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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Microfinance Self-Sustainability and Outreach in Uganda: A Case of Teso Rural Development Trust Limited
Authors:Kiiza, B.
Omeke, M.
Mugisha, J.
Year:2004
Periodical:Eastern Africa Journal of Rural Development
Volume:20
Issue:1
Pages:34-44
Language:English
Geographic term:Uganda
Subjects:foundations
credit
subsidies
Economics and Trade
Development and Technology
Abstract:In Uganda, microfinance institutions (MFIs) have been able to reach poor but economically active people in rural areas, where the traditional commercial banks deliver limited financial services due to the high transaction costs and risks involved in lending to this clientele. MFIs have developed ways of reducing these transaction costs and risks through group lending and solidarity guarantee, among others. Supporting MFIs has been one of the channels used by governments and development partners to alleviate poverty. However, this has been done by heavily subsidizing MFI activities, in this way hampering their self-sustainability. This study determines the level of MFI self-sustainability using subsidy dependence index/ratio and depth of outreach for a representative microfinance institution in Uganda, Teso Rural Development Trust Ltd (Terudet). The study was conducted in Soroti, Katakwi and Kaberamaido districts. Primary data were collected from 180 randomly selected active clients of Terudet and secondary data were obtained from audited and unaudited financial statements of Terudet for the period 1998-2003. The results show that Terudet was heavily dependent on external funds. It was not profitable and self-sustainable through its own income in the period 1998-2003. Its depth of outreach was also low in that it covered more of the non-poor people than the poor. Recommendations for improvement of this situation conclude the paper. Bibliogr., sum. [Journal abstract, edited]
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