THE EFFECTS OF RETAIL BANKING SERVICES ON THE VIABILITY OF PRIDE MICROFINANCE LIMITED IN UGANDA: A CASE STUDY OF MASAKA DISTRICT

Abstract

The presence of microfinance institutions allows poor people and low-income clients to access the financial services such as credit, savings etc shunned by the mainstream banking sector because of lack of collateral. These financial services give the poor and low-income clients an opportunity to finance & support their economic activities, their household as well as their business's financial management and utilization needs. The financial viability or sustainability of a MFI is critical for its healthy financial and operating performance of MFI is more vital for their good performance and to serve their customers appropriately. Therefore, this study presents empirical analysis of financial and operating performance of Pride Micro Finance Limited (PMFL) from the point of financial viability. The purpose of this study was to assess the effects of retail banking services on the viability of Pride Microfinance in Uganda, and specifically the achievement of PMFL in outreach, financial sustainability, profitability and trend in performance assessment. Data used was obtained from both primary and secondary sources. The researcher used majorly secondary sources to analyze data using various statistical techniques and performance indicators as well as ratio and trend analysis for a six years’ data from 2010 to 2015. The results of the study showed that PMFL has achieved some level outreach, and from financial sustainability (viability) perspective, PMFL has indicated mixed performance. The trends tell us there has been a steady decline of the main financial performance indicators of financial viability in terms of Financial Self- Sufficiency (FSS), Operational Self- Sufficiency (OSS) Return on Assets (ROA) and Return on Equity (ROE).