Impact of microfinance services on business growth in rural Uganda

Abstract

The study examined the impact of microfinance services on business Growth in rural Uganda. The Specific objectives included to: find out the effect of loan services on growth of rural businesses, examine the contribution of skills development/training on growth of rural businesses, find out the contributions of financial advice services on growth on business growth and find out the influence of savings on growth of rural businesses. The study adopted a cross-sectional research design using both qualitative and quantitative research paradigms and targeted the business owners in Buwama Town, sampling a total of 80 (eighty) respondents. The study used questionnaires to collect data which was analyzed and presented in tabular tables inform of percentage and frequencies means and standard deviation. The study revealed that: accessing a loan from a microfinance institution is beneficial to their business and that loans are used for agricultural production, trading, processing and transport. Loan services can help them develop innovative methodologies for reaching different market niches. Additionally, the MFIs integrates adequate & timely credit into larger developmental processes such as community and leadership training, entrepreneurship and that the real business owners get deeper issues of how money is utilized and invested by low-income individuals. Business owners are now able to make financial decisions with the help from professional financial advisors and those financial advisors help individual investors make informed investment choices and avoid some investment mistakes. It was also revealed that businesses can make a pool of savings in order to have a source of lending funds thus facilitate & finance their businesses and that the business owners are able to access ready and available capital. It was also shown that savings groups offer a safe place to keep money and are a way to provide access to small loans for boosting businesses. Finally, recommendations made include: the government needs to supplement efforts of microfinance institutions and allow more microfinance institutions to operate in all areas of the country especially the rural areas so as to meet the increasing demand of their services in such areas. It is also recommended that management needs to revisit and reconsider their policies and provide grace periods for these business owners before they begin with the repayment process. This will allow them get enough time to gather money for the repayments