THE EFFECT OF VILLAGE SAVINGS SCHEMES ON POVERTY ERADICATION

A CASE STUDY OF BUSIIMBI SUBCOUNTY MITYANA DISTRICT

INTRODUCTION

This chapter presents the background of the study, statement of the problem, purpose, objectives, specific objectives, research questions, scope, significance and definition of key terms.

1.1 Background to the study

According to Chambers (2015), saving is setting a side of available resources or income for future use. Savings can be in cash or in kind but for purposes of this study, savings is limited to cash. Savings scheme is an informal financial sector that has been created deliberately by self-mobilized and self-administered individuals or community groups who mobilize their savings at agreed intervals, and make them available and accessible to their members in form of credit, Ashe (2012). The purpose of the fund is to support members financially to start or improve their small businesses, acquire productive assets, or buy life enhancing consumer durables such as blankets, bicycles, house hold utensils and children’s school uniforms. Interest charged on those loans contributes to building the group‟s fund, Ibid,& Zeller (2011).

The members of the savings schemes are more likely to own livestock and other valuable assets, despite facing obligations to spend their individually earned incomes on the general
consumption needs of the family, compared to their counterparts who did not earn any income. Involvement in the developmental activities was seen as a major strategy through which these women improved economic and social statuses, Abu (2011).

Village Savings schemes were initially started by women’s groups in Niger, West Africa as a means of empowering the groups’ members to manage their own funds. The concept was then successfully transferred to India and Bangladesh. In 2012, CARE started the first Village Community savings in Tanzania, Tuly (2012). Village savings has its roots in ancient cultures and was most recently adopted for use by micro-finance institutions as a way to control costs Most groups can be found in the rural parts of the Kilimanjaro region, where for people who cannot provide any collateral, access to asavings loan even of very minor amount is almost impossible, Morisset and Neda (2011).

More than three quarters (¾) of the world population constitutes a much less fortunate group herein described as the poor. Their lives are characterized by malnutrition, illiteracy, disease, squalid surroundings, high infant mortality and low life expectancy as to be beneath any reasonable definition of human decency, Robert (2011). Chambers (2015), describe the outsider’s view of the poor “The poor are rarely met: when they are met, they do not speak; when they speak, they are often cautious and differential; and what they say is often either not listened to, or brushed aside, or interpreted in bad light.”

The poor are characterized by physical weakness through lack of food, malnutrition leading to low immune response to infections, inability to pay the cost of schooling; to buy a radio or a bicycle, to travel to look for work, or to live near the village center or a main road; are vulnerable due to lack of assets to pay large expenses or to meet contingencies, and are powerless because wealth goes with status quo: the poor have no voice (Ibid). Currently the issue of poverty is raising a lot of concern worldwide and especially in developing countries. According to World Bank Report (2012), poverty is the inability to attain a minimum standard of living. It considers
income and expenditure per capita to be yardsticks of measuring welfare hence determining those who fall under or above the minimum level and classify them as poor and non- poor respectively, Zeller (2011).

According to Sen (2010), poverty is a matter of deprivation and to understand poverty, it is necessary to look both at ownership patterns, exchange entitlements and the forces that lie behind them. Asset ownership has been identified as one of the key determinants of increasing households‟ abilities to raise their incomes and reduce risk of falling into poverty. According to Manfred (2011), narrowing the gap between the poor and non- poor requires increasing
accessibility and availability of financial services to low income people and increasing their ability to find employment, to participate in markets and to own productive assets such as land.

In Uganda, it is estimated that about 43% of Uganda’s population have no access to financial services, with unmet need being greatest in the rural areas. Accordingly, a number of Community Based Micro Finance mechanisms have been introduced to address the problem of financial services accessibility in Uganda. Community Based Savings Micro Finance initiatives provide savings and/or credit facilities to micro and small-scale business people who have experienced difficulties in obtaining such services from the formal Micro finance institutions and Commercial Banks. The members in the group are self- selected and they do not access any direct external financial assistance to their associations; instead they pool their money to create a fund from which members can borrow, Ashe (2012).

