The impact of micro savings mobilization and loan deployment on community livelihood in northern Uganda

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International Journal of Development Research

The impact of micro savings mobilization and loan deployment on community livelihood in northern Uganda

Abstract: 

Various microfinance institutions have sprouted at the community levels and continue to operate in the Acholi sub-region during the insurgency and in the aftermath.  Their roles have been to carry out financial intermediation functions of mobilizing savings and deployment of loans. A number of studies have been carried out on the contributions of MFIs on community livelihood with mixed results. Some studies upheld that microfinance interventions have achieved significant improvements in terms of increased business incomes and improved livelihood means. Others asserted that there was less evidence to support a positive impact of microfinance especially on health, nutrition and education. The objective of this study was to establish the effects of microfinance loans in the promotion of livelihood of the beneficiaries. The study was based on a cross sectional design in which a sample of individuals were drawn from districts of Gulu, Kitgum and Agago. Econometric methods were used to determine and discriminate the impact of loans, savings and capitals on livelihood means of beneficiaries and non-beneficiaries. The results showed that in the eight livelihood means considered, the average assets holding of beneficiaries were higher than those of non beneficiaries. However, through further statistical analysis, two strands of livelihood means emerged, namely; those that were structurally stable and those that were not. The structurally stable categories were household holdings in animal husbandry at , housing stock at  and transportation means at . Hence, statistically there were no differences between beneficiaries and non beneficiaries in those livelihood themes. A total of five categories were structurally unstable, namely; household holdings in communication means at , crop production at , education expenditures at , media means at   and medical treatments at . Hence there were structural differences between beneficiaries and non beneficiaries in those livelihood themes. Thus microfinance loan deployment in the community could have led to those higher holdings with the beneficiaries than with the non-beneficiaries besides other sources of financing.

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