Impact assessment of microfinance services on the performance of micro and small scale businesses (MSBs): "A case study of Arua district of Uganda"

In the recent years micro and small scale businesses have been rapidly increasing in Uganda and Arua district in particular but the issue of inadequate capital to run these businesses has been a growing concern for many policy makers. In order to solve this problem the government of Uganda through privatization encouraged the development of microfinance institutions to provide financial services such as microcredit, savings, micro insurance and training to micro entrepreneurs who are economically active, but financially constrained and vulnerable. This study was therefore aimed to assess the impact of microfinance services on the performance of micro and small scale businesses in Arua district in Uganda. Although there are many previous studies regarding impact of microfinance services on its clients in Uganda, most of studies focused on small and medium enterprises leaving out micro enterprises which are the major forms of businesses a poor person can afford to start with microfinance loans. For instance Arua district in particular has limited research which used a methodology that adequately explained the impact of microfinance services and the performance of micro and small scale businesses. This study used purposive and simple random sampling technique to draw the sample from the population with the aid of questionnaires as an instrument for primary data collection from 200 clients of microfinance institution and secondary data was gathered from journal articles, selected texts and publications. Data was analysed using descriptive and inferential statistics with the aid of Statistical Package for Social Sciences (SPSS). Two models of multiple regression analysis were used to examine the extended to which microcredit, savings, micro insurance and training services provided by microfinance institutions affect the performance of micro and small scale businesses. Most of the mentioned variables contributed positively to the performance of micro and small scale businesses in Arua district. The results also shows that entrepreneur's age, gender, level of education and marital status contributes greatly to the performance of micro and small scale businesses in Arua district.