The effect of microfinance institutions on the livelihood of households in Bukerere Sub county, Mukono district

Abstract

The main objective of the study was to examine the effect of microfinance institutions on the livelihood of the people in Bukerere Sub County, Mukono district. The study was based on three specific objectives that is; to investigate whether MFIs institutions have economically enhanced the livelihoods of the households in Bukerere SC, to assess how the loans offered by the microfinance institutions contribute to the livelihoods of the households in Bukerere SC, and lastly to identify the challenges faces by the households in Bukerere SC in acquisition and repayment of loans borrowed from MFIs. 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 Yamane 1967 and then convenience as well as purposive sampling was employed during data collection. This data was coded, cleaned and analyzed using SPSS. The study found out that majority of the respondents have ever acquired services from MFIs and majority of the respondents who had ever received these services also agree that the services have in one way or another improved the livelihood of their households. Also of the respondents who receive services from MFIs, majority get loans and they also agreed that these loans do improve the livelihood 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 MFIs and improvement in the livelihood of the households using cross tabulation. Some of the challenges majorly highlighted in loan acquisition from MFIs included lack of collateral security, high costs bureaucracy among others. In conclusion, MFIs should open up more branches most especially in the deep rural areas 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 in the rural areas so as to give them a chance to access loans from these institutions in order to improve their livelihoods.