the role of microfinance

8/12/2019 the role of microfinance

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KISAKYE BESS

STUDENT

DATE

i.

Approval

This is to certify that this research proposal entitled Micro finance deposit taking institutions and

the economic development of the trade sector among rural women in Jinja district, was carried

out and presented by ms Kisakye under my supervision.


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Signed..

DR. RICHARD MWIRUMUBI (PhD)

SUPERVISOR

DATE

Dedication

I dedicate this proposal to my dear parents, Mr. and Mrs. Mugabi Julius of Jinja who planted

the first seed of civilization into me, along with formal education, and who, by God's

grace, have seen it grow to this level of Education. I also dedicate it to my dear aunts Lillian

and Suzan plus my brothers, sisters and friends.


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Acknowledgements

I would like to thank my dear parents, brothers and sisters plus the entire family for their never

ending support to me. They consistently covered all gaps in my life which had been created by

pleasures of the course.

Special thanks to my supervisor Dr. Richard Mwirumubi for the patience, encouragement,

criticism and constant guidance to me all through the course. All my future lay in his hands and

here he is giving it back to me.


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Thanks go to the management of FINCA Jinja branch for their help in my search for knowledge

and information.

Finally and most important I would like to thank the Almighty God who has given me life and

enabled me to overcome all sorts of obstacles, so that I can reach this far successfully.

Thanks to you all.

Table of contents

Declaration ................................................................................................................................................. i

Approval ................................................................................................................................................... ii


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Dedication ................................................................................................................................................ iii

Acknowledgements .................................................................................................................................. iv

Table of contents ....................................................................................................................................... v

Operational definitions ............................................................................................................................ vi

Abstract ................................................................................................................................................... vii

CHAPTER ONE ........................................................................................................................................... 1

INTRODUCTION ........................................................................................................................................ 2

Background to the study ........................................................................................................................... 3

Statement of the problem .......................................................................................................................... 4

Objectives of the study .......................................................................................................................... 5

Research questions .................................................................................................................................... 6

Scope of the study ..................................................................................................................................... 7

Subject Scope ........................................................................................................................................ 8

Geographical Scope. ............................................................................................................................. 9

Significance of the study ......................................................................................................................... 17

Justification of the study ......................................................................................................................... 10

Organization of the research study.......................................................................................................... 19


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CHAPTER TWO ........................................................................................................................................ 12

Study literature ............................................................................................................................................ 13

Introduction ............................................................................................................................................. 14

Concept of microfinance. ........................................................................................................................ 15

Village banking. ...................................................................................................................................... 16

Historical background of village banking. .............................................................................................. 17

Climate for microfinance: ....................................................................................................................... 18

Indicators of economic growth ............................................................................................................... 19

Contributions of Micro Finance Funding ................................................................................................... 20

Designation of Appropriate Strategies .................................................................................................... 21

conclustion.21

CHAPTER THREE .................................................................................................................................... 22

Research methodology ................................................................................................................................ 23

Introduction. ............................................................................................................................................ 24

Research Design.......................................................................................................................................... 25

Qualitative research ............................................................................................................................ 26

Quantitative research........................................................................................................................... 27

Reasons for combining the two methodologies. ................................................................................. 28

Study Population ..................................................................................................................................... 29Sample population and Size .................................................................................................................... 30

Sources of Data ....................................................................................................................................... 31

Primary Data ....................................................................................................................................... 32

Secondary Data ................................................................................................................................... 33

Instruments of data collection ................................................................................................................. 34

Questionnaire. ..................................................................................................................................... 40

Interview guide. .................................................................................................................................. 40

Observation ......................................................................................................................................... 41

Data quality control/quality assurance .................................................................................................... 41

Piloting ................................................................................................................................................ 41


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Training ............................................................................................................................................... 41

Editing questionnaires ......................................................................................................................... 42

Data analysis ....................................................................................................................................... 42

Editing ................................................................................................................................................. 42

Coding ................................................................................................................................................. 42

Tabulation ........................................................................................................................................... 42

Establishing themes ............................................................................................................................ 43

Report writing ..................................................................................................................................... 43

validity and reliability38

Ethical considerations ......................................................................................................................... 43

Limitations and delimitations.................................................................................................................. 44

conclustion..39

REFERENCES ....................................................................................................................................... 45

Appendices.42

Appendix 1 questionaire ..................................................................................................................... 42

APPENDIX 2 interview guide ............................................................................................................ 43

Appendix 3 Budget44

Appendix 4 Timetable45

Appendix 5 Ethical form46

ii.


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Abbreviations and Acronyms

BIRD Bankers Institute Of Rural Development

CMR Centre for Microfinance Research

DWCRA Development of Women and Children in Rural Ares

EFS Equipment Finance Scheme

ETC Etcetera

EXP Expense

FINCA Foundation for International Community Assistance

MC Micro- Credit

MCI Micro- Credit Institution

MDI Micro Deposit Taking InstitutionsMDIA Micro Deposit Taking Institutions Act

MF Micro- Finance

MFED Ministry of Finance planning and Economic Development

MFI Micro- Finance Institutions

MSE Micro and Small Entrepreneurs

NGO Non Government Organizations

SACCOs Saving Cooperatives and Credit Societies / Unions

UCB Uganda Commercial Bank


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Operational definitions

Banking according to WWW.allbanking solutions.com is defined as the business activity of

accepting and safeguarding money owned by other individuals and entities, and then lending out

this money in order to earn a profit.

Deposit taking institutionaccording to Martyn Shuttleworth isan institution which is licensed

to receive money on deposit fromprivate individuals and to pay interest on it, e.g. a building

society,bank or friendlysociety.

Loan according to WWW. Wisegreek.com is a financial transaction in which one party (the

lender) agrees to give another party (the borrower) a certain amount of money with the

expectation of total repayment.

Micro finance according to Consultative Group to Assist the Poor (CGAP), an independent

policy and research center, is the supply of loans, savings, and other basic financial services to

the poor."

Researchaccording to Creswell, is a process of steps used to collect and analyze information to

increase our understanding of a topic or issue". It consists of three steps: Pose a question, collect

data to answer the question, and present an answer to the question.

Village Bankis a financial support group made up of friends, neighbors and family members

who come together to guarantee each others small loans.
http://www.allbanking/http://www.investorwords.com/3100/money.htmlhttp://www.investorwords.com/1411/deposit.htmlhttp://www.investorwords.com/3850/private.htmlhttp://www.investorwords.com/2531/interest.htmlhttp://www.investorwords.com/6427/building_society.htmlhttp://www.investorwords.com/6427/building_society.htmlhttp://www.investorwords.com/401/bank.htmlhttp://www.investorwords.com/11137/society.htmlhttp://www.investorwords.com/11137/society.htmlhttp://www.investorwords.com/11137/society.htmlhttp://www.investorwords.com/401/bank.htmlhttp://www.investorwords.com/6427/building_society.htmlhttp://www.investorwords.com/6427/building_society.htmlhttp://www.investorwords.com/2531/interest.htmlhttp://www.investorwords.com/3850/private.htmlhttp://www.investorwords.com/1411/deposit.htmlhttp://www.investorwords.com/3100/money.htmlhttp://www.allbanking/


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Abstract

Jinja as a local government institution has various development partners it works with to uphold

the welfare of its community. In the field of microfinance, there are non government

organizations that promote their services to the community. The Council, however, is limited in

terms of research findings on how these organizations implement their services and whether the

community is benefiting from them or not. The study intended to establish and develop baseline

data that would be used by scholars and credit institutions in Jinja Town Council for effective

planning and program implementation will be guided by the following research objectives:

a. To examine the nature of financial services offered by FINCA micro finance institutions

to the women in Jinja.

b.

