Microfinance Institutions And Poverty Reduction In Uganda A Case Study Of Makindye Division

ABSTRACT

The study sought to establish the extent to which Micro Finance intervention could be effective

against poverty reduction in Uganda. The research was based on three objectives; to identify the

various Micro Finance services provided by MFis in the division, to establish whether MFis

provide entrepreneurial advice to their clients in the division and to examine the relationship

between Micro Finance intervention and poverty reduction.

The findings revealed that MFis provided insurance, loans and savings services to their clients.

Insurance is a very crucial tool against pove1ty. Borrowers need to be protected against both fore

seen and unforeseen financial risks that could hit and condemn them (borrowers) into more

financial problems. Savings services are for the purpose borrowing since MFis were not deposit

taking institutions. The findings also indicated that MFis provided entrepreneurial skills to their

clients. The findings confirmed that goal orientation; financial skills, creativity and autonomy are

the constructs of entrepreneurial skills. Findings show that Micro Finance services enhance

investment or investment depends on Micro finance. Investment in turn influences the level of

pove1ty. Also micro finance services significantly predict poverty reduction through acquisition

and developing existing land, increased livestock and farm output, meeting education and health

requirements for household members and improvement on housing facilities.

The conclusion of the study indicate that loans, savings and insurance are components of micro

finance and that MF!s in the division provide entrepreneurial Skills in addition to Micro Finance

services. It was concluded that the combination of micro finance services and entrepreneurial

skills significantly predict poverty reduction.

Recommendation was that since there was a significant positive relationship between Micro

finance services and pove1ty reduction, it is recommended that Micro finance outreach be

deepened to enable the majority rural poor to access these services and make an effort to come out of poverty.