THE ROLE OF MICROFINANCE BANKS ON POVERTY ERADICATION A CASE STUDY OF CENTENARY BANK, ARUA BRANCH ARUA DISTRICT-UGANDA

ABSTRACT

The study sought to establish the "the role of microfinance banks on poverty

eradication" with a case study of Centenary bank-Arua branch and was driven

by mainly three objectives. These objectives included; the need to identify the

policies used by the Microfinance Ins titutions such as Centenary Bank, Arua

Branch in a dministering loans. The need to determine the effectiveness of the

above policies used by Microfinance Institutions such as Centenary Bank, Arua

Branch towards poverty eradication, and the third objective is to examine the

relationship between Microfinance Institutions and poverty eradication.

To achieve these objectives, the researcher sampled fifty (50) respondents from

Centenary Ba nk-Arua bra nch. The study utilized qualitative and quantitative

research methods; three data collection instruments were used, structured

interview guides and questionnaires and the collected data was presented in

tabular form and analyzed statistically to decipher findings.

The researcher was guided by three research questions; the first research

question sought to find the policies used by the Microfinance Institutions

(Centenary Ba nk, Arua Branch) to administer loans in a bid to reduce poverty

and the research revealed that Centenary Bank-Arua branch uses numerous

policies to administer loans su ch as the presentation of collateral security by

the client before giving a loan to him or her.

The second research question sou gh t to find out how effective are the policies

used by the Microfinance Institutions such as Centenary Bank, Arua Branch in

administering loans in its fight of poverty eradication and the findings revealed

that these policies a re not all that effective in administering loans as so many

clients fail to fulfi ll the policies and those who have already obtained the loans

sometimes do not follow the terms and the conditions of the loan agreement.

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