To identify the indicators of growth in economic activities of FINCA micro financebeneficiaries in Jinja.

c. To establish the contribution of FINCA micro finance funding to the economic activities

of the women in Jinja district.

d. To design appropriate strategies that will increase the outreach of micro finance

institutions so as to enhance economic development.

The researcher will use both primary and secondary data. The primary data will be got from

FINCA clients (past, present and non beneficiaries) and from management. The information will

be obtained by use of self-administered questionnaires and interviews. Secondary data will be

obtained from published materials, which will include journals, textbooks magazines, internal

reports and newspapers. The study will come up with the several conclusions, notable among

them may be that FINCA offers several services to clients; there are several indicators of growth

in economic activities; FINCA may have positive contribution on economic growth of rural

women in Jinja district. The research will cover a total population of 100 people as sample size

census including FINCA present, past clients and FINCA officials. The report will also be

organized in five chapters which will be discussed in detail.


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CHAPTER ONE

INTRODUCTION

Background to the study

Micro credit and micro finance are relatively new terms in the field of development, first coming

to prominence in the 1970s, according to Robinson (2001) and Otero (1999). Prior to then, from

the 1950s through to the 1970s, the provision of financial services by donors or governments was

mainly in the form of subsidized rural credit programs. These often resulted in high loan

defaults, high losses and inability to reach poor rural households (Robinson, 2001). Robinson

states that the 1980s represented a turning point in the history of microfinance in that

Microfinance Institutions (MFIs) such as Grameen Bank and Banking Rural Institutions (BRI)

began to show that they could provide small loans and savings services profitably on a large-

scale outreach. They received no continuing subsidies, were commercially funded and fully

sustainable, and could attain wide outreach to clients (Robinson, 2001). It was also at this time

that the term "microcredit" came to prominence in development (Micro finance Information

Exchange, 2005).

The world over, the pursuit of development has taken the direction of socio- economic

development. Both men and women are involved in the development process although in the past

the women, in comparison to the men, were marginalized and disadvantaged in various aspects

of development. Throughout the history of the development process, the development

practitioners have tried to identify strategies that could promote the level of the womens

participation in the race for development. Thus various interventions such as microfinance

lending have been specifically targeted at the women in a bid to improve their socio-economic

levels of development.


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Microfinance is a facility that makes it possible for the focused poor people to get a small loan to

start a business, pay for school fees, procure housing or receive health care (Microfinance vital to

economic growth 2005:15). Such an initiative is instrumental in changing the poverty patterns in

view of improved facilities to lessen the challenge posed by startup capital. Microfinance hasbeen changing peoples lives and revitalizing communities since the beginning of trade (United

Nations 2005e:1).

The United Nations declared the year 2005 the year of micro-credit because since 1959, the

Unated Nations (UN) has designated International Years in order to draw attention to major

issues and to encourage international action to address concerns that have global importance and

ramifications (Microfinance vital to economic growth 2005:15). The United Nations General

Assembly resolution on the mandate for the year invited member states, relevant organizations of

the United Nations system, nongovernmental organizations, the private sector and civil society to

collaborate in the preparation and observance of the year. The invited organizations were

expected to raise public awareness and knowledge about micro-credit and microfinance (United

Nations 2005d: 4). The year of micro- credit 2005 was observed in Uganda by the existing

microfinance institutions and the umbrella bodies of microfinance institutions and the

government of Uganda. There was wide-spread awareness of micro-credit through the

newspapers, magazines, television case studies and radio coverage. The media, especially the

newspapers and magazines, featured articles about the industry and presentations of

microfinance dignitaries made about the microfinance activities in Uganda. There were also

success stories of microfinance clients all over the country that were presented in the papers and

case studies were broadcasted on television. The lists of microfinance institutions and the areas

they operate from in Uganda were featured in the media as well.


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Uganda has several microfinance institutions all over the country that are issuing loans and

deposit facilities to the communities. The institutions include Finca, Brac, Faulu (now

Opportunity Uganda), Blue, Bayport, Pride Microfinance and other small self-help groups that

organize themselves for purposes of accumulating savings and lending to members. In all thesemicrofinance institutions, the women have always taken an active role and keen interest in the

services they provide to them given their disadvantaged positions in the commercial banks. The

study focused on the rural areas of Jinja where the researcher is familiar with and the study will

concentrate on women who are in most cases looked down. The study will aim at answering the

following research questions: after all the lending and borrowing in the study area, has the

situation of the women improved? If so, how? If not, why? What can the microfinance

institutions learn from this? What recommendations are made to the government of Uganda,

NGOs and the communities for holistic development, especially of women?

The study will attempt to answer these questions through the research findings that will establish

the role of microfinance in the economic development in the trade sector of rural women in Jinja

district.

Statement of the problem

Much as microfinance services have existed in Jinja for a period of time, there is lack of

information on the good practices in the area and the exact magnitude of impact of the services

on the women and how the loans are accessed and utilized in order to attain socio-economic

development. The fact that poverty still exists amidst the attempts of provision of microfinance

creates room for exploring how far microfinance has benefited the women in in the rural areas of

Jinja.

When Ms Rehema Musongola Naiga borrowed shs500, 000 from FINCA Micro finance last

year, she had two wishes; one boost her tailoring business, and to pay school fees for her primary

school going child.


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But no sooner had she got the money than sickness attacked her; immobilized by post delivery

stomach complications and the indisposition made her unable to put the money into her business.

Instead, the loan paid off hospital bills. But shortly after, she was asked to pay back. This burden

fell on her husband, Mr. Jaffery Musongola.Mr Musongola, a resident of Wakitaka Village, Jinja District and a chapatti maker at Kutch Road

in Jinja town, went on another borrowing spree, this time from friends. He managed to repay

shs300,000 back to the micro-finance.

Narrating the family ordeal to Daily Monitor, Mr. Musongola said, As my wife lay in hospital

waiting for the doctors knife, I was fighting to pay the loan and also look for money to foot the

hospital bill. I pleaded with FINCA to give me time to take care of my wife but they did not

listen. a FINCA field officer, [only identified as], Fauzia said my wifes sickness cannot stop

the loan payment, he said.

Three days after the operation, Ms Naiga was detained with her two and half months old baby at

the Jinja FINCA offices for 10 hours after being persuaded by Fauzia to go to FINCA offices to

find out whether she could be given her savings.

Although the members of Bwondowoza Group, of which she was a member, had paid the shish

200,000 left, FINCA attached her property worth shs810, 000 leaving the family more

impoverished. But Musongola is just one out of many in Jinja who have suffered the cruelty of

FINCA loans.

