Microfinance risk management, social mission and financial performance during the Covid-19 pandemic in Uganda
DOI:
https://doi.org/10.47672/ajf.1017Keywords:
Microfinance, risk management, social mission, financial performance, Covid-19Abstract
Introduction: Microfinance is an economic tool promoted to extend financial services to the vulnerable groups excluded from the formal financial institutions. The Covid-19 pandemic containment measures disrupted the economic activities of the poor and made it hard for microfinance institutions (MFIs) to reach out to poor.
Purpose: This paper sets out to investigate the relationship between microfinance institutions risk management, social mission and financial performance of MFIs during the Covid-19 pandemic in Uganda. The study objectives were to investigate the relationship between risk management and financial performance of MFIs during the Covid-19 pandemic in Uganda and to investigate the relationship between the microfinance social mission and financial performance of MFIs during the Covid-19 pandemic in Uganda.
Methodology: This was a cross sectional study that involved 53 respondents conveniently selected from six (6) MFIs from Central Uganda working in the area of credit. The data was collected during the late period of the year 2021 using a self –administered questionnaire and analysed using STATA 12 to generate both descriptive and inferential statistics.
Results: The study findings revealed the existence of a significant positive relationship between risk management and the social mission (0.88; ); risk management and financial performance (0.91; ); the social mission and financial performance (0.88; ). Collectively, the predictor variables explain 85% of the variation in microfinance financial performance (Adjusted R-squared 0.85; p<0.00).
Recommendations: It is recommended that while designing risk management strategies, the focus be put on the social mission that will translate in the attainment of the financial objective. Attempts should be made by policy makers to help MFIs design strategies that integrate the dual bottom line with the triple bottom line.
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Copyright (c) 2022 Dr. James Kizza (PhD), Namukasa Samali
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