Vulnerability, Risks, Assets and Empowerment - The Impact of Microfinance on Poverty Alleviation

This research study sought to examine the impact of microfinance on poverty within the framework of the "household economic portfolio" with reference to "financial," "physical," "human" and "social" assets. The research investigated:

• Which groups among the poor Uganda Women's Finance Trust (UWFT) reaches the nature of risks confronting the poor clients of the UWFT;
• If and how financial services improve client's capacity to manage and control assets and build up their asset base to protect against and cope with risks;
• If and how microfinance services enable clients to use assets to maintain a minimum economic threshold.

The research revealed that financial services help to protect against risk by:

• Providing chunks of money to build assets (financial, physical, human and social assets);
• Providing chunks of money to better manage cash flow and assets;
• Increasing the diversification and development of household assets;
• Offering a place to safely store savings;
• Increasing women clients' control over assets.

In addition, financial services help poor clients cope with shocks by:

• Providing savings or emergency loans to draw upon;
• Building assets that can be sold.

Furthermore, the study found that social intermediation combined with financial services contributes to reduced vulnerability and increased empowerment for women clients.This is achieved by:

• Building women's human assets (like self esteem, bargaining power, control over decisions, and skills and knowledge);
• Increasing women's social assets (social networks, membership of groups, relationships of trust, and access to wider institutions of society).