Micro Finance Institutions and Rural Development in Uganda. A Case Study of Lwengo Micro Finance Ltd, Lwengo Sub County, Masaka District

ABSTRACT Microfinance is the provision of finance services to low income clients including consumers and the self employed that traditionally lack access to banks and related services. Microfinance institutions are therefore institutions that provide financial services to low income earners who lack access to banks and bank related services (Georgina, 2001). According to Garner (1996) the object of micro finance institution is a world in which as many poor and near poor households as possible have permanent access to an appropriate rate of high quality services including not just credit but also savings insurance and fund transfers those who promote microfinance institution have believed that such access of poor or near poor people to an appropriate rate of high quality financial services of credit and savings will help poor clients out of poverty and lead to rural development. (Agarwal, I 990). Rural development on the other hand is a term denote in the action and activities taken to improve the standard of living persons in non urban neighborhoods country side and remote villages, (McDowell, 2002). In this proposed study rural development per household or "being better off" will be measured using the variable of amount of food stuff in store, amount of food sold last year 2009, and amount of fixed assets held by household (building, land, and machinery). According to Donald (2001) rural communities are communities exemplified with a low ratio of inhabitants to open space, agricultural activities of production of food stuffs and raw materials and most importantly with the population being predominantly illiterate. The study made use of both primary and secondary data collection method. Primary data was collected using structured questionnaires that were administered through personal interviews. Secondary data was collected from books, journals and others as well as internet. Primary data was analyzed by use of content analysis given its high nature. The result of the study found that microfinance institutions have positive effect on the rural development of the power client because majority of the respondents have actually obtain loans from the microfinance institution hence improving their lives and business at general.