Impact of microcredit on household living conditions in Kampala

Abstract

The main objective of the study was to examine the impact of microfinance on the living standards of the people Kampala. The study was based on three specific objectives that is; to investigate whether microfinance have economically enhanced the living condition of the households in Kampala, to assess how the loans offered by the microfinance contribute to the living conditions of the households in Kampala, and lastly to identify the challenges faced by the households in Kampala in acquisition and repayment of loans borrowed from microfinance. The study employed primary data which was collected using a questionnaire and both quantitative and qualitative data was collected. The sample size of 60 was estimated using a formula for Cochran and then convenience as well as purposive sampling was employed during data collection. This data was coded, cleaned and analyzed using STATA software. The study found out that majority of the respondents have ever acquired services from microfinance and majority of the respondents who had ever received these services also agree that the services have in one way or another improved their living condition. Also, of the respondents who receive services from microfinance, majority get loans and they also agreed that these loans do improve the standards of living of their households. Also, majority of the households used the loans acquired for opening up businesses. The study established a strong relationship between acquiring services from microfinance and improvement in the standards of living of the households using cross tabulation. Some of the challenges majorly highlighted in loan acquisition from MFIs microfinance included lack of collateral security, high costs bureaucracy among others. In conclusion, microfinance should open up more branches so as to bring their services closer to the people. They should also reduce on the collateral they ask for most especially from the poor people so as to give them a chance to access loans from these institutions in order to improve their living conditions.