Micro finance institutions and rural development; a case study of Rukungiri town council

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Kampala International University, College of Economics and Management
Micro-finance institutions that include cooperatives, credit unions, NGOs and some commercial banks were identified as the only financial institutions that would serve the poor. The services provided include savings and credit, assistance with group formation, business information and training services to their clients. Utilization of the services will enable the poor to increase their income levels, reduce poverty levels and women clients will be empowered. Despite MFls’ efforts to reach the poor in rural communities, the poor are still unemployed, their level of poverty is high, and their general welfare is also low. The study was guided by both general and specific objectives; to establish the impact of MFls on rural development. The specific objectives to: examine how MFls have contributed development in Rukungiri town council, find out the challenges faced by MFIs while rendering their services to the rural people in the area and establish the strategies they have put in place to help overcome the challenges. The study was also based on a descriptive case study research design and both primary and secondary data was used in the study. Primary data was obtained with the help of researcher-administered questionnaires. The findings were analyzed in line with the objectives and found out that MFIs have to a greater extent contributed to development in the area. Through the services rendered, the MFls clients were able to increase their income and reduce poverty levels. However, MFIs are faced with challenges while serving the people in the area that included high transaction costs, lack of appropriate products for the poor. And MFIs have tried to put in place strategies to help overcome some of the challenges like the classification of the rural people so that they can be assisted accordingly, adoption of credit registers. The researcher made recommendations on various aspects like savings, credit, and training so that the quality of the services could be improved. And that the government of Uganda should utilize Twesigye (1995)’s recommendation so as to be able to realize development in rural areas. 
A Thesis Submitted to Kampala International University, School of Post Graduate Studies In Partial Fulfillment of The Requirement for the Award of Masters In Business Administration of Kampala International University
Micro finance institutions, Rural development, Rukungiri town council