Busimbi Sub County started savings schemes with the major aim of providing loans which normally start at small amount and are linked to savings such that the more a client saves the more she can borrow. The normal loan period for the savings schemes in Busimbi Sub County is four months and is repaid in 16 weekly installments. At the end of 2016, 95% of clients covered by a benchmark sample of 71 NGOs and institutions engaged in village saving lending members. To eliminate the need for collateral, village savings in Busimbi Sub County rely on a variation of the solidarity lending methodology. It relies on a system of cross-guarantees, where each member of a village savings ensures the loan of every other member. In 2014 there was a very big financial setback caused by the abrupt closure of Uganda Cooperative Bank Mityana branch, the only commercial bank that was serving a very big number of the under privileged women and peasant farmers at relatively affordable conditions. This led to the growth and development of informal micro finance services in the district.( which problem gap is in your conclusion to allow you go a head to investigate)

1.2 Problem Statement

Village savings is a microcredit methodology whereby financial services are administered locally rather than centralized in a formal bank. Income generation groups in Uganda are more likely to own livestock and other valuable assets, despite facing obligations to spend their individually earned incomes on the general consumption needs of the family, compared to their counterparts who did not earn any income. Involvement in the developmental activities in the County was seen as a major strategy through which these lending members improved economic and social statuses (Abu, 2011). However according to the government poverty eradication program report(2016), the government of Uganda has tried to diversify household income sources especially from nonfarm activities and expand employment opportunities through savings schemes program in Busimbi Sub County Mityana District for instance bonnabagagawale scheme but many households in Busimbi Sub County have little or no shelter, inadequate food supply, their health is poor, they are unemployed and a few of their children go to school due lack of school fees. This study therefore, is prompted the researcher to conduct further investigation on the effect of village savings schemes to eradication of house hold income poverty in Busimbi Sub County Mityana district.

1.3 General Objective

To assess the effect of village Savings schemes on poverty eradication among the people in Busimbi Sub County Mityana district.

1.4 Specific Objectives

1. To establish the types of village Savings Schemes commonly supporting the people of Busimbi Sub County.
2. To establish the challenges being faced by village savings schemes beneficiaries in their struggle to eradicate poverty.

• To find out the different strategies to improve on savings cultures in Busiimbi Sub county Mityana District

1.5 Research Questions

1. What are the types of village Savings Schemes commonly supporting the people of Busimbi Sub County?
2. What are the challenges faced by Community Based Savings Micro Finance beneficiaries in their quest for household income poverty eradication?

• What are the different strategies to improve on savings cultures in Busiimbi Sub county Mityana District

1.6 Scope of the Study

1.6.1 Subject scope

The study will be based on the effect of village Savings schemes on poverty eradication among the people in Busimbi Sub County Mityana district. The study will focus on the types of village Savings Schemes commonly supporting the people of Busimbi Sub County, the challenges being faced by village savings schemes beneficiaries in their struggle to eradicate poverty and the different strategies to improve on savings cultures in Busiimbi Sub county Mityana District.

1.6.2 Time scope

The study will consider a period of (2014-2017) and investigate the impact of village savings schemes on poverty eradication. The researcher shall base on those records to draw a conclusion in the process of compiling a report. Therefore the research will be carried out from March to August (2017).

1.6.3 Geographical scope

The study will be conducted in Busimbi Sub County, Mityana district. Mityana is bordered by Kiboga District to the north, Nakaseke and Wakiso districts to the east Mpigi, Butambala and Gomba districts to the south and Mubende District to the west. The district is about 45kms from Kampala and a two-hour drive from the city. In busimbi Sub County has many savings schemes and these schemes are intended to eradicate poverty among the households. (Source)

1.7 Significance of the Study

The study will shade light on the contribution of the informal micro finance sector or village savings schemes towards household poverty eradication. The study will also contribute to the body of knowledge about the role of the informal micro finance sector to economic development.

The findings will help Policy makers to understand the contribution of community based savings schemes to household income poverty eradication. In addition, the findings will equip the policy
makers with concrete data that will enable them to advocate and influence policies governing credit accessibility among the poor households and community participation in community based development initiatives.

The study will also enable policy makers and mostly government to borrow a leaf from the contributions of informal micro finance institutions and see how to embrace them and integrate their approaches into the bigger projects of Poverty Eradication Action Plan (PEAP) and Plan for Modernization of Agriculture (PMA). This is because village savings is a key factor that can address issues that have long stood in the way of poverty eradication; and there can never be modern agriculture mostly in rural areas when it is not backed by increased income sources.

The findings will also contribute to the ongoing debate of how possible it is to achieve women’s empowerment through provision of savings schemes.  The findings will be helpful to the policy makers in drawing recommendations on the different ways of eradicating poverty in Uganda.

The study will widen the knowledge of the researcher about the contribution of savings schemes on poverty eradication in the country.

1.8 Definition of Key Concepts

Saving: The setting a side of available resources or income for future use. Savings can be in cash or in kind but for purposes of this study, savings is limited to cash.

