The Impact of Microfinance Institutions on Poverty Alleviation Case Study; Pride Micro Finance Limited (Pmfl) Uganda

Abstract

The study was conducted at Pride Microfinance Limited Uganda headquarters located in Victoria Business Park, in Bukoto, a northeastern neighborhood in Nakawa Division and it focused on the concept of microfinance institutions and poverty alleviation. The study was inspired by the persistent poverty in the country despite the existence of micro finance institutions.

The study used two approaches of qualitative and quantitative research methods which were used to generate data. The quantitative method focused on testing the impact of micro finance institutions on poverty alleviation, while the qualitative approach was used to analyze non- numerical statements of respondents, mainly their views, perceptions and attitudes towards micro finance and poverty alleviation in Nakawa division. The research used both primary and secondary data , where the primary data was collected using a questionnaire and an interview guide while the secondary data was accessed through reading text books, reports and journals about the impact of micro finance on poverty alleviation.

The study findings at bivariate level indicated a positive and significant relationship between micro finance products and services and poverty alleviation. Therefore, it can be concluded that if individuals’ access micro finance products and services such as savings, loans and skills development, this can generally influence economic growth.

From the data collected, the study revealed a positive significant relationship between poverty alleviation through microfinance institutions where savings enabled individuals to pay fees, pay rent and loan facilities enabled them to startup businesses as well as skills development which enabled access of loans and financial advisory services.

The study recommends that government should carry out vigorous sensitization on the issue of access to the micro finance services and products so that even rural people can have the chance of developing their areas. It also further recommends that the local community at large should ensure that it uses the opportunity of the availability of micro finance services and products such as group lending and savings and also local community leaders should introduce and welcome micro finance institution investment in their areas so as to promote development. Lastly it is also important for future studies to carry out a national survey on how micro finance loans have encouraged poverty among the very poor, the different ways in which people understand microfinance activities in the country, why micro finance institutions are very few in rural areas, how micro finance institutions carry out their activities as well as whether micro finance services and products have really reduced poverty or brought more suffering.

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