The Effect of Microfinance Institutions on Sugarcane Growing In Kamuli District; A Case of Kiroba Sugar Cane Factory out Growers
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Date
2019-09
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Kampala International University, College of Economics and Management.
Abstract
This study attempted to assess the role played by loans provided by Micro Finance Institutions (MFIs) to Small scale sugar cane out growers in Uganda, a case study of Kamuli District in Eastern Region. Currently, SMEs contributes significantly to Employment, Income generation and stimulation of the economic growth in both urban and rural areas in Uganda. SMEs contribute about 40% to the country’s Gross Domestic Product (GDP) (this is according to SMEs Development policy 2003). In Uganda it is estimated that every year only 5.7% of the school leavers get employed in public sector while the remaining 94.4% end up being absorbed by SMEs sector. For these reasons there is a need for the government to provide conducive environment for the growth and sustainability of the SMEs in the country through loans/agricultural credit. The sample size was 78 respondents selected through random sampling drawn from population of 398 small scale cane growers at Kamuli District both from MFIs and FCGA to fulfil the requirements of the study. Both primary and secondary data were used or employed. The former used questionnaires and interviews, while the latter was used through
reviewing documents in terms of performance reports, articles magazine. Both quantitative and qualitative data were also analyzed. The responses from the interviews were coded, summarized and entered in a computer. The data were analyzed using Statistical Packages for Social Science (SPSS) version 16. Part of the analysis was based on descriptive statistics to describe the responses, characteristics of the data and information. The findings were presented in form of figures, tables and graphs. The findings of the study revealed that collateral, security requirement and high interest rates were the major problems for SSSCG to secure loans from MFIs. Most of SSSCG 50(64.1%) agreed that loan improve agricultural production. The study also revealed that 33(42.3%) had primary level education this was a problem especially on the processing of agricultural credits from financial institutions. Majority obtained loan from SACCOS and other informal sources. The study also revealed that loan acquired had positive influence in the growth of agriculture. Requirement of collateral was a major problem in accessing of loan by small scale sugar cane growers it was supported by 65(83.3%) of all small-scale farmer-respondents. From the study, it is concluded that there is significant impact of microfinance loan scheme on small scale sugar cane production since farmers’ access to microcredit also means access to better
financial products and services. Thus, despite problems encountered by small scale sugar cane farmers in accessing loans from banks, loans from microfinance banks and SACCOS has to some extent helped farmers to reduce poverty and boost production through financial system that meets their needs. Lastly, the researcher recommends that in order to succeed and develop, small scale sugar cane growers (SSSCG) all over the country should be assisted in improving cooperative societies. The cooperative approach is one of the best means of self-protection for small farmers mainly due to its self-help concept and member’s participation. It is therefore vital for the government to strengthen cooperative credit and improve efficiency of agricultural credit supply by providing innovative financing scheme to SSSCG who lack collateral and minimize long processing of documents and other requirements.
Description
A Research Report Submitted to The College of Economics And
Management in Partial Fulfillment of Requirements for The Award Of A Bachelor’s Degree In Business Administration-Finance And Accounting Of Kampala International University
Keywords
Micro finance Institutions, Sugarcane Growing