Village Savings Scheme: An informal financial sector that has been created deliberately by self-mobilized and self-administered individuals or community groups who mobilize their savings at agreed intervals, and make them available and accessible to their members in form of credit (Ashe, 2012).

Poverty Eradication: An improvement in the economic conditions of the poor households by introducing them to a reliable source of income hence increasing their ability to demand and own productive assets, freely associate with others, secure a better livelihood and increase their standard of living in the short and long term.

Household: The family unit, with mother, father, children and other relatives who may be
within the house eating the same meal under the same roof or who just come for benefits.
Household Income Poverty:  Household Income poverty is a state when a household does not have access to money or other assets; they lack enough food or medicine and the have poor
clothes and houses.

CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

This literature review provides the conceptual architecture and theoretical support for this research by grounding it on prior knowledge. It is an attempt to review the existing relative literature to the case study.

2.1 Types of village savings schemes

Women income generation groups are more likely to own livestock and other valuable assets, despite facing obligations to spend their individually earned incomes on the general
consumption needs of the family, compared to their counterparts who did not earn
any income. Involvement in the developmental activities was seen as a major
strategy through which these women improved economic and social statuses (Abu, 2011).

The Rotating Savings and Credit Associations (ROSCAS) in Kenya helped Women in the Mathare Valley by availing credit facilities. With these credit services, women are able to invest in many ventures, send their children to school and either repaired or constructed new homesteads. It is obvious that in the context of the local economy, these women were above average income earners (Nelson, 2016).

In Uganda, Ochwo’s Community Based Savings Micro Finance initiative of an informal savings and credit system in Tororo district has contributed greatly to improving the peoples; standard of living. Charles saw a need for bicycles and spare parts and started a shop with that merchandize in Tororo town, to which he added a hire purchase service for boda boda2 boys who lacked lump sums of money to buy the bicycles, he encouraged small daily repayments for 2 to 3 months, and a 20,000/= premium (interest) was added up to the principle loan of 60,00/=After they paid off the loan, most boda boda boys continued to make daily small saving deposits with him. He maintained a ledger book and invested the excess money. Sometimes he would give savers loans at interest rates ranging from 10% – 25% depending on the terms negotiated, (Abu,
2011).

The rural Small and medium sized entrepreneurs in the West Nile – Nebbi district are resorting to keeping their money in metallic boxes of the village savings scheme other than with big financial institutions. Padyere County in Nebbi is one area with at least four active Village Savings and Loan association groups with more than 100 members where by each group keeps their money in metallic boxes in the treasurers‟ homes within the villages. According to them, this is aimed at providing easy accessibility of financial support like loans to small and medium sized institutions. Despite the existence of Stanbic Bank, Commercial Microfinance (CMM) and Centenary Bank in Nebbi district, the locals prefer to use this village saving scheme where money is kept in locally made metallic boxes for safety. These metallic boxes have three padlocks; keys are kept by three different members trusted by the group whereby each member keeps a set of keys for each padlock and these boxes are opened during the meeting only. This is done to limit the chances of one person getting tempted to steal the money since one person cannot open the boxes without the other two key keepers, James (2015).

Providing links monetary policy to the overall strategy of economic development. Credit policy should be considered as one of the essential elements of the overall economic development strategy of the savings and requires coordination with its deposit, the interest in politics, policy, and management of savings risks. As one of the major elements that make up the overall economic development strategy, credit policy must be consistent in their goals with the overall strategy and not to enter into conflict with it, Peterson (2012).

In the development of monetary policy situation in the country, Bank’s credit policy is largely associated with the external environment, which is determined by the state of the state’s economy. At the stage of Ukraine’s transition to a market economy is the environment undergoes substantial transformation, which defines the new economic opportunities for individual areas of the savings credit policy and Consideration in the development of monetary policy forecasting financial market conditions, James (2015).

In determining the strategic objectives of the savings on the volume of its lending activities, the formation level of lending rates, forms and types of credit customers need to be projected and included some changes that are expected in this period in the financial market in general and in those market segments in which the savings holds their lending activities, ensuring compliance with legal norms of state regulation of lending activities of savings. As with other areas of economic activities of individual business entities, the credit activity of savings is subject to active regulation by the state. Forms of such regulation are the specific laws and regulations of the National savings of Ukraine (for example, he established economic standards for the implementation of credit transactions). Strategic objectives and credit policy and mechanism for their implementation should not be in conflict with applicable federal, state regulation of lending activities, Consideration of internal capacity and capabilities of the bank’s development, Peterson (2013).

The volume of credit the bank’s activities, diversification of directions, the possibility of individual operations and the application of certain debt instruments are largely determined by the size of its share capital, the level of material-technical base and innovative technology, skilled credit managers, organizational structure, management and some other elements that characterize its internal resource potential (Balunywa, 2015).