Although her property has not been attached, a FINCA village group leader in Wakitaka village,

who preferred anonymity for fear of being denied future loans told this paper about how her

group members are fined even after returning the loans.( Daily monitor 23rd2011)


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The members claim that they are cheated in the whole process. They tell us that our money is

not being shown in the computers and even if we show them the bank slips they insist that we

pay afresh, the source said.

Some members had to get directly from the loan and those who had not carried any money werefined, said a chairperson of a group in Wakitaka. They [loanofficers] now tell us to go to their

homes if we want to get the money instead of the groups official meeting place, another source

said.

According to FINCAS Jinja branch chief, Ronnie Kyazze, such a practice is unknown to them.

He says that their normal operation procedure involves reaching an agreement with group

members on how and when to pay the loan before its disbursed. He insists that their

investigation reveals that some field officers exploited the ignorance of the rural folk.

The demand for immediate repayment has left many FINCA members in the vicious circle of

poverty and debts as they end up accumulating more debt from other people to repay the loans.

A woman in Namulesa village, who was the groups chairperson withdrew from the association

because the field officers who take advantage of the illiteracy of the village members. They tell

women that the computer needs more money from them and the loan record books from villages

cannot pass through computers for scrutiny because they are dirty, she says.

Although FINCA does not give fresh loans before a group services the previous one, a FINCA

loan officer asked a Numulesa group member to pay, in late fees, shs 600,000 that he claimed

had been accumulated but after an inspection at the Kampala office, it was discovered that the

loan officer was wrong.


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Namulesa LC1 chairman, David Batambuze ,said FINCAhas been confiscating peoples property

in the village without his consent. I just receive complaints after the property has been taken.

No FINCA person has ever appeared in my office, he says. When they had just come, they

were doing some good job but these days they have become crooks who are just making peoplesuffer, he adds.(www.monitor.co.ug/News/National/-/--/index htmal)

Issues investigation

But Mr Kyazze adds: Our field officers are graduates from universities, we train them on

customer care but if some people in those villages are complaining, I am going to institute an

investigation. Therefore the research found FINCA to be an area of interest for research.

Purpose of the studyThe purpose of the study is to assess how micro finance has contributed to the economic

development of women in the trade sector taking FINCA Jinja branch as a case study.

Objectives of the study

The study will be guided by the following objectives

1. To examine the nature of financial services offered by FINCA micro finance to the rural

women in Jinja district.

2. To identify the indicators of growth in economic activities of FINCA macro finance

beneficiaries in Jinja district.

3. To establish the contribution of FINCA micro finance funding to the economic activities

of women in Jinja district.

4. To design appropriate strategies that will increase the outreach of FINCA micro finance

so as to enhance economic development
http://www.monitor.co.ug/News/National/-/--/indexhttp://www.monitor.co.ug/News/National/-/--/index


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Research questions

The study will be guided by the following research questions

1. What is the nature of financial services offered by FINCA micro finance to the rural

women in Jinja?

2. What are the indicators of growth in economic activities of FINCA micro finance

beneficiaries in Jinja district?

3. What is the contribution of micro finance funding on the economic activities of the rural

women in Jinja district?

4. What are the appropriate strategies put in place to Increase the outreach Of FINCA micro

finance so as to increase on their contribution to economic development?

Scope of the study

Subject Scope

The study will focus on the contribution of FINCA micro finance to the Household Income and

Asset Development of the rural women in Jinja district.

Geographical Scope.

The study will cover the rural areas in Jinja district.

Significance of the study.

Academicians and researchers.

The study about the role of FINCA microfinance in the socio-economic development of

the rural women in a community, taking Jinja district as a case study, will be important to

the academicians and researchers who can use it as a springboard for other

researches/studies.


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Information and research centers.

The information will also be used in the information and resource centers of higher

institutions of learning like universities that have microfinance as a course for their

students as well as the resource centers in microfinance institutions and their umbrella

organizations. It will therefore be an additional reference for the data banks in the

microfinance industry.

Policy makers.

Furthermore, the information will be useful to policy makers especially the district

councils, town councils and the Ministry of Microfinance, who could utilize it to promote

policies and bye laws that will enable more people to access microfinance and benefit

from it as much as possible. The study envisages that the findings of this research will

highlight the significance and relevance of microfinance in the socio-economic

development of the rural areas and thus avenues to replicate it throughout Uganda will be

analyzed by policy makers.

Justification of the study

The year 2005, observed world wide as the international year of micro-credit, highlighted the

contribution of micro-credit to the millennium development goals, increased public awareness

and understanding of microfinance, promoted inclusive financial services and promoted strategicpartnerships to build and expand outreach and success of micro-credit (United Nations 2005 b:1).

This study will time its effort to establish the role of microfinance in the socio-economic

development of rural women in Jinja district in Uganda after various promotions, support and

public awareness strategies had been carried out during the international year of micro-credit.

Jinja district as a local government institution has various development partners it works with to

uphold the welfare of its community. In the field of microfinance, there are

Non government organizations that promote their services to the community. The Council,


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however, is limited in terms of research findings on how these organizations implement their

services and whether the community is benefiting from them or not. The study is intended to

establish and develop baseline data that will be used by scholars and credit institutions in Jinja

district for effective planning and program implementation.

Organization of the research study.

The following section is a discussion of the specific content of each chapter.

The research will begin with the preliminaries which will cover the declaration, the approval,

acknowledgements, table of contents, acronyms and abbreviations, operational definitions, list of

tables and lastly the abstract.

Chapter one will cover the introduction, statement of the problem, objectives of the study,

research questions, scope of the study justification and lastly the organization of the study.

Chapter twowill contain a discussion of the literature specific to the research topic and research

objectives and questions. The literature from the developed world, Africa, Uganda and Jinja

District will be reviewed.

Chapter threewill be the detailed discussion of the methodology of the research. It will discuss

how the research will be carried out and the methods that will be used to collect, analyze and

Record the data.

Chapter fourwill discuss the findings from the study as guided by the research questions and

objectives.

Chapter fivewill present the conclusions and recommendations from the study for consideration

by the Uganda government, the microfinance institutions and the microfinance beneficiaries.

The research will finally look at the list of references and the appendices which will cover the

questionnaire, interview guide, the budget, timetable, observation check list and the ethical form.

Conclusion

Chapter one discussed the introduction to the research, statement of the problem, objectives,

research questions, scope of the study and justification of the study and organization of the study


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But this alone cannot draw a conclusion to the study. There is need to review the existing

literature and to find out the gaps for further research hence need for chapter two.

1.


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CHAPTER TWO

STUDY LITERATURE.

Introduction

This chapter will review the existing literature on key microfinance concepts, and will look at the

nature of services offered by FINCA micro fianc, and will identify the indicators of economic

activities growth and evaluate the contribution of FINCA micro finance to the economic

activities of the selected rural areas in Jinja district.

Theories/ models of Micro Finance

The poor need financial products and services to build assets stabilize consumption

and shield themselves against risk. Originating from the founder of formal

microfinance, many writers and policy makers have often looked at microfinance as

the last-mile bridge to the low-income population excluded from traditional banking

system, but yet no single study have so far proven beyond doubt how microfinance

alleviate poverty (Fotabong & Akanga 2005), hence need to understand the models/

theories of Microfinance.

