Microfinance institutions and poverty reduction in Uganda: a case study of Makindye division

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Kampala International University, College of Economics and Management
The study sought to establish the extent to which Micro Finance intervention could be effective against poverty reduction in Uganda. The research was based on three objectives; to identify the various Micro Finance services provided by MFis in the division, to establish whether MFis provide entrepreneurial advice to their clients in the division and to examine the relationship between Micro Finance intervention and poverty reduction. The findings revealed that MFis provided insurance, loans and savings services to their clients. Insurance is a very crucial tool against pove1ty. Borrowers need to be protected against both fore seen and unforeseen financial risks that could hit and condemn those (borrowers) into more financial problems. Savings services are for the purpose borrowing since MFis were not deposit taking institutions. The findings also indicated that MFis provided entrepreneurial skills to their clients. The findings confirmed that goal orientation; financial skills, creativity and autonomy are the constructs of entrepreneurial skills. Findings show that Micro Finance services enhance investment or investment depends on Micro finance. Investment in turn influences the level of pove1ty. Also micro finance services significantly predict poverty reduction through acquisition and developing existing land, increased livestock and farm output, meeting education and health requirements for household members and improvement on housing facilities. The conclusion of the study indicate that loans, savings and insurance are components of micro finance and that MFis in the division provide entrepreneurial Skills in addition to Micro Finance services. It was concluded that the combination of micro finance services and entrepreneurial skills significantly predict poverty reduction. Recommendation was that since there was a significant positive relationship between Micro finance services and pove1ty reduction, it is recommended that Micro finance outreach be deepened to enable the majority rural poor to access these services and make an effort to come out of poverty
A Research Report Submitted to the College Of Economics and Management Sciences In Partial Fulfillment for the Requirements for the Award of the Degree In Bachelor of Business Administration of Kampala International University
Microfinance institutions, Poverty reduction, Uganda, Makindye division