Assessing the impact of microfinance services on the livelihood of the rural people: case study Kayabwe parish, Nkozi sub-county

Abstract

The main objective of the study was to assess the impact of microfinance services on the livelihoods of the rural people in Kayabwe Parish in Nkozi Sub-County. The study specifically assessed the impact of credit and savings on the livelihoods of the rural people and challenges rural people face in accessing MFI services. The study further explored other studies done by scholarly persons in relation people’s perceptions and attitudes towards borrowing and using credit, reasons why people save and challenges faced by rural people in accessing MFI services. The study adopted a research design which included field survey and the data was collected using three research instruments that is, questionnaires, interviews and observation. Respondents were drawn from the clientele base of various MFIs in Mpigi and representatives from MFIs. A sample of 92 was selected using simple random sampling technique. A pre-tested questionnaire was used to gather information about the study variables. Findings revealed that MFIs services improve on the livelihood of rural people amidst other several poverty reduction measures. Majority of the borrowers in this community get small loans from MFIs as opposed to commercial banks that require conventional collateral security which most rural people lack. Social support in form of group solidarity is among the collateral security low income earners in Kayabwe present to MFIs in order to get a loan. Findings also affirmed that demand for voluntary savings among the rural people is higher than compulsory savings. Based on the findings it is recommended that MFIs should make their credit access methodologies simple, reduce on the interest rates, increase grace period for loan repayment, make people’s savings easily accessible and establish their branches in rural areas to curb the problem of long distances by the clients.