It has been established that in order to overcome poverty the poor households must help themselves (Chambers, 1983). Savings schemes therefore are set up to create and increase financial services accessibility to poor households to either eradicate poverty or slow it down (Ashe, 2010). Trapped as they are, the poor households have come together, created these Savings schemes which are highly adaptable, easily accessible and very flexible with a form of insurance, to help them access financial services to cater for children’s education, health care and rebuild social networks.

Community Based Savings Micro Finance is known for providing useful sums of money to the poor households to start income generating activities and or improve their businesses. The revenue generated is used to pay back the loan, cater for household basic needs and general improvement of people’s living conditions. Loans also help members to manage their life cycle events such as education, marriage, birth and home making; widowhood, old age and death (Mutesasira cited in Microsave Africa, 2010).

Loans normally start at small amount and are linked to savings such that the more a client saves the more she can borrow. The normal loan period is four months and is repaid in 16 weekly installments. at the end of 2016, 95% of clients covered by a benchmark sample of 71 NGOs and institutions engaged in village saving lending were women. To eliminate the need for collateral (the poor man’s obstacle to receiving savings loans), village savings rely on a variation of the solidarity lending methodology. It relies on a system of cross-guarantees, where each member of a village savings ensures the loan of every other member. This system gives rise to an atmosphere of social pressure within the village bank, where the cost of social embarrassment motivates savings members to repay their loans in full. The admixture of cross-guarantees and social pressure makes it possible for even the poorest people to receive loans Saurina (2015).

This method has proven very effective for savings yielding a repayment rate of over 97% in its worldwide network. Village savings are highly democratic, self-managed, grassroots organizations. They elect their own leaders, select their own members, create their own bylaws, do their own bookkeeping, manage all funds, disburse and deposit all funds, resolve loan delinquency problems, and levy their own fines on members who come late, miss meetings, or fall behind in their payments. There was some hope in the early years of villagesavings development that these small village organizations could become independent and self-financing, but this hope was later abandoned. Most village savings in operation today are directly supervised by the staff of a local NGO or microfinance institution, from which they receive much of their loan financing, Johnson (2011).

Savings schemes were innovated by Grameen saving and then later developed by groups such as FINCA International founder John Hatch. Among US-based non­profit agencies there are at least 31 microfinance institutions that have collectively created over 800 village savings programs in at least 90 countries. And in many of these countries there are host-country MFIs sometimes dozens that are village savings practitioners as well, Baker (2016).

Johnson (2011) that A village savings is an informal self-help support group of 20-30 women, predominantly female heads-of-household. If the program is “on mission”, in a normal village savings about 50% of all new members entering the program will be severely poor representing families with a daily per-capita expenditure and  the rest are moderately poor. These women meet once a week in the home of one of their members to avail themselves of working capital loans, a safe place to save, skill training, mentoring, and motivation,

The village savings and loans schemes are popular because they meet a real need for better security for savings and the possibility of earning interest rates of between 30% to 40%  (they are set by the group). The real drawback of microfinance for the poor is that the rate of interest on borrowing is very high – 10% to 15% a month is standard (again it is set by the group) – and a bank’s rate is much lower, Baker (2016).

2.3 The challenges being faced by village savings schemes beneficiaries in their struggle to eradicate poverty.

The women who are the poorest of the poor are not always guaranteed of reducing poverty in the household because of their lack of decision-making abilities within the family. Men still control household resources and economic wealth. Some women are denied access to the financial services and they have no say on the family earnings even when they have contributed to it, Deugd, 2012 cited in Skartlatos (2014).

This raises a question “does access to financial services and increase in household income necessarily translate into poverty eradication among the households in village. Despite their vitality in helping the poor households to meet their social, economic and cultural needs, Community Based Savings Micro Finance mechanisms lack proper credit delivery mechanisms, financial and administrative systems to manage potential fraud at group level, which threatens sustainability of the Community Based Savings Micro Finance (CBSMFs) (Micro Save Africa, 2016).

A number of the informal financial systems are fraught with high risks of default and mismanagement of funds due to the absence of written records, rules and regulations and loan agreements. Consequently, short terms loans are given to the members; with limited repayment period ranging from one to three months. This puts a lot of pressure on the beneficiaries to generate adequate income to save and payback the loan within a short time (Wright & Mutesasira, 2011).