Grameen Bank Model of Bangladesh

The Grameen Bank (GB) is based on the voluntary formation of small groups of five

people to provide mutual, morally binding group guarantees in lieu of the collateral

required by conventional banks. Women were initially given equal access to the

schemes, and proved to be not only reliable borrowers but also astute entrepreneurs as

well. GB has successfully reversed conventional banking practices by removing

collateral requirements and has developed a banking system based on mutual trust,

accountability, participation and creativity.


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According to Professor Yunus the founder of the Grameen Bank , credit is seen as a

cutting edge tool for affecting those inequalities that confine the poor to a poverty

cycle and for releasing the inherent capacities in people. Thus, it restores some sort of

social power which has been denied to the poor because they lack collateral. Professor

Muhammad Yunus argued that the conventional banking system is anti-poor, anti-

women and anti-illiterate and thus, has contributed to maintaining the statuesque

between the rich and poor. Thus microcredit issued to small groups, is purported to

enable them the opportunity to purchase equipment and other inputs and engage in

micro enterprises of their choice.

Methodologies of the Grameen Bank Model

As mentioned earlier, the GB is based on the voluntary formation of small groups of

five people to provide mutual, morally binding group guarantees in lieu of the

collateral required by conventional banks. Women were initially given equal access to

the schemes and contrary to what was thought of, they proved to be not only reliable

borrowers but also astute entrepreneurs. Intensive discipline, supervision and

servicing, characterize the operations of the GB, which are carried out by bicycle

bankers in branch units with considerable delegated authority.

Group based lending is one of the most novel approaches of lending small amounts of

Money to a large number of clients who cannot offer collateral. The size of the group

can vary, but most groups have between four to eight members. The group self-selects

its Members before acquiring a loan. Loans are granted to selected member(s) of the

group first and then to the rest of the members. A percentage of the loan is required to

be saved in advance, which points out the ability to make regular payments and serve

2.


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as collateral. Group members are jointly accountable for the repayment of each

others loans and usually meet weekly to collect repayments. To ensure repayment,

peer pressure and joint liability works very well. The entire group will be disqualified

and will not be eligible for further loans, even if one member of the group becomes a

defaulter.

Weaknesses of the Grameen Bank Model

1. One of the most successful models replicated and discussed around the world is

the Grameen model. The bank has successfully served the rural poor in

Bangladesh with no physical collateral relying on group responsibility to

replace the collateral requirements. However, I think the model has the

following limitations

2. Setting up a Grameen bank requires putting up a huge mega structure that

involves huge costs. Most of the funds obtained from external sources to

finance micro projects end up being used to pay operational costs and salaries

of personnel working in the mega structure.

3. The Grameen Bank Model has degraded into a level where, the poor are being

pushed into a cycle of multiple borrowings through the rolling of cash. That is,

the poor keep on borrowing to pay previous engagement that is robbing Peter to

pay Paul. This in addition to its usurious lending rates and high- handed

collection mechanisms pushes the poor further below the poverty line. What

ought to be a bank-aided socially purposive activity is now a private equity

driven business with profits and valuations as the goal.

3.


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It involves too much of external subsidy which is not replicable as the bank has

not oriented itself towards mobilizing peoples resources. Thus, in the absence of

donors funded programs and mezzanine assets financial self sufficiency becomes

questionable.

4. The repayment system of 50 weekly equal installments is not practical because

the poor do not have a stable job. In addition, in a typical agrarian community,

during lean seasons it will become practically impossible for them to repay the

loan.

5. Pressure for high repayment drives members to money lenders. Credit alone

cannot alleviate poverty and the Grameen model is based only on credit.Consequently, haste can lead to wrong selection of activities and beneficiaries.

6. The interest rate charged by the Grameen bank is by far higher than those

charged by conventional banks. They charge more than 7% monthly, with the

credit terms remaining inflexible and ill adapted to the activities of the poor

clients. Grameen Bank defends it high interest rates in relation to money

lenders rather than low cost bank finance providers.

7.

Again, agriculture which in most developing countries is the principal activity

of the poor is neglected. The Grameen model calls for the dynamics of joint

liability. This mean that groups screen and self select their members to form a

relatively homogeneous groups and consequently members typically share

similar probability of defaulting on a loan. Again, the poor are again left out

due to negative perception of poor people in a community, with no social

groups willing to accept the poor.4.


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Village Banking Model of FINCA

The village banking institution, Foundation for International Community Assistance

(FINCA) implements a village banking model in its effort to create financially-

sustainable solidarity groups. FINCA trains small community groups in a 22-module

program to form Community Credit Enterprises (CCE). These small enterprises, or

companies, permit members to buy shares as shareholders and generate capital to

offer sustainable credit and business models. The village banking model was first

developed during the 1980s in Bolivia by John Hatch.

Methodologies of the Village Banking Model

According to the original model, village bankingFINCA works with groups of 30-60

members, usually all women. As soon as the village bank is inaugurated, it receives its

first loan from the implementing agency (the local headquarters of FINCA or its

affiliate) for on-lending to the individual members of the village bank. The sponsoring

agency spends one to three months in setting up each bank, organizing the election of

a management committee and training its members, as well as developing the rules

and regulations to govern the village bank. The first individual loan (usually US$ 50)

is repaid on a weekly basis in equal installments of principal and interest over a four-

month period. The village bank collects these payments at regular meetings and, at the

end of the 16th week; it repays the entire loan principal plus interest to the

implementing agency. The funds circulating back and forth between the implementing

agency and the village bank for loans to members constitute the external account. If

the village bank repays in full, it is eligible for a second loan. If the village bank is

5.


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unable to pay the amount due, the implementing agency stops further credit until

reimbursement is made

Weaknesses of the Village banking Model

1. The village banking model of FINCA is over dependent on external funding.

This puts the model at risk in a situation where funds are no longer being

channeled into the village bank.

2. Because funds are being channeled into the village bank at 10% interest rate,

the villagers or credit beneficiaries end up paying interest rates of more than

2% on weekly basis. This high interest rate is not sensible considering the

meager resources of the poor and the purpose put forth to defend this initiative.

3. Again, the model requires compulsory 20% savings of the loan amount granted

with beneficiaries compelled to repay the loan-principal, interest and savings

within 16-24 equal weekly installments. This most often is ill adapted to the

cycle of activities of the community particularly with agricultural financing

most of which have but seasonal cash flow.

4. Loans are exclusively granted for trading and micro enterprise activities with a

maximum amount granted to an individual being limited to $300 due to the

lack of the village bank own resources.


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5. Most village banks are not registered and consequently are not covered by the

law and again without an ongoing recruitment and mobilization drive for

depositors the village bank can run into problems. Savings are the life-blood of

an institution and it enables lending. Therefore concerted attempts to broaden

the membership base and ultimately savings volumes are imperative. Most of

the village banks have little or no government support.

Concept of microfinance.

Microfinance refers to financial services provided to low-income earners usually people who

cannot get access to formal commercial banks (Bategeka, 2001)

Microfinance refers to financial services provided to low-income people, usually to help support

self-employment. Examples of microfinance products include: small loans, savings plans,

insurance, payment transfers, and other services that are provided in small increments that low-

income individuals can afford. Because salaried or wage-paying jobs are scarce in many

developing countries, most citizens earn their livings through self-employment, creating

and operating their own tiny enterprises. But without financial services to fuel their productivity,

the poor can never grow their microenterprises into businesses that help them escape

poverty. The microfinance movement was born to ease the suffering caused by poverty, andto awaken the global economy's sleeping giant: the under-capitalized productivity of the

world's working poor

Village banking.

