The effect of microfinance outreach services on poverty reduction in Busoga sub- region: A case study of Iganga district

Abstract

The purpose of this study was to assess the effect of Microfinance Outreach Services on Poverty Reduction in Busoga Sub-region; a case study of Iganga district. The study was guided by the specific objectives which were; to establish the application of microfinance outreach services in Busoga Sub region, to establish the level of poverty reduction in Busoga sub-region, and to establish the relationship between microfinance outreach services and poverty reduction in Busoga Sub-region, and examine the moderating influence of compatibility on the relationship between microfinance outreach services and poverty reduction in Busoga Sub-region. The study adopted a cross sectional descriptive survey design that triangulated quantitative and qualitative methods to study a sample of 392 respondents who were constituted of 10 managers of MFIs and 382 key MFI beneficiaries. Data were collected using self-administered structured questionnaires and interviews. It analysed using descriptive and inferential statistics including Pearson Correlation confidents and Regression analysis in SPSS 26.0. The study established that MFIs offer various outreach services to their respective customers/clients and these include credit extension, savings, business training and insurance services. The study further established that there has been a reduction in poverty among the households of the key MFI beneficiaries in Busoga sub-region. The study established that there is a positive and significant relationship between MFIs outreach and Poverty reduction in Busoga sub region (r=0.795, p<0.01). The results further indicated that MFIs outreach services account for 63.3% of the poverty reduction in Busoga sub-region. This improvement would change to 69.21% with the consideration of service compatibility with the demands of the MFI customers. It was concluded that improving on MFIs outreach would significantly reduce poverty among the MFI key beneficiaries. This calls for prioritising credit offering, followed by savings services and then business training interventions, while ensuring that the services meet the needs of the MFI key beneficiaries adequately and in due time.