Most likely, Community Based Savings Micro finance could be helping 90% the poor households to eradicate poverty. Apparently their contribution to poverty eradication seems not be evidently noticed and registered as a result little documentation has been done on their contribution to household poverty eradication. This limits adoption of the good practices, implementation of corrective measures to enrich the methodologies, as well as focusing specifically on improving the quality of services delivered to the beneficiaries (Skartlatos, 2014).

The literature reviewed gives an overview of poverty, both at international and national levels, the types CBSMF, how they try to address the problem of poverty and challenge the CBSMFs face as they address poverty issues. Unlike the formal micro finance sector, little was known about the informal micro finance services available, the category of beneficiaries, and how the benefits translated into household poverty eradication. Such issues were of great interest during this study, (Micro Save Africa, 2016).

The capital for the loans is provided with on-time weekly installment repayments collectively guaranteed by all members i.e., a shortfall by one member must be covered by other group members. This joint liability form of microcredit is controversial, with Muhammad Yunus (for example) rejecting formal systems of joint liability in Grameen Bank’s solidarity groups,  Johnson (2011).

Market interest rates apply to village savings loans. At the end of 2016, the average portfolio yield for a sample 71 microfinance institutions engaged in village savings was 27.7%, after removing the effect of local inflation. The village savings itself will usually mark up this rate when it on-lends to individual members. While these rates seem high, they are low compared to those charged by local moneylenders in most countries. Unlike rural savings and credit unions these microfinance institutions do not provide savings services directly to their clients, (Johnson, 2011).

Worldwide FINCA’s 21 affiliates have about 3,300 staff, of which about 2,600 are field staff (credit officers and supervisors), and among these many are the better-educated children of FINCA clients. Each credit officer (CO) attends the weekly meeting of each of her 10-15 village savings to coach its leadership committee and monitor the bank’s activities, Saurina (2015).

In addition to motivation and adult education, the (CO) supervises client attendance, monitors bookkeeping accuracy, checks the accuracy of the current week’s loan and savings collections, and checks when the deposit receipt of the previous meeting. In turn, each village savings is managed by its elected officers a president (who leads the bank’s democratic decision-making process), secretary (who takes attendance and keeps minutes) and a treasurer (responsible for accurately handling all cash transactions). Finally, each village banker has her own passbook, and her recorded balances of loan payments and savings deposits must always be the same as those recorded in the treasurer’s record for each client, Saurina (2015).

Village Community Savings were initially started by women’s groups in Niger, West Africa as a means of empowering the groups’ members to manage their own funds. The concept was then successfully transferred to India and Bangladesh. In 2012, CARE started the first Village Community savings in Tanzania,Tuly (2014). Each Village Community savings is a group of 25-30 members from the same village. In the Kilimanjaro region, membership is not limited to women, but around 90% of the members are women. Most groups can be found in the rural parts of the Kilimanjaro region, where for people who cannot provide any collateral, access to asavingsloan even of very minor amount is almost impossible, Morisset and Neda (2011).

The concept of the Village Community savings as three main advantages. Firstly, through access to credit, group members are able to invest in income-generating activities including agriculture, trading of goods, livestock, food stalls, and small manufacturing; and to get access to education. Secondly, empowerment: Due to regular meetings and training, members become empowered and commonly become active members of the community, known to take up leadership positions, Tuly (2014).

The system provides a safety net where by the insurance fund provides means for members to address immediate cash needs to meet health and social requirements. The basic concept of each Village Community savings is the same; there are only small differences in terms of the exact conditions for loans and membership rules and regulations (e.g. interest rates, minimum or maximum amount of shares etc.), which each Village Community savings defines itself in its constitution, Morisset and Neda (2011).

Each Village Community savings as two main funds – the savings fund and the insurance fund. For the savings fund, at every weekly meeting, each member has to pay a certain amount equivalent to one share. There is also a maximum of shares a member can buy. The member then has access to a loan with a maximum amount of 3 times his or her value of shares. Loans are only paid for investments of members into income-generating activities and for education purposes of members or their children, and need to be paid back typically within 3-6 months, Johnson (2011)).

There is a low interest rate set by the members of typically 10%. The interest collected is saved as a profit for the group. At the end of each 12-months cycle, the profit (coming from interest and fines) is paid out to the members as a dividend, according to their respective share. Each group of 30 members is divided into 6 sub-groups of 5 members each, which act as guarantors for each other. Any member applying for a loan has to prove to the 4 other members of his or her sub-group that the loan can be paid back, Nancy and Wells (2011).

