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.
TABLE OF CONTENTS
DECLARATION ...................... . ...... . .... . .............. . ......................................... . . i
APPROVAL .......................................................................... ........... .. ........................................... .ii
DEDICATION ................ ........... . ................... ....... ......................... .... ............ .iii
ACKNOWLEDGEMENT ................. .............. . ..................................... . ............. .iv
ABSTRACT ... ................................................................................................. v
TABLE OF CONTENTS ............................... . .... . ................................... . ........ . .. vi
CHAPTER ONE ................... . ......................... ............. ............ .. .. ..................... 1
1.0 Introduction .................................. .. ..................................................................... 1
1.1 Background of the study .......................................................................................... I
1.2 Problen1 Statement ....... .. . .. ............ ......... . ....... ................ ... .................. . .... .... 2
1.3 Purpose of the study ................................................................ . ............. ......... 3
1.4 Specific objectives of the study .......................................................... . .............. 3
1.5 Research questions ........................................................................................ 3
1.6 Scope of the study ........ .......... ............... . ................................. .. . ................... 4
1.7 Significance of the study ........ ............ . ............................................................ .4
1.8 Conceptual framework ................................ ..... . ..... . ... . .... . ...... . ............... .......... 5
CHAPTER TWO ...... . ... . .... . ... . ................................ . ........................ . ................ 6
LITERATURE REVIEW ................................................................................... 6
2.0 Introduction .......................................................................................... . ..... 6
2.1 Causes of global financial crisis ......................................................................... 7
2.2 Impact of global financial crisis on microfinance institutions .................................. . .. 22
2.3 Response by finca Uganda to overcome challenges of global financ ial crisis ............. ...... 25
CHAPTER THREE ................................. . ......... . .. . . . . ... . ........ ... ............. ... ......... 28
METHODOLOGY ..... .. ............................. . ... .... . ..... . ...... .. .............................. .. 28
3.0 Introduction ...................... . ........................................................................ 28
3.1 Research design . . . ....................................................................................... 28
3.2 Area of study ... . .................. . .............. . ..... . ..... . ........ . .................................. 28
3.3 Study population .. .. ................................................... .. ................................ 28
3.4 Sample size and sampling technique ....... . ............ ............................... . .. ... ... .. .... 29
3.5 Data source collection methods, instruments and analysis ... . ..................................... 29
3.5.1 Data collection methods and instruments ......................... . ......................... ........ 30
v
3.6 Data analysis and presentation ................................................... ........ 00 000 .... oooooo.31
3.7 Research procedure ........................................................... ..... ...................... 31
3.8 Limitations of the study .................. ... ............................................. oo ......... oooo.31
CHAPTER FOUR .............................................. . ............. oo .............................. 32
DATA PRESENTATION ANALYSIS AND INTERPRETATION ............................ . oooo.32
4.0 Introduction ...... . ...... ................................................................................ 0032
4.1 Respondents by age ........... ............................. ............ .............. .. ............. 00000032
4.2 Gender profile of the respondents ......... . ....... .. ............................................. 00000032
4.3 Respondents by education level. .................................................................... 00.34
4.4 classification of respondents by department. ... . ..... ........................................... 00 oo.34
4.5 Number of years worked in the organization ........ ........................................ ... .... 0035
4.6 Reactions on operation ofFINCA Uganda microfinance institution ............................ 0036
4.7 The extent to which global financial crisis affected the operations ofFINCA Uganda
Micro finance institution .................................................. ............... . ...... . ....... 37
4.8 Clients response on the impact of global financial crisis on FINCA Uganda 0000000000 0000 000000000038
4.9 Way forward for FINCA Uganda micro finance to manage challenges of global financial
Crisis ............... ................................................................................. . ...... 40
CHAPTER FIVE . . .... .............. . . . ............. . ...... .............................................. ... 41
DISCUSSIONS, CONCLUSIONS AND RECOMMEN DATIONS .. OOOOoOo000o000o000000000000000.41
5.0 Introduction ...................................................................... . .................. 00000041
5.1Discussion of findings .................................... .............................. . ........... oo .... 41
5.1.1 Bio data ........................................................................................... oo .... 41
5.2 Activities ofFINCA Uganda micro finance institution ............................ .... 00.00000.0000 41
5.2.1 Credit policy ................. 00.00 .... 00.00 .... 00 .... 00 ................ 000000000000000000000000000000 .......... 00.41
5.2.2 Credit terms .................. . ...... .................................. oooooo ........ oo .. oooooooooooooooooo oo .... oo42
5.3 Clients and staff response on impact of global financial crisis on FINCA Uganda micro
Finance institution ..................................................... ... .............. . .. . 00 00 ........ 43
5.4 Measures to mitigate the impact of global financial crisis on FINCA Uganda microfinance
institution ................... .... .. ......................................................... .... ...... oo.43
5.5 Conclusion ............................................................................................ 000044
5.6 Recommendations .... .. ................... ... ........ ... . ........................................ 0000 .... 44
REFERENCES ...................................................................... ................ ·oo· ..... 32
APPENDIX 1: TIME SCHEDULE ...... ....... ...................................................... ..... 34
APPENDIX 2: BUDGET ESTIMATE .. oo .............. .. oooooooooo ....... oo .. OO.OOOOOOOoOOOOOooOOooo ... 35
APENDIX 3: QUESTIONNAIRE ........................................ oooo36