The contribution of microfinance institutions towards poverty reduction among women in Kabale municipality: FINCA MFI

Abstract

MFI sector plays an important role in poverty reduction in the economy especially of the less developed countries. This research focused on the contribution of the microfinance sector on poverty reduction efforts among women in Kabale Municipality. Poverty reduction was looked at using four major variables namely; household income, access to start-up capital/employability, domestic savings and assets ownership by female entrepreneurs. The study employed three objectives which were; to examine the impact of MFI loan schemes towards women’s household incomes, to assess the impact of MFI loan schemes towards women’s saving initiatives and to establish the extent to which MFI loans affect women’s assets creation. In order to analyse the contribution of the microfinance institutions on the above-mentioned parameters, primary data were collected through questionnaire from 90 respondents. The study employed the use of a self-administered questionnaire to collect data from the respondents. The study considered microfinance loans as the independent variable. Empowerment was measured through factor analysis of four variables; being able to save profits from businesses, increased household income, and ownership of assets obtained through profits, and reported creation of jobs among women. The findings revealed that 92% of the clients accepted that they have been making savings from the income they are earning from their business which are greatly financed by the loans. Findings also revealed that 77.7% of the respondents noted that loans have significantly helped them to improve their household incomes largely from their business activities while over 90% of the sampled clients self-reported that loans from FINCA have made it possible for them to own their personal assets. It is recommended that the microfinance sector should invest in advertising its services so that more poor people are recruited by them. Again, there is a need for them to expand their services to rural areas where the rate of poverty is higher rather than concentrating in urban areas.