The Effect Of Budgeting On The Performance Of Micro-Finance Institutions. A Case Study Of Uganda Micro-Finance Limited (Uml) Kampala Uganda

ABSTRACT

This study was carried out to investigate on the effect of budgeting on the performance of

micro finance institutions. It aimed at achieving the following objectives, to establish the

impact of budgeting on micro finance institutions performance to identify indicators of

performance in micro finance institutions and to establish the relationship between budgeting

and performance of micro finance institutions.

The study was catTied out to establish the reasons why many micro finance institutions have

continued to perform poorly despite management efforts to improve perfonnance through

training, recmitment, motivation, monitoring and evaluation. This was evidenced by low

revenue collection and overspending compared to planned ones, overdependence of grants

from the government, low morale and commitment of employees, claims and rumors from

customers in respect to poor services offered to them like corruption and bribes.

To collect the relevant data the researcher used questionnaires, interview and library research

on relevant material. Data was analyzed by the use of descriptive methods such as percentage

distribution and frequency distribution.

The researcher found out that, budgeting has both positive and negative impacts on the

performance of micro finance institutions, under positive includes high profits, and avoids

delays in work reduction, in repair, maintenance costs and increase in relationship with

external stake holders. Negative side it leads to misappropriation of resources, inefficiency

utilization of resources, low profits and low productivity.

According to the researcher's findings, the role played by budgeting in micro finance

institutions included, better planning, increase in profit, high production and attain effective

utilization of resources.

The following area were suggested for further study, establishing the magnitude of the

relationship between budgeting and perfonnance of micro finance institutions, examining the

influence of culture on perfonnance of micro finance institutions.