| The ability of both male and female farmers in Sub-Saharan Africa (SSA) in general and Uganda in particular to improve agricultural production is severely constrained, among other factors, by the lack of rural financial services. In addition, women's access to finance is restricted both by gender inequality and their multiple production and reproduction roles.This study documents socioeconomic characteristics of various financial intermediaries with emphasis on the role of the informal financial sector. The primary objective of the study was to investigate the main social, demographic and economic characteristics of rural financial institutions and the people who use them. Two general hypotheses were explored in this study: first, poor people have restricted access to formal financial institutions and second various individuals and groups make differential use of formal and informal financial services due to gender, ethnic, location, and other differences.In this study I have used an integrated intermediate level socioeconomic theoretical framework, based on social embeddedness theory, to investigate the typical economic and extra-economic factors that influence poor people's access to rural finance. Data obtained from a cross-sectional household survey conducted in 1992/93 among a random sample of 527 respondents in the districts of Arua and Mukono were analyzed to determine typical demographic characteristics, farm-household factors, contextual factors, and perceptions that influence their access to and use of formal and/or informal financial services.The descriptive findings of the study indicate that there is a relatively low level of financial intermediation in Uganda. Respondents have generally a limited access to rural finance. Most people use informal finance and have virtually no access to formal financial institutions. As such, informal finance is critical for the well-being of most rural people. The analytical results are mixed. Overall, demographic variables exerted the strongest positive statistical impacts on respondents' use of financial services, while farm-household and contextual factors produced inconclusive results and all perception variables were not significant. Thus, the hypotheses of restricted and differential access to financial services by poor people in Uganda are only partially support. Further research is needed to verify these findings. |