Village banking is amicrocredit methodology whereby financial services are administered

locally rather than centralized in a formal bank. (en.wikipendia.org/wiki John-Hatch) Village

banking has its roots in ancient cultures and was most recently adopted for use by micro-finance

institutions (MFIs) as a way to control costs. Early MFI village banking methods were innovated

by Grameen Bank and then later developed by groups such asFINCA International founderJohn
http://en.wikipedia.org/wiki/Microcredithttp://en.wikipedia.org/wiki/FINCA_Internationalhttp://en.wikipedia.org/wiki/John_Hatchhttp://en.wikipedia.org/wiki/John_Hatchhttp://en.wikipedia.org/wiki/John_Hatchhttp://en.wikipedia.org/wiki/FINCA_Internationalhttp://en.wikipedia.org/wiki/Microcredit


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Hatch. Among US-based non-profit agencies there are at least 31microfinance institutions

(MFIs) that have collectively created over 800 village banking programs in at least 90 countries.

And in many of these countries there are host-country MFIssometimes dozensthat are

village banking practitioners as well.

In 1984, Hatch finally created his own nonprofit agency-the Foundation for International

Community Assistance (FINCA). He was inspired with the idea of FINCA while in an airplane

high above theAndes, en route to a consultant assignment inBolivia. He grabbed in-flight

cocktail napkins, scraps of paper, and a pen and began writing down ideas, equations, and flow

charts as fast as he could. By the time he landed inLa Paz, he had the outline of a radically

different approach to poverty alleviation: a financial services program that put the poor in

charge. Give poor communities the opportunity, and then get out of the way! he said. The

means to achieving this purpose were "village banks", a self-managed support group of some 25

borrower-owners. Its purpose was to provide the poorest families, particularly those headed by

single-mothers, with loans to finance self-employment activities capable of generating additional

household income. The story of FINCA-which has been called a "World Bank for the Poor" and

a "poverty vaccine for the planet"-is quite remarkable and even miraculous. FINCA currently

operates village banking programs in 23 countries and since 1984 it has assisted over

1,000,000families, lending over $360 million (in 2007) to the world's poorest families with a

repayment rate of 98%, while also generating enough income to completely cover the operating

costs of the field programs themselves. Moreover, there are now over 800 village banking

programs worldwide in 60 countries created by about 30 other nonprofit agencies.(

en.wikipendia.org/village-banking).

Micro Finance Services

Sinha (1998) states, "Micro credit refers to small loans, whereas micro finance is appropriate

where NGOs and MFIs supplement the loans with other financial services (savings, insurance)";

therefore micro credit is a component of micro finance in that it involves providing credit to the
http://en.wikipedia.org/wiki/John_Hatchhttp://en.wikipedia.org/wiki/Microfinancehttp://en.wikipedia.org/wiki/Andeshttp://en.wikipedia.org/wiki/Boliviahttp://en.wikipedia.org/wiki/La_Pazhttp://en.wikipedia.org/wiki/La_Pazhttp://en.wikipedia.org/wiki/Boliviahttp://en.wikipedia.org/wiki/Andeshttp://en.wikipedia.org/wiki/Microfinancehttp://en.wikipedia.org/wiki/John_Hatch


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Climate for microfinance:

a) FINCA Uganda is the countrys first regulated, deposit-taking microfinance institution,

permitting it to intermediate saving deposits, allowing a vast new area of client services.

b) The World Bank has estimated that Uganda's informal economy represents 43.1 percent of thecountrys GNP.

Indicators of Growth in Economic Activities for a period of 2004- 2012.

Economic activities require commitment, cooperation, and cohesion at all levels of development

individual, household, community, and national. While micro finance alone does not improve

roads, housing, water supply, education and health services, it can play an important role in

making these and other sustainable contributions to the community.

The following are some of the indicators of growth in economic activities that can be

enjoyed by beneficiaries of MFIs: - Consumption and Asset

Development can be used as a measure f growth in economic activity. As the incomes of

beneficiaries increase, there is likely to be an improvement in the consumption patterns of the

people as well as in the asset bases for their families. Beneficiaries can now afford some of the

expenditure and assets that were out of their reach originally.

Growth in profitability is also one of the indicators of improvement in economic activity.

Such growth should be reflected in profitable enterprises, growing enterprises, and conversion

into medium or large enterprises. In addition, small-scale businesses' growth can be measured in

terms of profits. Profit making organizations look at the rate of return on the resources of the

firm (Pandey, 1996).


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According to section 5(5) of the income Tax Act, payment of income tax by enterprises is sign of

growth since they are seen as engines of development, employing 90% of the non-farm

economically active poor people (Ministry of Finance and economic activities Report, 2000).

The growth in business can make it possible for firms to train its employees. Naisbitt (1985),growing businesses have human resource objectives such as helping employees improve their

career opportunities or improving performance through job skill training.

Increase in the Market Share is also a sure way of measuring growth. According to Kotler

(2000), the company's growth will be determined by the increase in rate of growth of its market

share. The increase in the market share will be reflected in the increased volume of sales and

establishment of distributional channels for the goods and services to target market segment.

Growth in economic activities is measured by strong management. Owners of businesses

usually have previous managerial experience. In fact the competitive strength of the firm is often

based upon the founder's unique skills on cost control, sales and so on. The managers of the

business must be able to take risks. Management must be willing to work hard to overcome the

challenges associated with growth possibilities.

Customer care also stands out as a signal of growth in enterprises. Donald (1987) stated that

growth of economic activities could be viewed in the level of customer service offered tocustomers. The customer service is offered in form of product quality, diversification or

innovation. Technological advancement in enterprises can also be viewed as a sign of

development. Enterprises will say move from the use of typewriters to the use computers or even

where they have computers, to continuously upgrade their equipment. This may not be the case

in the developed countries where, because of market opportunity and likely success due to

environmental enabling factors, it is easier to secure new technology. Besides, this technology

originates from the developed countries and unlike in the developing countries where it must be

imported, it is relatively cheap (Coleman, et al, 2005).


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Improved savings and economic assurance: MFIs can help people become more

economically secure. Savings serve as reserves for important household expenditures (such as

school fees, feeding and other emergencies), and as insurance against sudden crises (such as

illness, natural disasters, or accidents) that can otherwise result in destitution for people alreadyliving at the poverty line (Cheston et al 1999). MFIs can build upon Africa's traditional savings

ethics to enhance outreach and quality of services. It is important to keep in mind that for any

financial service to have a lasting impact on poverty eradication, it must be flexible and

innovative to adapt to the needs of its clients

(Joanna, 1999)

The greater the rate of increase in numbers of employees, the greater the likelihood of growth.

MFIs help people start or improve their own small businesses, providing income generation and

employment for themselves and their families.