The case and amount is discussed and decided during the group meeting. Money provided from the insurance fund also has to be paid back (typically within 1 month), but no interest is being charged. Village Community Savings don’t have any staff; all members are volunteers choosing amongst themselves who should carry the necessary positions. The chairperson is in charge of storing in his or her house the cashbox, which is a strong metal box. Its key is guarded by another person, the treasurer, who is in charge of keeping records of all financial transactions. Further roles include two money counters, and a discipline master or mistress controlling that the rules defined by the group’s constitution are being followed by all members. Inside the cash box there are 4 bags – one to put cash for the savings fund; one carrying the emergency fund’s cash; one with cash resulting from interests; and one for cash resulting from fines, Johnson (2011)).

Additionally, in Tanzania, Village Community Savings have been recognized by the government in 2012. They can register as CBO (Community-based organization) and with BRELA Tanzania as a company. When a new group is started; they are being trained by professionals of NGOs specializing in this subject area, such as FASO (Fumbuka Agro Solution Organization). The initial training takes place once per week, typically for duration of 1-3 months, Zhang (2011).

The NGO later regularly meets the group to monitor their activities. In the Kilimanjaro region of Tanzania, the concept proved successful and the number of Village Community Savings is constantly growing. Business activities started primarily include agriculture, trade, running small restaurants (in Tanzania called “Mama Ntilie”), and producing handcraft items. Matured groups often start projects as a group rather than as individual members, and get engaged in larger scale business activities. In the beginning of 2013, several NGOs specializing in supporting VICOBAs were joining forces and started an alliance, allowing them to get access to international microcredit programs and get better conditions from conventional savings, Peterson (2013).

Volunteering internships will take place with FASO (Fumbuka Agro Solution Organization), a Moshi-based NGO founded by Innocent Mbele, a young graduate of Finance and Business Administration from Moshi. Together with 5 fellow members and other organizations engaging in the subject area of microfinance, he is training start-up Vicoba groups and monitoring them. The main challenges mentioned by Innocent are carrying the transport costs for visiting the Vicoba Groups in the Kilimanjaro area (transport costs are not always met by the Vicoba groups), conflicts within the groups, and lack of commitment of certain groups or individual members, Balunywa (2015).

2.4 The different strategies to improve on savings cultures

Population control measures through family planning programmes in order to reduce the dependent and encourage saving which can lead to increased capital accumulation and as a result high level of investment can be attained which creates employment opportunities to particularly disabled people hence rectifying the problem of poverty and it was according to the research done by John industrialist and philanthropist (2012).

Changing the education system. According to Paul (2013), the basic of economics urged that emphasis should be put on job creators even if they are disabled instead of job seekers such as training people on how to become entrepreneur where by those entrepreneurial skills help them to establish something on their own leading to the improved standard of living thus contributes to improved savings culture.

Diversification of economy. Johnson (2014) corporate social responsibility, says that in order to reduce on over reliance on few sectors especially agricultural sector other sectors should be opened or promoted such as service business to help to create more opportunities for disabled people to benefit from it when their standard of living so as to enable people improve on their savings culture and this was also supported by Cole (2012) in his investment theory and practice.

Encouraging commercial production. In the research done by Shridge Management College (2014), substance production is reduced, more employment opportunities are created and as a result people generate more incomes which improves their standards of living particularly those ones with disability.

Credit facilities should be extended to people especially the disabled ones. People in rural areas should be given credit facilities to enable them uplift  their earnings and standards of living whereby they also start or initiate some businesses where they can generate more incomes as a solution to improving the savings culture, Wilson (2009).

Infrastructure development. Robbins (2010) investment for development emphasizes that the government should embark on building a strong and sound infrastructure like roads and health facilities which can stimulate investment leading to more employment opportunities and improved standards of living. Excellent primer on modern investment continues with the statement that infrastructures such as transport network, power supply should be developed in order to induce investment in a country like Uganda and improved savings culture.

Proper planning and implementation. Kamuntu (2015) observed that the government should carry out proper planning in order to allocate the available scarce resources efficiently and implement them with minimum wastage so as to uplift people’s earnings such as the disabled persons and improved standards of living thus the savings culture can be improved.

The technological development should be done through intensive research and innovations in order to promote efficiency in production which also uplifts people’s standards of living. He adds that encouraging local savings and investments. In order to reduce poverty people should develop the culture of savings especially the disabled people even if the salary is very small to enable them establish something productive, Wilson (2009).

In Uganda, various efforts were made by the government, non-governmental organizations and individuals to reduce poverty in the country. According to Ogwumike (2011) poverty alleviation measures implemented so far in Uganda focuses more attention on economic growth, basic needs and rural development strategies. The economic growth approach focuses attention on rapid economic growth as measured by the rate of growth in real per capita GDP or per capita national income, price stability and declining unemployment among others, which are to be attained through proper harmonization of monetary and fiscal policies.

