Client protection and social performance of microfinance: A study of MFIS in Kampala, Wakiso and Mukono Districts.

Abstract

The inspiration of this study was to establish the relationship between client protection and social performance of microfinance institutions in Kampala, Wakiso and mukono Districts. Client protection was operationalised by transparency pricing, sensitivity to over indebtedness and grievance handling while social performance had social mission, client service, employment climate and outreach as its constructs. The study was a cross sectional research design, which was combined with a descriptive and analytical research design and Thirty two (32) MFIs were studied. The data was collected using a selfadministered questionnaire and data was analyzed using SPSS and Excel programs.

Results show that there is a significant positive relationship between transparency pricing, sensitivity to over-indebtedness, grievance handling and social performance. This means that when an MFI improves its disclosure of information related to prices, creates a transparent system of grievance handling and with a high sensitivity to over indebtedness of the client, it improves the social performance. It was also established that these three (transparency pricing, sensitivity to over indebtedness and grievance handling) can predict 55.1% of social performance.

The results revealed that transparency pricing and Grievance handling were significant in influencing social performance. This implies that disclosure of all relevant information and timely and adequate conflict resolution between the MFI and clients are paramount in improving the social performance of an MFI