MICRO FINANCE DEPOSIT TAKING INSTITUTIONS AND

THE ECONOMIC DEVELOPMENT OF THE TRADE

SECTOR AMONG THE RURAL WOMEN
IN JINJA DISTRICT

A CASE STUDY OF FINCA JINJA BRANCH



A RESEARCH PROPOSAL SUBMITTED TO THE SCHOOL
OF BUSINESS ADMINISTRATION FOR FIELD
RESEARCH AS PARTIAL FULFILLMENT
FOR THE AWARD OF A BACHELORS
DEGREE IN BUSINESS
ADMINISTRATION
(ACCOUNTING)
NKUMBA UNIVERSITY, ENTEBBE UGANDA
FEB2014
Declaration
I, Kisakye Bess hereby declare that, the work presented is original and has never been submitted
to any University for the award of a degree in Business administration (accounting)
Signed


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.

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.




















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.

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

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


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 ..................................................................................................................................... 29
Sample 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

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.

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 Institutions
MDIA 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










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 institution according to Martyn Shuttleworth is an institution which is licensed
to receive money on deposit from private individuals and to pay interest on it, e.g. a building
society, bank or friendly society.
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."
Research according 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 Bank is a financial support group made up of friends, neighbors and family members
who come together to guarantee each others small loans.






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 finance
beneficiaries 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.



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.





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 has
been 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.





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 these
microfinance 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.


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 23
rd
2011)



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 were
fined, said a chairperson of a group in Wakitaka. They [loan officers] 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.




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 people
suffer, 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 study
The 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






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.





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 strategic
partnerships 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,




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 two will 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 three will 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 four will discuss the findings from the study as guided by the research questions and
objectives.
Chapter five will 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

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.


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.


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.

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.


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.


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 banking FINCA 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.

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.


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, and
to awaken the global economy's sleeping giant: the under-capitalized productivity of the
world's working poor
Village banking.
Village banking is a microcredit 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 as FINCA International founder John


Hatch. Among US-based non-profit agencies there are at least 31 microfinance 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 the Andes, en route to a consultant assignment in Bolivia. 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 in La 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


poor, but micro finance involves additional non-credit financial services such as savings,
insurance, pensions and payment services (Okiocredit, 2005). The provision of micro finance
services focuses on three core dimensions of poverty alleviation. These are centered on the terms
"Promotion" (promotion of individuals and households out of poverty) and "Protection"
(protection of people from vulnerability because of fluctuations of income) Rogaly (1999).
The MFIs offer Enterprise Development facilities by assisting people, individually and in groups,
to access financial services to start and grow enterprises which can sustain them and their
families above the poverty line. This is mainly done through the provision of access to
Microcredit services, for building up self-employment, in form of loans at interest free, low
interest and market rates ( Rogaly 1999). Making inexpensive credit available to the rural poor
has been key to breaking the vicious circle of low capital, low productivity, low savings thus
overcoming poverty.
They also offer loans for Consumption and Asset Development which help beneficiaries to build
up asset bases for their families or consume certain products that they would not consume if they
were earning low incomes (transport, meals, and weddings). This may be enhanced through
encouraging of Savings especially using low or no fee small deposit savings accounts. Saving is
at least as important, if not more so, than loans in the effort to help households to accumulate
resources (Shreiner and Morduch, 2001). Savings are financial assets that the poor can
accumulate against emergencies and long term needs.
Insurance and Income Protection services are also offered such that people protect themselves
from income fluctuations and become financially protected from life misfortunes (illnesses,
death, accidents) Through Insurance, that is by raising of distress funds and forming of small
scale insurance cooperatives, MFIs can assist individuals and groups to become more financially
secure. Savings can also act as guarantee against outstanding loans and are mandated payments
especially for emergencies.


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 the
countrys 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).




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 to
customers. 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).


