Research consultancy

Research consultancy

THE IMPACT OF VILLAGE SAVINGS AND LOAN ASSOCIATIONS ON THE ECONOMIC EMPOWERMENT OF RURAL WOMEN IN LIRA DISTRICT, NORTHERN UGANDA

CHAPTER ONE

INTRODUCTION

1.0 Introduction

This chapter presents the background of the study, problem statement, research objectives, questions, scope, significance, and a summary of the research.

1.1 Background of the Study

Historically, households worldwide have saved to secure their financial future, meet social obligations, and invest in opportunities (Rutherford, 1999). The concept of saving dates back to ancient times, possibly even before the Roman Empire, when merchants entrusted goldsmiths with their valuables for safekeeping (Cox, 1996).

Bailey (2001) highlights that savings enable members to access loans, fostering economic growth. Savings and Credit Cooperatives (SACCOs) have significantly improved living standards by providing financial services to vulnerable groups, including women, youth, and persons with disabilities. These institutions promote economic and social empowerment, financial literacy, and entrepreneurship (Cox, 1996). SACCOs also support small-scale businesses such as retail shops, salons, and agricultural ventures, enhancing productivity and food security (Evans, 2002).

SACCOs encourage thrift, offer affordable credit, and educate members on financial management (Kabuga & Batarinyebwa, 1995). They also provide risk management services, ensuring the safety of members’ savings. Additionally, SACCOs foster social interaction and collective financial growth (Ssemogerere, 2005).

In Africa, SACCOs serve as community-based financial institutions aimed at uplifting low-income populations (Kabeer, 2001). While Uganda’s SACCO sector shows promise, it remains underdeveloped compared to traditional banking systems, which are predominantly urban-centered (Mugwanya et al., 2004). Challenges such as weak savings mobilization, lack of regulatory frameworks, and limited financial literacy hinder their full potential (Manyara, 2003; Champo, 2008).

1.2 Statement of the Problem

Despite the proliferation of Village Savings and Loan Associations (VSLAs) in Lira District, many rural women still face challenges in accessing financial services. Key issues include:

• Ineffective savings mobilization strategies
• Lack of regulatory safeguards for members’ funds
• Insufficient financial training and investment evaluation mechanisms
• High loan demand with limited accessibility (Morduch, 2005)

This study seeks to assess the impact of VSLAs on the economic empowerment of rural women in Lira District.

1.3 Purpose of the Study

The study aims to evaluate the influence of Village Savings and Loan Associations on the economic empowerment of rural women in Lira District, Northern Uganda.

1.4 Research Objectives

1. To identify the types of financial services provided by VSLAs to women in Lira District.
2. To assess the effects of VSLAs on women’s economic empowerment.
3. To examine the challenges women face in accessing loan services.

1.5 Research Questions

1. What financial services do VSLAs offer to women in Lira District?
2. How do VSLAs impact the economic empowerment of rural women?
3. What barriers hinder women from accessing loan services?

1.6 Scope of the Study

1.6.1 Geographical Scope

The study will focus on Lira District, Northern Uganda.

1.6.2 Content Scope

The research will examine:

• Financial services provided by VSLAs
• The economic impact on women
• Challenges in accessing loans

1.6.3 Time Scope

The study will be conducted over six months.

1.7 Significance of the Study

• Government: Findings will inform policies on microfinance regulation and equitable resource distribution.
• Women: Rural women will gain insights into financial empowerment opportunities and challenges.
• Management: VSLA administrators will identify areas for service improvement.