Rural Microfinance Clients in Uganda: FINCA Client Analysis
In order to understand its client better, Foundation for International Community Assistance (FINCA), in association with Financial System Development (FSD), has tried to investigate the impact of microfinance on the project target group.
The first part of this study was devoted to socio-economic activities of the groups, and the second part focused on the lending group behavior and analyzing the potential weaknesses of existing financial institutions.
The study lists the key observations of the socio-economic activities as:
- Most women are involved in selling either clothes or agriculture products;
- Expenditure arises from education, medical or other household related areas;
- Use of loans is not restricted to commerce alone;
- Most women have low daily and weekly income, and are impacted by seasonal changes;
- Financial planning is medium term oriented with no specific business strategy;
- Social network is strong with strong financial reciprocal commitments.
Its findings related to the lending group and the MFIs are:
- Installments and savings are recorded during the weekly meetings of the members;
- Members lack technical knowledge of accounting process leading to faulty bookkeeping;
- Misuse of funds and gender problems are the main reasons for dropping out;
- Assessment of new clients is a shared task of both the group and the MFI;
- Members feel FINCA's strict repayment schedule does not tally with unstable income pattern.
The study concludes that while there is no long-term positive impact for development in business, clients seem to see FINCA as a reliable source of loans, and as crucial for empowering women.
