The contribution of microfinance institutions to youth welfare

Abstract

This study intended to evaluate the contribution of microfinance institutions on youth welfare, considering a case study of the youths of Nabinene village which is found in Kabonera Sub county of Masaka district. The research focused on answering the research questions of what is the effect of savings on youth welfare in Nabinene village, Kabonera Sub-county, Masaka district, what is the contribution of youth loans on the welfare of the youth in Nabinene village, Kabonera Sub county, Masaka district and what is the contribution of financial training on the youths’ welfare in Nabinene village, Kabonera Sub-county, Masaka district? This research was based on the neoclassical theory in relation to the Village Banking because these two comprehensively look at the variables of microfinance services. In the same way, the study was based on a case study design which is qualitative and descriptive in nature and it focused on determining the contribution of microfinance institutions on youth welfare. This design was chosen because it enables the researcher to look at the study in various aspects compared to other designs. The study population of the study area was 568 youths from which 229 respondents were sampled using the Morgan method. And the data was collected using questionnaires as the data collection instruments. The findings revealed that the biggest beneficiaries of microfinance services belong to the single marital status category with secondary education dominating the academic background of their population. Paid employment is the biggest source of income for these youths. They are aged between 26 to 30 years and the majority respondents were males. Furthermore, in reference to the findings, savings are ranked the most benefiting service offered by MDI’s followed by financial training and these are lastly followed by youth loans. Therefore in a general perspective, it was found out that microfinance institutions greatly contribute to improving youth welfare although there still exist some gaps that limit the effectiveness and efficiency in the performance of MDI’s. These include limited branches, high levels of bureaucracy, inadequate clients’ supervision and monitoring, many MDI’s are town centered hence neglecting the original target rural clients, poor mobile networks and ATM system failures, very short repayment periods and very big collateral requirements.