The donor community and sustainability of microfinance institutions in Uganda: a case study of Pride Uganda (1995-2005)

Abstract

The research aimed at establishing the level of MFI sustainability, while examining the donor community conditions and support as well as the relationship and effect of donor community on MFI sustainability using PRIDE Uganda as a case study between the years 1995 and 2005. The study adopted a longitudinal research approach between the years 1995 and 2005. Both quantitative and qualitative data was used. Quantitative data was mainly derived from secondary information consisting of financial statements and document reviews which was analyzed using the statistical package for social scientists. Qualitative data was derived from the interview guide, which involved face to face interactions with the key informers. This data was grouped and categorized thematically based on key themes of donor community support and conditions. The findings indicate that the donor community provided PU with financial support such as grants to cover operating shortfalls, capital grants, loan grants, technical assistance and capacity building, to be operationally and financially self-sustained in both the short and long run. In addition, the attached conditions provided checks and balances for smooth relations and operations of the institution. In conclusion, financial viability is central to MFI sustainability with the loan fund grants being the most significant predictor. Therefore MFIs should solicit for funds to grow their loan portfolios which greatly contribute to the overall sustainability of the MFI.