Financial deepening and poverty reduction in Kamuli Town Council, Kamuli District in Uganda.

Abstract

The study assessed the effect of financial deepening on poverty reduction in Kamuli Town Council in Eastern Uganda. The objectives of the study included: to establish the relationship between savings and poverty reduction in Kamuli Town Council; to examine the effect of credit accessibility on poverty reduction in Kamuli Town Council; to find out how remittances from abroad and locally contribute to poverty reduction in Kamuli Town Council. The Case study and Correlation research designs were adopted with a triangulation of both qualitative and quantitative approaches of data collection and analysis. Out of the targeted sample size of 354 respondents, 215 respondents were covered suggesting a response rate of 59.3%. The quantitative data was analyzed using descriptive statistics, Pearson correlation and regression analysis techniques. Qualitative data was summarized and presented using verbatim statements. The findings showed that, remittances from abroad and locally had the greatest contribution towards poverty reduction in Kamuli Town Council by 6.1%.Savings had a 5.6% effect on poverty reduction. Access to credit had the least effect on reduction of poverty at 0.8%. In conclusion, the growth of financial services in Kamuli Town Council positively relates with improved standard of living through increased household income which in turn reduces the poverty incidence. However, dealing with issues of health, education and infrastructure could go a long way in empowering the people in order to engage in small businesses. The study recommended that mobile money transfers be regulated by Bank of Uganda as they are largely used to transfer money country wide, Post Bank Uganda that is mandated to channel government funds to SACCOs should be strengthened through policy reforms. Financial literacy by both government and financial institutions will largely empower the people economically and lastly, banks and MDIs should develop new products that enable poor people access funds.