MFI in Uganda, show that loans given to small farmers have resulted in substantial increases in

part-time and permanent wage labor of non-clients. Expansion in scale of production leads to the

development of departments and consequently increases in number of employees (Afrane,

2002). Credit can be used as working capital so that clients' efforts become more productive;

for example, clients can buy produce in bulk at discounted or wholesale prices and resell at retail

prices for more profitability (Brau, et al, 2005). As clients become more productive, their

incomes increase and they are able to accumulate savings for other investments as well as


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to enable them start the payment schedules after a reasonable degree of business

stability. Jerik, (2005) argued that one of the hindering factors limiting accessibility to MFIs

services is collateral security. He suggested that it should be scrapped off so as to enable those

without it to access the services freely. This may however not be practical since security is arequirement by all banks.

Palakow (2003) argued that most MFIs branches are in urban and pre-urban areas. He suggested

that FINCA should endeavor to open up more branches in rural areas so as to make its services

more accessible to all target groups. Currently most of the clients are supposed to travel to head

office or to midi strict headquarters for meetings and remitting of their weekly loan installments.

This however, increases their operational costs and is time consuming as well (Walter,

2002). Sebstard et al, (1996) argued that MFIs need to expand or increase on the product

portfolio offered.

The products currently offered are very few compared to the clients' demands. This in a way

has fueled the misappropriation of funds received by the clients to other purposes not prescribed

in the loan contract which increases high default rate (Hoque, 2004). Coleman et al, (2005),

argued that management of MFIs should endeavor to appraise and recommend projects to be

funded. Their experience over time should assist them to realize the types of businesses with the

least failure rate and be able to advise their clients accordingly. The management should go an

extra mile to periodically monitor the operations of the projects funded so as to reduce on

the default rate.

Conclusion

Having reviewed the existing literature about the topic, the researcher stands a challenge of how

a complete state of information will be obtained. This has to be done through different data

collection methods hence finding need for chapter three to discuss how the data will be collected.


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CHAPTER THREE

RESEARCH METHODOLOGY

Introduction.

This chapter will outline in detail the manner in which the study will be executed. It will

highlight the areas of study, the research design, the sampling design and procedure. It will also

state the data collection methods, the data processing and analysis, which the researcher

will use.

Research Design

The study will be cross-sectional; both descriptive and analytical approaches will be used. The

data will be collected from both primary and secondary data sources, from FINCA in Jinja

region, and the study will be focused on the contribution of MFIs to the economic activities of

the women in Jinja for the period 2004-2012.

The researcher will use both qualitative and quantitative methods of data collection and analysis

so as to capture the details and adequate information. The use of both methods will also ensure

that the data was effectively interpreted using the numbers, figures as well as the narrative.

Qualitative research

The researcher will employee this method of research because there is need to interact with the

micro-credit beneficiaries as well as to ensure that specific information is obtained from

particular respondents. The use of interviews will be relied on to collect the qualitative data. The

interviews will be used to collect data from the key informants in the study.


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The quantitative tools used in this study will include the questionnaires that will be used to

obtain data that will quantify in numbers and figures and tables as shall be presented in the next

chapter. This is also supported by (Casebeer and Verhoef 1997:2) who state that quantitative

research is the numerical representation and manipulation of observations for the purpose ofdescribing and explaining the phenomena that those observations reflect.

Reasons for combining the two methodologies.

The use of the two methodologies is aimed at obtaining reliable, valid and logical conclusions to

the research findings. The baseline data got through the qualitative method will be

complemented by the numerical and statistical representation of the quantitative research. There

will also be in depth understanding of the topic of microfinance by the researcher when the two

methodologies are employed. This will serve to provide inferences and analysis to the issues.This is affirmed by Creswell (1994:177) who mentions that the combination of the two

approaches helps the researcher to better understand the concept being tested or explored. The

two approaches have also been likened to the brain by Davies (2000:1) who explains that

quantitative research focuses on the left brain while qualitative research deals with the right

brain. He asserts that while the right brain gets us into trouble, the left brain reasons our way out.

According to Davies (2000:3), the most powerful research engages both the left and right hand

side of the brain. This is because running quantitative research alongside qualitative research

offers a synergy whereby objective data can provide a structure to analysis of subjective

qualitative data (Davies 2000:3).

The two approaches will be used mainly because the respondents will have different

backgrounds. Some respondents will easily understand and fill out the questionnaire while others

will require the interview guide to enable them talk, share, and be probed for the responses to the

questions. These two approaches also complement each other in that the many words can also

use the numbers to support specific conclusions.


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Study Population

The study population refers to the large groups of people or things (Ruane 2005:105). The study

population for this research comprised of women beneficiaries from microfinance institutions,

staff members of microfinance institutions, local government officials in Jinja district,dealing/collaborating with microfinance institutions and local government officers in Jinja town

council. The personnel from Jinja District supervise and coordinate all the microfinance

institutions in the entire district while the personnel from jinjaTown Council only deal with the

microfinance institutions in the Town Council. It should be noted that the town council is part of

the district and the district is bigger than the town Council in terms of coverage and personnel

but they are both local governments

The study will cover a total population of 100 people, namely, 20 past and 50 present FINCA

clients, 10 non-beneficiaries and 20 management staff. Since the type of information required

will be qualitative in nature, judgment sampling! Purposive will be the most appropriate to use.

Sample population and Size

The study population will be selected using purposive sampling technique basing on the fact that

the researcher will be well knowledgeable about the economic activities parameters and that

the respondents will be believed to have appropriate information pertaining to the study. For

purposes of obtaining the relevant information, the researcher will target 100 FINCA clients

(past and present and non beneficiaries) and 10 FINCA management officials (credit officers) as

shown in table Stratified random sampling was used to obtain the clients.


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1.3. Table Population & Sample size.

Nature of the respondents Population.

Nature of the

respondents

Population Sample size

(%)

Sampling

technique

Sample size

Past FINCA clients 20 18.2 Stratified

sampling

20

Present FINCA

clients

50 45.5 Random

sampling

50

Non- beneficiaries 10 9.1 Systematic

sampling

10

Management 20 27.3 Random

sampling.

20

Total 100 100 100

Sources of Data

The researcher will use both primary and secondary sources of data.

Primary Data

The data will be obtained from FINCA clients (past, present and non beneficiaries) and

from management. The information will be obtained by use of self-administered questionnaires

and interviews.

Secondary Data

This data will be obtained from published materials, which will include journals, textbooks

magazines, internal reports and newspapers. They include among others, minutes, internal and

credit officers' reports of FINCA, which will talk about the control and utilization of loanable

funds and customer business operations.


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Instruments of data collection

The researcher will use a number of data collection instruments namely, questionnaires,

interview schedule and observation.

Questionnaire.

The researcher will design self administered questionnaires which will be pre-tested distributed

to FINCA management staff, past and present clients as well as non beneficiaries of FINCA

services. The completed questionnaires will then be picked from respondents for analysis.

The questionnaires will be used to obtain quantitative data for the research because it has been

observed that, in considering the various research options for systematically gathering

information, the questionnaire will be earned the right to be a perennial favorite, a frequent

choice of researchers because of its versatility, its time and cost efficiency and for its overallability to get the job done (Ruane 2005:143). Therefore the questionnaires will be used to obtain

the quantitative information from the fifty beneficiaries of microfinance services in rural Jinja

The questionnaire will be used because it is specific for the respondents to explain the exact

situation without giving room for unnecessary and irrelevant information for the study topic.

