Microfinance and the performance of small scale

Abstract

The study examined the effect of microfinance towards the performance of small scale farmers a case of FINCA Mbarara. The objectives of the study were to; examine microfinance services accessed by small scale farmers in Mbarara district, analyze how services offered by microfinance affect performance of small scale farmers and establish challenges small scale farmers face in accessing services from microfinance. Descriptive research design was used in this study. Purposive and simple random sampling techniques were used in the selection staff at FINCA and clients of FINCA as respondents respectively. Data was collected from a total of 50 respondents who included 40 clients of FINCA and 10 staff of FINCA Mbarara branch. Descriptive techniques were used to analyze data. It was found out that the services offered to small scale farmers in Mbarara district by FINCA microfinance include; credit services, savings, loan insurance cover, employment to marginalized groups of people like women, training and advisory services. It was also found out that the effects of services offered by microfinance on performance of small scale farmers include; improved income levels, acquisition of capital to improve on their Agricultural production hence increased output, improved stability in saving of small scale rural farmers, improved asset accumulation and improved productivity in their activities hence increased profits. It was also found out that the challenges small scale farmers face in accessing services from FINCA microfinance include: delay in processing loans, small size loans given to small scale farmers, short loan periods, high interest rates charged by FINCA microfinance, lack of security (collaterals), borrowers’ illiteracy, transport and communication barriers. In conclusion FINCA microfinance helps small scale farmers to improve on performance in their activities they are involved in hence improving on their levels of income which can be a basis to reduce on poverty. It is therefore recommended that other rural farmers should be encouraged to join microfinance like FINCA and develop the spirit of savings and entrepreneurship