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 already
living 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


improvements in welfare (nutrition, hygiene, and housing) and emergencies (Hashemi, 2003).
Improvement in economic activities of the beneficiaries of MFIs will mean substantial
improvements in their clothing, sanitation, feeding, housing, medical care, household
property/equipment owned and ability to cover costs related to school fees, transportation and
other physiological needs (Armendariz et al, 2005).
Contributions of Micro Finance to women.
When properly harnessed and supported, micro finance can scale-up beyond the micro-level as
a sustainable part of the process of economic empowerment by which the poor can lift
themselves. Considerable debate remains about the effectiveness of micro finance as a tool for
directly improving on the economic activities and about the characteristics of the people it
benefits (Chowdhury, Mosley and Simanowitz, 2004). Sinha (1998) argues that it is notoriously
difficult to measure the impact of micro finance programmes on social economic activities.
Designation of Appropriate Strategies
Objective four sought to find out appropriate strategies that would make FINCA services
readily accessible to its potential and actual targeted groups. The strategies include among
others; lower interest rates, lengthen the loan repayment periods, Scrap off collateral security,
rural outreach, expansion product portfolios and Project appraisal Ryne et al, (2002), argued
that lowering the interest rates is a strategy geared at making MFIs services more accessible to
them. This would go a long way in enticing users to become users as well as ensuring increased
use of the services by the current clients. It will also enable MFIs clients to benefit more as
interest rates are lowered since it will favorably impact on their profitability.
Gyasi (2002) argued that the management of MFIs should revisit the loan repayment
period offered to clients. This is due to the fact that majority of the FINCA clients in Jinja
depend on agriculture and trade which needs a long period to reap from the operation.
Lengthening the repayment period would enable them meet their financial obligations in time.
The clients may also want FINCA to give them a grace period before start of the payment period


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 a
requirement 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.





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.


This approach is supported by Weinriech (2006:2), who points out that those qualitative research
methodologies are designed to provide the researcher with the perspective of target audience
members through immersion in a culture or situation and direct interaction with the people under
study. Weinriech (2006:2), elaborates that qualitative methods used include observations, in-
depth interviews and focus groups and these methods are designed to help researchers
understand the meanings people assign to social phenomena and to elucidate the mental
processes underlying behaviors.
Further support for the qualitative method is from Straus & Corbin (1998:17), who explain that
qualitative research represents a kind of investigation whose findings are arrived at without
statistical procedures or other means of quantification. According to Casebeer and Verhoef
(1997:2), qualitative research is the non numerical examination and interpretation of
observations, for the purpose of discovering underlying meanings and patterns of relationships.
Meanwhile other researchers like Smith (2008:1), mention that qualitative methods include the
researcher's experience through techniques such as focus groups, case studies, interviews and
personal observation.

Quantitative research
Identifies the hard facts and numbers related to the issue (Smith 2008:1).
Weinriech (2006:1) also supports quantitative research, which uses methods adopted from the
physical sciences that are designed to ensure objectivity, generalizability and reliability. These
techniques cover the ways research participants are selected randomly from the study population
in an unbiased manner, the standardized questionnaire or intervention they receive and the
statistical methods used to test predetermined hypotheses regarding the relationships between
specific variables. These methods produce quantifiable, reliable data that are usually generalized
to some larger population (Weinriech 2006:2).


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 of
describing 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.


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.









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.



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 overall
ability 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 the
interviewee (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



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.



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.
Editing Editing will 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 will be 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.



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 FINCA
microfinance, 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 with
feedback about the findings of the study.







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.









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 achievements and 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.


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












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




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




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



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?

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

If any other specify

.
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



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

If any other specify

Thank you













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?

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.















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




















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.

5 Dressing code
in offices

6 Language
used by
customers

7 Customer
care
























Appendix 5 Timetable
TIME PERIOD ACTIVITY
JANUARY Designing the topic
6-11 Getting facts about the problem statement
12-18
th
Reviewing the relevant literature
26
th
-31
st
Writing down charter two
FEBRUARY
1-8
th
Writing chapter three
9
th
15
th
Checking with the supervisor and making
corrections
16
th
-28
th
Designing the Appendices
MARCH
1
st
-8
th
Pre-testing the Appendices
9
th
-15
th
Checking with the supervisor
16
th
-22rd Corrections and typing
23
rd
29
th
Going to the field
APRIL
1
st
-6
th
Interviewing and observing
7
th
-12
th
Collecting the questionnaires
13
th
-19
th
Analyzing data
20
th
26
th
Recording data

21.
27
th
-30
th
Presentation of data
MAY
1
st
5
th
Checking with the Supervisor
6
th
10
th
Making corrections Corrections.

11
th
19
th
Writing Charter five
20
th
26
th
Checking with the Supervisor











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: 15
th
may

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.




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.





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:..