(The questionnaire used is attached in the appendix).

Interview guide.

The interview refers to a personal exchange of information between the interviewer and theinterviewee (Bowling, 2002:147). In this case, the researcher will use the interview schedule to

guide the discussion in Appendix 2 with the respondents who will be key informers and thus

needed to elaborate on several issues.

The researcher will design appropriate questions relating to the topic of discussion and then

present the questions to FINCA respondents noting the responses thereof. The collected

responses will then be analyzed. This will be shown in Appendix 2


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Observation

The researcher will employ the observation method to note whatever will take place in

the organization and its clients. For instance, the general appearance of the FINCA premises,

staff attire, interior and exterior design, equipment in use, staff attitudes (disgruntlement,receptive faces and others), the dressing code of clients, their health plus other attributes. This

will be discussed in detail in Appendix 4.

Data quality control/quality assurance

The researcher wills employ some measures to control the quality of the data. These will include

the following:

Piloting

This is where the data collection materials will be tested and or piloted and refined. This will

take into consideration the language spoken and understood by the respondents. The

questionnaires will first be given to my family and friends to check an error that might have been

made and corrections will be made immediately.

Training

The researcher will carry out the research with the assistance of two research assistants/data

collectors that will be trained to assist the researcher with the collection of data especially using

the questionnaires. They will be trained on how to administer the interview guide and the

questionnaire and how to record any other useful information they will come across in the field.

Each of the research assistant will be able to administer both the interview guide and the

questionnaire to the respondents under the direct supervision and monitoring of the researcher.

The field notes will be made and edited immediately after data collection on a daily basis.


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Editing questionnaires

The questionnaires will be edited on receipt from the research assistants and any missing

information will be rectified immediately. The data from the key informants will be recorded

immediately during the interviews.

Data analysis

The researcher will use both descriptive and statistical approaches in processing and analyzing

the data.

Mostly qualitative data will be will be obtained from the questionnaires and analyzed

After the information have been gathered, a variety of tools will be used to analyze it in order to

capture the relevant findings and also present it in a manner that will be understood by fellow

researchers and other research users. These tools are discussed below.

EditingEditingwill be done in order to discard unwanted and irrelevant information, verify the

data and check for consistency.

Coding

This will involve grouping answers of a similar nature or with similar meaning into one set of

answers and giving them a particular number called a code. This means that for example answers

with yes in a given questionnaire willbe coded as number one and answers with no would

be coded as number two for each questionnaire. The coding will assisted the researcher to get the

total number of responses for each of the questions. This will also help to tabulate the data using

the figures and numbers obtained.

Tabulation

Tabulation will involve representing the information obtained in figures and tables. This will

later be used to establish comparisons as well as conclusions for the study.


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Establishing themes

The data will be analyzed using and utilizing specific themes that will in turn be used to establish

systematic linkages and conclusions for the study. The main themes that will be established

include; type and nature of FINCA microfinance, women and their benefits from FINCAmicrofinance, challenges of accessing MFIs, challenges of utilizing MFI loans, recommendations

for MFIs, and recommendations for further research.

Report writing

The research report will be written based on the themes and conclusions drawn from the findings

as presented in the research report that will be comprised in this document.

Ethical considerations

The researcher will consider the research values of voluntary participation, anonymity and

protection of respondents from any possible harm that could arise from participating in the study.

Thus the researcher; will introduce the purpose of the study as a fulfillment of a field study

program and not for any other hidden agenda by the researcher and will request the respondents

to participate in the study on a voluntary basis and refusal or abstaining from participating will

be permitted. The researcher will also assure the respondents of confidentiality of the

information given and protection from any possible harm that could arise from the study since

the findings will be used for the intended purposes only. The respondents will be provided withfeedback about the findings of the study.


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Limitations .

Power shortage:

The research will be delayed by power shortage which delays most research work.

Shortage of funds:

The allocated funds may not be enough for the research work so this will hinder to the research

work.

Slow response:

The questionnaire response may be slow and this may delay the work.

Knowledge:

The study is on an area that requires specific knowledge on micro finance matters, so

information will only be got from a specific group of people.

Organization policies:

The study will be slowed down owing to stringent policies in some organizations regarding who

authorizes or releases any information on micro finance funding and related matters.

S

Conclusion

Having noted the research methodology, the research will proceed to the field to get the views of

the respondents so as to come out with the findings hence leading to chapter four, findings and

eventually analysis and presentation.


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REFERENCES

Afrane,s. (2002) Impact Assessment of Microfinance Interventions in Ghana and South Africa.

Armendariz D and Morduch J (2005). The economics of Microfinance.

Bategeka (2001). Ugandas achievementsand challenges in the Financial sector.

Brau J and Woller G (2005) Microfinance a comprehensive review of existing literature.

Bowling A(2002) . Research methods in health.

Casebeer AL and Verhoef MJ (1997). Combining Qualitative and Quatitative Research Methods

Cheston, S and Reed, L (1999). Measuring Transformation Assessing and Improving the impact

of micro-credit

Coleman Isobel ( 2005) Defending Microfinance.

Davies R ( 2000) Orient Pacific Century Market Research

Drake D and Ryne E ( 2002). The commercialization of Microfinance Balancing and

Development

en.wikipendia.org/wikivillage-banking

en.wikipendia.org/wiki/John-Hatch

Fotabong,LA, & Akanga K, (2005) Micro Finance and poverty redication.

Gyasi F and Anthony (2002). Social Economic Impact Assessment of Microfinance.

Hoque and Serajul ( 2004). Micro-credit and the reduction of poverty in Bangladish.

Jurik and Nancy, C ( 2005) Microfinance Development in an Era of welfare reform.

Palakow S Sasha (2003). Giving the poor Micro-loans are in Vogue.


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Ruane JM (2005). Essentials to Research Methods.

Sebstad J and Chen G (1996). Over viewing of studies on the impact of microfinance credit

Straus A and Corbin J (1998). Basics to Qualitative Research.

Smith CD (2008). Using both Qualitative and Quantitative Research Methods.

United Nations (2005).WWW.yearofmicro-credit.org/doc/Get involved

united Nations (1998). Microfinance and the Millennium Development Goals. http:yearofmicro-

credit.org/doc/mdgdoc.MN

united Nations(1998). The role of Microcredit in the eradication of poverty

Winriech NK (2006) intergrating Qualitative and Quatitative methods in Social and Marketing

Research.

www.allbanking solutions.com

www.Wisegreek.com

www.monitor.co.ug/News/National/-/--index
http://www.yearofmicro-credit.org/doc/Gethttp://www.wisegreek.com/http://www.wisegreek.com/http://www.monitor.co.ug/News/National/-/--indexhttp://www.monitor.co.ug/News/National/-/--indexhttp://www.wisegreek.com/http://www.yearofmicro-credit.org/doc/Get


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APPENDICES

APPENDIX 1 QUESTIONNAIRE TO FINCA CLIENTS

The researcher in collaboration with the school of business association is investigating the role of

micro finance institutions and the economic development of youths and women in Jinja district, a

case of FINCA Jinja branch.

