The Design of Micro Credit Contracts and Micro Enterprise Finance in Uganda


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Studies have shown that the negative effects of credit market inefficiencies are most felt by smaller firms. Therefore, in countries such as Uganda, where micro enterprises are at the bottom of the economic pyramid, moral hazard and adverse selection severely affect their ability to access formal credit hence limiting their growth potential. Microfinance has been heralded for its use of innovative lending methods to improve access to credit. The last decade has witnessed an unprecedented increase in the outreach of micro lending institutions and the development of financial products suited to the needs of the economically active poor, who often, are unable to obtain credit from mainstream financial institutions. This book analyzes the law and economics theories on access to credit and enterprise finance and based on case studies in Uganda, presents empirical findings of the promise and limits of contractual innovations in micro credit.



Published by
Published 29 December 2010
Reads 1
EAN13 9789966031976
Language English
Document size 6 MB

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Winifred Tarinyeba Kiryabwire September 2010
Published by:
LawAfrica Publishing (U) Ltd Crown House, 1st Floor Plot 4A, Kampala Road P.O. Box 6198 Kampala, Uganda Phone: +256 41 255808 Fax: +256 41 347743
LawAfrica Publishing (K) Ltd Co-op Trust Plaza, 1st Floor Lower Hill Road P.O. Box 4260 - 00100 GPO Nairobi, Kenya Phone: +254 20 2722579/80 Fax: +254 20 2722592
LawAfrica Publishing (T) Ltd Twiga Towers, 6th Floor P.O. Box 38564 Dar-es-Salaam,Tanzania Phone: +255 22 2120804/5 Fax: +255 22 2120811
Email: Website: © Winifred Tarinyeba Kiryabwire; LawAfrica ISBN 9966-1511-4-8
Preface Dedication Acknowledgement List of Tables List of Figures List of Abbreviations
Chapter One1.0ACCESS TO MICRO CREDIT IN UGANDA 1.1 Introduction 1.2 Research Problem and Research Questions 1.3 Motivation for the Study 1.4 Research Methodology 1.5 The Research Population 1.6 Selection Criteria 1.7 Limitations 1.8 Data Analysis
Chapter Two 2.0FINANCIAL DEVELOPMENT, AND ECONOMIC GROWTH: CREDIT, CONTEXTUALIZING THE THEORIES 2.1 Financial Development and Economic Growth: Is there a Nexus? 2.2 Missing Credit Markets in Low Income Countries and the Implications for the Finance-Growth Trajectory 2.3 Credit Markets in Low Income Countries 2.4 “Innovative Lending” and the Role of Micro Credit in Bridging the Access Gap
Chapter Three 3.0CREDIT MARKETS IN UGANDA 3.1 A Profile of the Financial Sector in Uganda: Dualism in the Financial Market 3.2 Commercial Banks and Micro Enterprise Access to Credit 3.3 Credit Institutions and Micro Enterprise Access to Credit
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W. M.Tarinyeba Kiryabwire The Design of Micro Credit Contracts and Micro Enterprise Finance in Uganda
3.4 Microfinance Deposit Taking Institutions and Micro Enterprise Access to Credit 3.5 Microfinance Institutions (Non-Deposit Taking) and Micro Enterprises Access to Credit 3.6 Informal Financial Institutions 3.7 Factors Contributing to the Costs of Providing Credit
Chapter Four 4.0 MICRO CREDIT AND THE PROMISE OF MICROFINANCE: BRIDGING THE ACCESS TO CREDIT GAP 4.1 The History of Micro Credit in Uganda 4.2 Microfinance Institutions: Outreach and Product Development 4.3 Micro Credit and Micro Enterprise Access to Credit: Anecdotes of Small Loans Producing Big Changes
Chapter Five 5.0MICRO ENTERPRISES IN UGANDA: DEFINING CHARACTERISTICS AND DETERMINANTS OF FINANCING DECISIONS5.1 Micro Enterprise Characteristics 5.2 Micro Enterprise Finance: Determinants of Financing Decisions 5.3 Costs of Credit and Micro Enterprise Finance
Chapter Six 6.0MICRO CREDIT: LENDING METHODS AND ACCESS TO CREDIT 6.1 Ex-Ante Screening of Loan Applicants 6.2 Lending Methods Used by Micro Credit Institutions 6.3 Borrower Monitoring 6.4 Enforcement of Micro Credit Contracts
Chapter Seven 7.0 MICRO CREDIT: INNOVATIVE LENDING AND PERSISTENT ACCESS TO CREDIT BARRIERS7.1 The Changing Nature of Micro Credit Lenders and Lending Methods 7.2 Negative Perceptions about the Screening Process 7.3 Expected Consequences of Default 7.4 Cost of Credit
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W. M.Tarinyeba Kiryabwire
Table of Contents
7.5 The Limitations of Contingent Credit 7.6 The Costs and Benefits of Group Homogeneity 7.7 Exploitation and Harassment of Borrowers 7.8 Business Environment Uncertainties 7.9 Limitations in Choice of Lender Conclusion Appendix I: Commercial Banks in Uganda as of December 2009 Appendix II: Credit Institutions and Microfinance Deposit Institutions in Uganda as of December 2009 Bibliography Index
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