Impact of global financial crisis on operations of microfinance institutions in Uganda:ch.

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Kampala International University, School of Economics and management
The research topic was chosen because most micro finance institutions have experienced difficulties in operation as a result of global financial crisis of which FINCA Uganda ix not exclusive. The research topic was to examine the effects of global financial crisis on operation of FINCA Uganda microfinance institution. Specific objectives were used to asses the causes of global financial crisis, to establish the impact of global financial crisis on the operation of FINCA Uganda micro finance institution in Kampala (CBD) branch and to establish what FINCA Uganda microfinance is doing to overcome the challenges of global financial crisis in her daily operations. The data was collected usmg the following methods: research design, research area, study population, sample size techniques and the research instrument: the research instrument used were, Questionnaire, which was used in most cases together with others instruments such as, Observation and interview. The data obtained was analyzed and presented in tabular form, barographs and pie charts showing the percentage and frequencies based on the analyzed information. These provided a clear meaning and therefore easy understanding of the data presented. Summaries were also drawn and conclusions made from presented analyzed data. The result revealed that global financial crisis affected greatly the operation of FINCA Uganda micro finance institution. Response shows that cases of loan delinquency were on the rise because clients were suffering from credit squeeze due to prioritized purchasing resorted to by the public in fear of engaging in extravagance. To mange the impact, Credit policies should also be reviewed often and made clear to all the persons working under credit department and even other departments so that FINCA Uganda Microfinance customers should be well informed on the bank's policies. There should put up strong mechanism to evaluate and forecast credit risks. A strong risk management team should be instituted with the resources necessary to execute risk management policies effectively. The tendency of financial institutions depended entirely on external funding especially from western donors. FINCA Uganda woes were due to dependency syndrome rather than creating a stable reserve base with effective management and qualified personnel, FINCA Uganda may be in a good position to overcome such a crisis in the future. The central bank, which is the regulatory authority of the financial sector, should endeavour to convert microfinance institutions into deposit taking institutions so as to be financially stable and sustainable. This is the only way to avoid dependence on external ftmding and reduce the high levels of interest rates charged on clients, thus reducing the institution's ability to transform lives through economic empowerment.
A dissertation paper submitted to school of business and management, in partial fulfillment for the award of Bachelor Degree of Business Administration of Kampala International University. march 2011
Global financial crisis, Microfinance institutions, Uganda