An Evaluation of the Impact of Microfinance on Poverty Alleviation: Evidence from Uganda

  • Ben Ssembajjwe Nelson Mandela University, South Africa
Keywords: Poverty;Poor; MFIs and Uganda


This paper aims to reveal the role of microfinance on poverty alleviation in Uganda. Using a probit regression model, a principal component analysis (PCA)and the analysis of variance technique, the impact of microfinance is evaluated using variables, such as gross income, loans, among others. The study is based on primary empirical data collected from 170 clients in 2017. The study revealed that access to microfinance loans had a positive impact on poverty reduction.The study concluded that, through the interplay of loan sizes, family employment, gross income and education, MFIs couldplay a significant role in poverty alleviation in Uganda. The study recommended that MFIs should provide non-financial assistance, such as facilitating business and management skills, and assist the poor, who would otherwise slide into further poverty, by including them in the financial stream in the country. risk. It further recommended that MFIs should provide low-interest loans to SMEs and that sensitization on borrowing should be introduced to increase the number of borrowers. Moreover, outreach programmes, low interest ratesand the promotion of saving be encouraged. Lastly, it recommended a reduction in bureaucratic tendencies in lending methodologies


Addae-Korankye, A. (2014). Causes and control of loan default/delinquency in microfinance institutions in Ghana.American International Journal of Contemporary Research, 4(12), pp.36-45.
Carlton, A. and Wien, L. (2001).Microfinance in Uganda. L&R Sozialforschung.
Chirwa, E.W. (2002). Microfinance and Poverty reduction in Malawi: What has Happened to the Microfinance Revolution?
Hagenaars, A.J., De Vos, K. and Asghar Zaidi, M. (1994). Poverty statistics in the late 1980s: Research based on micro-data.
Hulme, D. and Mosley, P. (1997). Finance for the Poor or Poorest? Financial Innovation, Poverty and Vulnerability’ published in ‘Who Needs Credit? Poverty and Finance in Bangladesh’, edited by Wood, GD and Sharif, IA.
IFAD, F., 2015.WFP (2015). In The State of Food Insecurity in the World
Imai, K.S., Arun, T. and Annim, S.K. (2010). Microfinance and household poverty reduction:New evidence from India. World Development, 38(12), pp.1760-1774.
Kalpana (2005. Rural Microfinance and Microenterprises: Informal Revolution: Social Mobilization and microfinance programmes
Klaas De Vos& M. AsgharZaidi (1997).Equivalence scale sensitivity of Poverty Statistics for the Member States of the European Country.
Littlefield, E., Morduch, J. and Hashemi, S. (2003). Is microfinance an effective strategy to reach the Millennium Development Goals?.Focus note, 24(2003), pp.1-11.
Ministry of Finance, Planning and Economic Development (2000). „Draft Final Report on the District Resource Endowment Profile Survey (DREPS)“, Vol. II, Survey of Microfinance
Omara-Ojungu, P. (2000). Environmental resources and development. The Geography of South Afirica in a Changing World, Oxford University Press, Cape Town, 419-438.
Popiel, 1994 Financing small and Microenterprises in Africa
Uganda –Poverty Assessment Report (2016) Main Report.
Sayed Samar etal (2014) Conceptual Frame work: The role of microfinance on wellbeing of poor people: Cases studies from Malaysia and Yemen.
Tavanti, M., 2013. Before microfinance: The social value of micro savings in Vincentian poverty reduction. Journal of business ethics, 112(4), pp.697-706.
World Bank (2004).“World Development Indicators & Global Development Finance”.
World Bank.(2003). World Development Report (2004). (Overview): Making Services Work for Poor People. World Bank.
World Bank, 2000.World development report 2000-2001: attacking poverty. World Bank Group.
Business Administration and Business Economics