Accessing micro credit, borrowers’ characteristic and household income in rural areas: A case of Kasese District

Abstract

Improving household income is one of the major challenges faced by developing countries. Different plans focusing on increasing household income through the use of credit institutions have been developed for example PEAP, 1997, entandikwa scheme and the prosperity for all plan (2006). While doing this they have largely ignored borrowers’ characteristics and business type the borrowers’ engage in. This study therefore examined the role micro credit access, borrowers’ characteristics, business type have towards improving household income for the poor. A sample of three institutions which included Ikongo micro finance scheme, Bukonzo joint credit institution, centenary bank and 131 beneficiaries was chosen out of a total of 32 institutions and 1004 beneficiaries. The study presents empirical findings basing on 82 beneficiaries who responded. Across sectional survey design was used to evaluate the variables above. Correlation coefficients revealed a significant positive relationship between the variables. Multiple regression analysis further revealed that 44.5% of the variance in the household income is explained by micro credit access, borrowers’ characteristics and business type. The study recommends that micro credit institutions should increase funds which borrowers’ can access. Credit institutions should always consider borrowers’ characteristics and business type the borrowers’ are to engage in before giving credit to the potential borrowers’. These factors enable the borrowers’ to use funds wisely and eventually they lead to improved household income of the poor.