The basic need approach focuses attention on the basic necessities of life such as food, health care, education, shelter, clothing, transport, water and sanitation, which could enable the poor live a decent life, where rural development approach focuses attention on the total emancipation and empowerment of the rural sector, Ijaiya (2012).

According to CARE International Report (2009), the leaders of the VSLAs need to be carefully selected to ensure that they have sufficient literacy level to complete the necessary monitoring documents and ability to read and write. VSLAs are self managing associations so it is necessary that the groups conduct proper monitoring in order to fully understand how much they are savingand lending and what problems may exist that need to be addressed. It was also stated that VSLAs should be linked with micro-finance institutions (MFIs) so that the VSLA members are able to borrow larger amounts. It would be beneficial to VSLA members if an increased number of VSLAs are linked to MFIs so that VSLA members are able to accesslarger loans from MFIs.

Katabarwa C.F (2009:54). Recommends that since VSLAs are the best tool for household poverty eradication especially in rural areas, government should fund them to increase the loan amounts, increase the repayment period and improve the credit terms for the expeditious eradication of household poverty.  She also recommended that training of the members and regular financial advice will help the VSLAs to overcome the challenges being faced in their effort to eradicate poverty.

CHAPTER THREE

RESEARCH METHODOLOGY

3.0 Introduction

This chapter presents the detailed plan of how the study will be conducted. It presents the study design, study population, sampling techniques, data sources, data collection methods, instruments, data processing, analysis and presentation, procedure of the study, limitation to the study and appendix.

3.1 Research Design

Descriptive research survey will be used with the intension of obtaining both qualitative and quantitative aspect of data and to organize data in an effective and meaningful way. The study will also help the researcher to collect data from population and get the description of existing phenomena as it exists by asking individuals about their perceptions, attitudes, behaviours and values. The study will employ both qualitative and quantitative research approach. This is because they supplement each other in that qualitative approaches provide in-depth explanations while quantitative approaches provide the hard data needed to meet required objectives. This method will be chosen due to time limitation and inadequate resources which may not allow another method of research to be chosen.  Quantitative method approach will be formal objective systematic process in which numerical data will be used to obtain and analyze information. Purposive and random sampling techniques will be used to select 40 respondents out of total population (45). Questionnaires and interview guide will be used as research tools in the process of collecting data.

3.2 Study Population and composition

Cooper et.al (2013) states that population is the total collection of elements about which we make some inference. The researcher will use a total population of 40 respondents including women entrepreneurs, Leaders of savings groups and Members of savings groups from a target population of 45.

3.3 Sample Size

The study will select a sample of 40 participants out of 45 and to participate in the study.

Table 1: showing the composition of sample size 

3.4 Sampling technique

Purposive sampling method will be used on leaders of savings groups who know the value of savings. This will be done with the intension of obtaining quality information for the study. Simple Random sampling will be used on members of savings group and Women entrepreneurs. Basing on this method, each respondent will get an equal chance of being selected for sample.

3.5 Data source

The data will be collected from the two major sources including primary and secondary data sources.

3.5.1 Primary data

The researcher shall obtain the first hand data directly from the respondents.

3.5.2 Secondary source

The data will be obtained from the operational manager’s report, journals, magazines, newspapers and any other documents that will be found relevant to the study.

3.6 Data collection instruments

3.6.1 Questionnaires

Quantitatively, the researcher will use questionnaires to obtain the primary data. Closed ended questionnaire will be drafted to collect primary data basing on the objectives of the study. The researcher will distribute the questionnaires to Women entrepreneurs, Leaders of savings groups and Members of savings groups. The questionnaires will be hand delivered to and will be collected later after filling them by the respondents for data analysis. Questionnaires will be used because many respondents are likely to be literate and the time for them to read and exhaust most of the questions will be enough hence the study will use this research instrument effectively.

3.6.2 Interview

Qualitatively, the researcher will use Interviews to people who do not have time to answer the questionnaires. Using this method, the researcher will gather the relevant data through direct verbal interaction with the participants. The respondents will get information verbally through face to face conversation.

3.7 Data presentation, processing and analysis

3.7.1 Data presentation

After editing, coding and analyzing data, tabulation will be done which will give a clear presentation of the various responses and significance of each interpretation. Frequencies and percentages will be used in tabulation which will portray statistics used in analyzing and interpreting the findings of the study. Frequency tables, graphs and charts will aid in presentation of the collected data which will make it summarized and more understandable using statistical packages like Microsoft excel.

