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Microfinance is the practice of giving loans in small denominations to the poor in developing countries. Much of the research on microfinance has focused on program sustainability. What has not been studied is the actual impact of these loans on development within the community (Hulme, 2000). This paper takes a recently completed survey of microfinance clients in Kabale, Uganda and attempts to discern whether the program has had measurable impact on the clients' social, spiritual and economic lives. Various authors have done work on social and economic impact assessments at the individual level. This study also begins to establish measurable indicators for spiritual development. In the final analysis, increased participation in the microfinance program has a significant impact on a client's social and spiritual development. However, clients' economic development does not appear to be affected by the program. The findings of this study suggest that the primary impact of microfinance in the short term is an improved social standing for the client which can lead to increased self confidence, better access to other financial services, and larger acceptance within the local business community. At the institutional level, it is important for microfinance practitioners who work in rural areas need to take the results of this investigation into account, particularly if they have economic development as a short term goal. Social and spiritual development are strongly correlated to program participation, but new innovations in rural microfinance must be developed in order to create and sustain the kind of economic development associated with urban microfinance programs. |
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