Public support of microfinance institutions in the light of costs and benefits generated by them: An example from Uganda

Lora Köstler

No 37, Discussion Papers in Development Economics from Justus Liebig University Giessen, Institute for Development Economics

Abstract: In the first chapter basics about microfinance and the financial sector in developing countries will be presented in order to explain the purpose of MFIs in developing countries. The second chapter deals with public support and its role in microfinance business. This chapter will conclude with a confrontation of the costs and benefits of MFIs generated due to public support. The third chapter describes the financial sector in Uganda and the microfinance activities in that country. The chapter also highlights the regulatory and supervisory framework of the microfinance sector in Uganda. The forth chapter analyses two selected Ugandan MFIs. This chapter will reveal if the two subsidised institutions are worthwhile in terms of costs and benefits for the poor and also show the subsidy dependence of the institutions over time. The paper finally concludes with a short discussion.

Date: 2006
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