3.7.2 Data processing

The data will be processed through editing, tabulating and coding. This will help the researcher check the completed responses with a purpose of detecting and eliminating errors and identifying vital information that will be essential in coding and tabulation. This will be done according to whether or not the response is in line with the objectives of the study and realistic to the subject matter. This will involve mainly the use of simple statistical techniques like the use of tables, percentages which tested the significance of the information from which meaningful information will be drawn.

3.7.3 Data analysis

Qualitative and quantitative data will be obtained, coded, edited and categorized according to the research objectives. Researcher will analyze qualitative data using descriptive statistical analysis methods of frequency distribution and tabulation. Quantitative data will be analyzed mathematically through arranging the responses from the different respondents which will be summarized in tables, frequencies and percentages from the general analysis. The researcher will edit the findings and present them through MS Excel and make conclusions about the study.

3.8 Data validity and reliability

The study will ensure validity and reliability of the data which will be collected in different ways.

3.8.1 Validity of the data.

The researcher will first design the questionnaires and submit them to the supervisor who will examine and approve them for purpose of their validity. After the approval of the questionnaires, the researcher will go ahead to carry out a pre-test pilot study and after pre-testing the tools, ambiguous questions will be adjusted accordingly.

3.8.2 Reliability of the data.

Reliability refers to random error in measurement. It indicates the accuracy or precision of the measuring instrument (Norland, 2012). To establish the reliability of the instrument, a pilot study will be carried out. Questionnaires will be administered on the target population to check consistency of the instrument while testing reliability. The questions will be pilot tested in the study area which will ensure the reliability of data that will be collected.

3.9 Procedure of data collection.

The research proposal will first be approved by the supervisor and then researcher shall design the research instruments which will be used in data collection activities with the help of the supervisor. The researcher will get a letter from the coordinator of research school of Management and other officials in the study area which will enable her officially conduct the study in the areas with ease. This will help her in setting out the program for interviews, giving out and collecting questionnaires.

3. 10 Limitations to the study

The researcher will also face a problem of limited cooperation from the respondents and this will be due to their own reasons among themselves being that they have limited time and interest in providing the information required. However, the researcher shall explain the purpose of the research and convince them to participate in responding to the study.

The researcher will face a problem of limited time to carry out research fully.  However, this problem shall be solved by the researcher through getting enough time that will enable her carry out the research effectively.

Communicating to some target respondents will be difficult due to cultural differences, language barriers and differences in behaviors which will give the researcher hard time. However, to ensure effective communication, the researcher will use English language which at least every literate respondent will comprehend and then local language for those with English limitation.

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Questionnaire for the respondents

Dear respondent,

I am NASSAKA CLAIRE STELLA pursuing a Bachelor of Management Science of Kyambogo University. I am conducting a study on “THE EFFECT OF VILLAGE SAVINGS SCHEMES ON POVERTY ERADICATION, A CASE STUDY OF BUSIIMBI SUBCOUNTY MITYANA DISTRICT. You are kindly requested to participate in this study by filling in the questionnaire so as to help me complete the program. The information provided will be purely for academic purposes and will be treated with a lot of confidentiality. Your cooperation will be highly appreciated.

 SECTION A: Bio data

1. Gender
2. a) Male                     b) Female
3. Age

a). Less than 25years                b). Between 25 and 35years                 c.) Above 35years

3. Marital status
4. a) Married b) Single
5. Education level

Primary              Secondary                Diploma             Degree                   None

SECTION B: Research Data

Objective 1: Services offered by VSLA

5. For how long have you been saving with this VSLA?
6. a) Less than two years b) Between two to five years c) Above Five years
7. What services does this VSLA offer?
8. Loans b) Financial knowledge                      c)  Saving
9. Others (Please specify)………………………………………………………………..
10. Have you ever gotten a loan from this VSLA?
11. a) Yes                                          b) No
12. If yes, what are the requirements for getting a loan?
13. Land title
14. Membership
15. House
16. Other (please specify)…………………………………………………………………
17. Ever since you became a member of this VSLA, has the living standard improved under the following indicators?

Objective 2: Challenges affecting VSLAS in the society

12. Does this VSLA face any challenges?

a). Yes                                     b). No

13. If yes, what challenges affect VSLAs in this area?

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

Objective 3: Strategies to overcome the challenges affecting VSLAs in the society

14. Are you satisfied with the level of savings in this VSLA?
15. a) Yes                                          b) No
16. If, yes state the strategies used by this VSLA to mobilize savings

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

16. In your own opinion what possible strategies can be adopted to solve the challenges faced by VSLAs?

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….

Thank you so much for your cooperation