The effect of microfinance institutions on growth of micro- enterprises in Uganda

Abstract

The major objective of this study was to establish the role of Micro Finance Institutions in the Growth of Micro Enterprises in Bweyogere Town Council. The specific objectives are; to establish the effect of group based approaches in the growth of micro enterprises, to evaluate the effect of business development services in the growth of micro enterprises, to assess the role of savings in the growth of micro enterprises. A case study design was used to conduct the study with a sample size of 59 respondents. Various data collection instruments used in this study was questionnaires and interview guide. The findings revealed that there is correlation between micro finance institutions and growth of micro institutions. The results revealed that there is a relationship between microfinance institutions and growth of microenterprises with a positive and significant relationship (r = 0.270, p 0.05). Based on the findings, the study concludes that there is growth in micro-enterprises due to changes in Microfinance Institutions’ services provided to the clients (borrowers). The results show that there is relationship between the micro finance institutions and the growth of micro enterprises. The study further concludes that group lending models, business development services and savings mobilization provided to micro enterprises leads to their high growth. It can also be noted that there is a major effect of the microfinance institutions on the growth of micro enterprises in Bweyogerere, Wakiso District. It also agrees with the findings of Cooper (2012) that microfinance services had a strong positive impact on the growth of SMEs.