conclude that microcredit services affect the poverty reduction, the study conclude that microcredit improvement contribute to poverty reduction in Mbarara Municipality. The study further conclude that microfinance savings services contribute to poverty reduction meaning that to improve the poverty reduction there is need to enhance the savings for the microfinance. The third objective conclude that microfinance services exist though not effective in providing the mechanisms for the poverty reduction, it therefore requires a concentration and much focus on the microfinance environment to attain poverty reduction. The study recommend for the need to improve the microfinance loans provisions in terms providing to all the people on fair terms at lower interest rates and accessible to the people in order to improve business environment. The improved access to microcredit will enhance the business development a mechanism that will stimulate business growth and development. On the second objective, there is need for improved savings lead to investments especially in SMEs that can provide a mechanism for business growth and development mix.
A research report submitted to the college of economics and management in partial fulfillment of the requirements for the award of Bachelor’s Degree of Business Administration of Kampala International University
Microfinance institutions, poverty alleviation, Mbarara Municipality