The Impact of Interest Rate on The Operations of Microfinance Institutions in Kampala A Case Study of Uganda Women Finance Trust

ABSTRACT 

Research proposal was prepared so as to act as a baseline of doing this research. I carried out his research because of the growing number of the financial institutions in Uganda since ndependence whereby these financial institutions attracted people to acquire loans from the nstitutions. fhe broad objective of this study was to asses the impacts of interest rate on the operations of the microfinance institutions in Kampala. Specifically this study sought to identify the various forms of loans offered, charges on the loans and how it affects the borrowers and the financial institutions. Snow ball sampling technique was used to collect data from the correspondents. Data was collected using structured questionnaires, in depth interviews, observation, focus group discussion and review of the existing literature on the topic. Data analysis was done manually with tables and graphs used to illustrate significant findings. In this study, I found out that organizations should strive to identify any impacts of marketing their services. This will enable them to be aware of change affecting them so as to deal with it properly. This study has shown that marketing their services influenced hundreds of customers to open up accounts with the financial institutions. For there to be a great influence, it is however important to tailor the services promotion at every stage of the consumer's transaction since each promotion has an influence of its own. Proper research is important before determining which tools will be effective and efficient in influencing the customer's decision of each service at each stage. 

Table of Contents 

Title page ........................................................................................................................................ 1 

Declaration ........................................................................................................................... ii 

Approval ....................................................................................................................................... iii 

Dedication ..................................................................................................................................... iv 

Acknowledgements ............................................................................................................... v 

Abbreviation ...................................................................................................................... vi 

Table of Contents ......................................................................................................................... vii 

Abstract .......................................................................................................................................... x 

CHAPTER 

1.0 Introduction .................................................................................................................. 1 

1. 1 Back ground of the study ................................................................................. 2 

1.2 Statement of the problem ................................................................................. 3 

1.3 Purpose of the study ......................................................................................... 4 

1.4 General objective .......................................................................................... vii 

1.5 Research questions ........................................................................................ vii 

1.6 Scope of the study ......................................................................................... vii 

1.7 Significance of the study ............................................................................... vii 

1.8 Conceptual frame work ................................................................................. vii 

CHAPTER TWO 

2.0 Overview ...................................................................................................................... 7 

2.1.0 Review of Related literature ..................................................................................... 7 

2. LI Overview of Micro Finance in Uganda ....................................................... 7 

2.2.0 Interest Rate for Borrowers ....................................................................................... 8 

2.2.1 Alternatives to Protect Customers ................................................................ 9 

2.3. 0 Impacts of Interest rate on Loan Provision ............................................................. 1 O 

2.3.1 The Impacts of Interest rate on Credit Supply ............................................. 11 

2.3 .2 Critique oflnterest Rate Interests ............................................................... 11 

vii 

2.4 Challenges Encountered in Contraction of the Microfinance Institution .................. 12 

:::HAPTER THREE 

3.0 Methodology .............................................................................................................. 15 

3.1 Overview .................................................................................................................... 15 

3 .2 Research Design ......................................................................................................... 15 

3.3 Study Population ........................................................................................................ 15 

3.4 Sampling Design ........................................................................................................ 15 

3 .4. l Sampling Procedure .................................................................................... 15 

3.4.2 Sample Size ................................................................................................. 16 

3 .5 Data Collection Instrument ........................................................................................ 17 

3.6 Data Analysis Technique ........................................................................................... 17 

3.4 Sampling Design ........................................................................................................ 17 

CHAPTER FOUR 

4.0 Presentation, Interpretation and Data Analysis .......................................................... 18 

4.1 Overview .................................................................................................................... 18 

4.2 Presentation of findings ............................................................................................. 18 

4.2.1 Analysis of Customers' Questionnaires ...................................................... 18 

4.2.2 Gender ......................................................................................................... 18 

4.2.3 .Education Level .......................................................................................... 19 

4.2.4 Fee Charged when applying for loans ....................................................... .21 

4.2.5 Analysis of employee's questionnaire ........................................................ 25 

CHAPTER FIVE 

5.0 Summary of findings, conclusions and recommendations ........................................ 31 

5 .1 Su1nmary .................................................................................................................... 31 

5.2 Conclusion ................................................................................................................. 31 

5.3 Recom1nendation ....................................................................................................... 31 

viii 

5.3.1 Loans as a Source of Finance ...................................................................... 31 

5.3.2 Floating or Fixed Interest Rates .................................................................. 32 

5.3.3 Difference ofUWFT Rates with Those of Commercial Banks .................. 32 

5.3.4 Impacts oflnterest rate exchange on individual operations ........................ 32 

5.3.5 Whether Interest Rate Exchange Affect the Organization Operation ......... 32 

5.3.6 Whether Interest rate exchange affect the Rate of loan seeking ................ 32