The Effectiveness of Microfinance Services in Promoting Women's Economic Empowerment in Central Uganda

Abstract

SDG 5 targets the elimination of all forms of discrimination against women and increases their participation in decision-making, both at the micro and macro levels. The empowerment of women is a critical component of a country’s development. This study investigates the effectiveness of microfinance services, specifically microcredit and microsavings, in promoting women’s economic empowerment (WEE) in Central Uganda. Using a cross-sectional survey of women clients of microfinance institutions, the study employs correlation and hierarchical regression analyses to assess the contribution of microfinance services to WEE. The findings indicate a strong, positive, and statistically significant relationship between microcredit and WEE (r = 0.77, p < 0.01), and a moderate, positive, and significant relationship between microsavings and WEE (r = 0.56, p < 0.01). Microcredit and microsavings jointly explain 61.03% of the variation in WEE, with the explanatory power increasing to 64.96% after controlling for marital status, loan size, and loan purpose; loan purpose emerges as the most influential control variable. The results suggest that microfinance enhances women’s economic empowerment through improved income generation, business productivity, asset accumulation, and decision-making autonomy. By disentangling the relative effects of microcredit and microsavings, this study offers new, context-specific evidence from Central Uganda that clarifies how different microfinance instruments shape women’s economic empowerment, with direct implications for gender-sensitive financial inclusion policy and practice