The effect of microfinance institutions on the livelihood of households in Pakwach Town Council, Pakwach district

Abstract

The study was carried out to establish the effect of Microfinance Institutions (MFIs) on the livelihood of households in Pakwach Town Council, Pakwach District. The research was guided by three objectives (i) to investigate whether MFIs have economically enhanced livelihood of the people in Pakwach Town Council, (ii) to assess how loans offered by MFIs contribute to the livelihood of the people in Pakwach TC and (iii) to identify the challenges faced by the people in the acquisition and repayment of the loans acquired from MFIs in Pakwach TC.

In chapter two, the related literature was reviewed which was in line with the objectives and researcher questions. Chapter three focused on the research design, study area and population, study variables, sampling techniques, data collection methods and tools, data processing and analysis, reliability, ethical values and limitations. The research had a total population of 4,602 households out of which 100 were selected. Chapter four of this research had presentation, analysis and interpretation of results. The data was presented inform of tables and graphs. The researcher followed the questionnaire from the demographic characteristics of the respondents and the questions of the objectives of the study. As per the demographic characteristics of the respondents, majority were males compared to females. It was implied that males tend to make more use of the financial services offered by the MFIs compared to women who were few. The age bracket of 26-35 had the majority of respondents because they were considered to be able to work hard and own enough collateral and those who were between 18-25 years. In reference to the researcher’s findings on whether loan services had improved their livelihood and that of their households, 60% of the respondents who were majority gave a positive response toward the contribution of the MFIs. Chapter five contained the summary of findings, conclusion and recommendations on the research. The researcher concluded that availability and accessibility of Microfinance Institutions (MFIs) is in no doubt a positive way of bringing a revolution not only in the lives of the poor households but also in the society. It is also concluded beneficiaries of the services offered by the MFIs incur high costs in the acquisition of these services. Furthermore, future studies should establish the various costs that are incurred by the MFIs as this would enable the establishment of the underlying causes to the high interest rates, high collateral requirements and few branches of the MFIs in the rural areas.