The role of microcredit programs towards poverty alleviation in rural areas of Uganda

Abstract

This research report examines the impact of microcredit programs on poverty alleviation in rural areas of Uganda focusing on Bunyaruguru Rural Development Bank as the case study. The research was conducted using the following objectives; to determine the impact of small loan services on poverty alleviation, to find out the relationship between client training and poverty alleviation, to establish the effect of the saving schemes on poverty alleviation and to find out the challenges faced by microcredit programs towards poverty alleviation in rural areas of Uganda. Muhumuza (2007) notes that poverty is so rampant today especially in rural areas of Uganda where most people live below the poverty line. It is on this basis that the researcher set out to do the research on the Impact of Microcredit programs toward poverty alleviation. The researcher used a case study design to carry out this research. The methods that were used to collect data are questionnaires and interview guides. The findings from the study research showed that the microcredit programs like small loans, saving schemes and client training offered by the bank have enabled some people of Kataara village to come out of poverty. Despite the extension of those microcredit programs, some people are still living below the poverty line. The findings also show that the major challenge facing the delivery of microcredit programs is high levels of illiteracy and conservatism among the poor. The researcher recommends the Microcredit institutions to work hand in hand with the government so as to alleviate poverty in rural areas of Uganda. The MFIs should also reward the best performers or give incentives to the entrepreneurs so as to encourage them to work hard and alleviate poverty from their home stead. Since the major challenge faced is the high levels illiteracy and conservatism, the institution should also invest more in the school fees loans offered to the poor and also sensitize people about the importance of some microcredit programs like the saving scheme and client training. The researcher therefore argues that when microcredit programs are effectively administered, they are very powerful tools in the alleviation of poverty. This report therefore calls upon us to build inclusive financial sectors and strengthen the powerful, unleash the untapped resources and arouse the entrepreneurial spirit existing among the disadvantaged or the poor so as to create more financially stable communities