ABSTRACT
The major aim of the study was to examine the variables that enhance or negate the effectiveness
of micro-finance institutions (Microfinance Institutions) in improving the economic status of women in the case of Ntungamo district. The study focused on credit schemes under; services offered, loan administration, loan recovery, and interest rates by the institutions on the one hand. On the other hand, the study examined the benefits for women, their projects, challenges and their impressions on these institutions.
During the research exercise, the study observed benefits, problems and other issues related to Microfinance Institutions and rural women clients. The data was collected using qualitative and quantitative methods to enrich interpretations and findings. The data was analyzed basing on the themes and sub themes developed from the literature review. The information obtained was from the Microfinance Institutions and their rural women clients about their methods and their experiences respectively; in relation to effective service delivery.
After data was analyzed, it was discovered that most of the problems that hinder service delivery are either administrative or as a result of the disadvantaged status that rural women suffer. All the repayments were to be done after one month, which makes long-term investment difficult as well as reducing the willingness to borrow sufficient funds. Others were poor information flow and concentration of branches in a few areas. On the part, the women found a problem in raising collateral as most property belongs to men. There was also the difficulty of finding enough members to qualify for a group loan.
Therefore it is recommended that Government can have a positive input using the ministry of finance. An interest rate of say 4% charged monthly aggregates to a staggering 48% annually. Yet some of the objectives of MFI's are poverty eradication and financial outreach on the one hand and a healthy portfolio and sustainability on the other hand. As a result, interest rates are too high. A policy that is more supportive to these clients so as to increase their benefits from the services of these Microfinance Institutions is required.