In the regard therefore the interview questionnaires are directed to the clients of FINCA micro

finance institution. The study tends to indentify the problems faced by micro finance institutions

which tend to affect their performance towards supporting the youths and women. Possible

additional ideas are very welcome.

The study is purely academic so your name or anybodys is not required. Your answers will be

strictly confidential. Your positive responses are highly welcome.

Thank you

Tick the correct answer (s) only

Respondents number to be filled by the researcher

Tick in the small boxes provided on the right hand side of the questionnaire

Introduction

1. Sex of the respondents

Male Female

2. Marital status

Married single divorced

3. Age bracket

(18-25) (26-35) (36-45) above 45


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4. Education level

Secondary certificate Diploma Degree

Others, specify

..

5. Position of responsibility

FINCA past client FINCA present client

FINCA non-client FINCA official

6. For how long have you been / dealt with FINCA Uganda?

1-6 months 6-12 months 1-3 years

4-10 years above 10 years


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7. What is the nature of financial services offered by FINCA?

Short-term loan medium term

Long term loan Business entity

Insurance Money transfer

If loan product, what is the purpose of the loan?

Business expansion Purchase of property

Debt payment Housing Land purchase

If any other specify

..

8. If business, which activity does you/did you engage in? specify

..

9. Did you first undergo training to make you competent to use the loan?

Yes No


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10.Did you get ready for the loan yourself before you received it? Did you have need for it?

Yes No

11.

What are the indicators of growth since you joined FINCA?

..

12.About how much capital working capital did you have before the FINCA loan?

Less than 50,000 500,000- 1,000,000

50,000- 500,000

1,000,000- 5,000,000

13.In total about how much capital did you borrow from FINCA? Specify

14.How much intrest is charged on the loans given?

10% 40% 60%

15.According to you, what is your view about the interest charges?


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16.About how much working capital do you have now, did you have by the time you left

FINCA? Specify

..

.. 17.

What problems have you encountered in using FINCA Uganda services?

High interest rates lack of collateral security

Short repayment period Inaccessibility of FINCA services


.

18.What do you think should be done to rectify the situation?

..

19.What is the contribution of FINCA to the women in your community?

20.How do you rate your loan repayment schedules while using the loan?

Good Fair Poor


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21.What is the contribution of Microfinance deposit taking institutions to rural women in

Jinja according to you? PLEASE RANK

(i)Business expansion

(ii)Ability to pay taxes in time(iii)Increase in peoples income

(iv)Improvement in infrastructure

(v)Meeting customer demands on time

(iv)Meeting financial obligations on time.

(a) i and ii

(b)i , ii, and iii

(c) i, iii and iv

(d)V and iv


Thank you


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Appendix 2 INTERVIEW GUIDE

Interview guide for key informants

Interview date:.

Interviewers name:

Respondent.

You are kindly requested to respond as I ask you a few questions as honestly as you possibly

can. The information obtained will be used for academic purposes only and will be treated with

ultimate confidentiality.

Age

Title Marital status

Role in Microfinance institution.

1. What is the nature of financial services offered by FINCA microfinance to the rural

trading women?

2. What are the indicators of growth in economic activities of FINCA microfinance

beneficiaries?

..

3. What is the contribution of microfinance funding to the rural women in Jinja district?


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4. What are the appropriate strategies that can be put in place to increase the outreach of

FINCA microfinance?

5. What challenges do you face as you deal with the rural women?

6. How have you handled the challenges?

.

7. What is your future plan as FINCA?

...

Thank you.


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APPENDIX 3 ESTIMATED BUDGET

Item Amount

Ream of papers 30,000

Meals and accommodation 100,000

Transport 50,000

Printing and stationary 50,000

Research fee 100,000

Reserve 50,000

Total 380000


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Appendix 4 Observation checklist

Task details

Mapping document

name

Assessors name Assessors

signature

Start date End date

CHECK LIST NUMBER OF TIMES TO

BE

OBSERVED

Item Description of what

the assessor expects

to observe

Number of

observations

1 2 3 4 5

1 Number of clients

2 Wealth status of

clients

3 Receptive faces of

FINCA officials

4 Working conditions

in FINCA

20.


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5 Dressing code

in offices

6 Language

used bycustomers

7 Customer

care


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Appendix 5 Timetable

TIME PERIOD ACTIVITY

JANUARY Designing the topic

6-11 Getting facts about the problem statement12-18t Reviewing the relevant literature

26t -31st Writing down charter two

FEBRUARY

1-8t Writing chapter three

9t 15t Checking with the supervisor and making

corrections

16t -28t Designing the Appendices

MARCH

1st-8t Pre-testing the Appendices

9t -15t Checking with the supervisor

16t -22rd Corrections and typing

23r 29t Going to the field

APRIL

1st-6t Interviewing and observing

7t -12t Collecting the questionnaires

13t -19t Analyzing data

20t 26t Recording data

21.

27t -30t Presentation of data

MAY

1st5t Checking with the Supervisor

6t 10t Making corrections Corrections.


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11t 19t Writing Charter five

20t 26t Checking with the Supervisor


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NkumbaUniversity

School of Business Administration

ETHICS RESEARCH APPROVAL FORM

Students Registration Number: Index Number: 2011/FEB/BBA/DAY/B8134

NU/SBA/FS/2011/1018

Students Name:Kisakye Bess

Supervisors Name: Dr. Richard Mwirumubi (Ph.D)

Date Ethics Form submitted:15thmay

Proposed Starting / Ending Date of the Project:FEB./JUNE

Research Topic:

Micro Finance Deposit Taking institutions and the economic development of rural women

under trade in Jinja district.


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Purpose of the Research:

To assess how Micro Finance has contributed to the economic development of women taking

FINCA Jinja branch as a case study

Objectives:

1. To examine the nature of financial services offered by FINCA to rural women in Jinja.

2. To indentify the indicators of economic growth among women.

3. To establish the contribution of FINCA.

Brief Description of the Methods, Procedures and Strategies to be used :

a) Methods

i. Interviews

ii. Questionnaires

iii.

Documentary review

iv. Observation

b) Procedures

i. Key informants will be identified

ii. Inform the respondents in advance about the time, venue and date of the

interview

iii. Distribute the questionnaires to identified informants

iv. To inform those involved in activities and tasks to be observed

v. To inform the . Staff and Administrators about the research to allow access

of relevant information from different stakeholders.

c) Strategies

i. To select a representative sample of respondents, observes and interviewees

involved in the

ii. To use the methods noted above, namely: interviews, questionnaires,

documentary review and observation.


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Benefits of the Research: This research is important and its findings will be beneficial to the

following stake holders:

i.

Academicians.ii. Researchers.

iii. Information and resource centers

iv. Policy makers

Certification by the Student and Supervisor

Student

I certify that, I will behave in a professional manner and adhere to the high ethical standards

and abide by the regulations, terms and conditions set by your organization while carrying

out my research activities connected with external stakeholders (individuals, groups,

organizations and others) and Nkumba University.

Students Signature. Date15/05/2014.

Supervisor

I certify that our student (researcher) shall behave in a professional manner and adhere to the

high ethical standards and abide by the regulations, terms and conditions set by our and your

organization while carrying out his/her research activities.

Supervisors Signature. Date:..

the role of microfinance

Documents