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Uganda's microfinance policy regime: An exploratio through a political-economy framework

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  • Schmidt, Oliver

Abstract

In 2005, Uganda’ government fundamentally shifted the direction of its microfinance (MF) policy. Hitherto it had focused on integrating MF institutions into the financial sector, allowing them to take deposits. Since 2005, it focuses on savings and credit cooperatives (SACCOs); with government funding of and ostensibly interfering in the SACCOs’ operations. This paper explores the reversal of policy direction, drawing on public choice theory. It finds that the shift of policy direction served the objectives of Uganda’s politicians to maintain political power, as it offered them an avenue to create loyalty through patronage. MF special interest groups – particularly development agencies – had chosen a strategy based on information and financial contributions that failed to incite politicians and to maintain univocal support from technocrats and MF practitioners.

Suggested Citation

  • Schmidt, Oliver, 2012. "Uganda's microfinance policy regime: An exploratio through a political-economy framework," MPRA Paper 42374, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:42374
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    File URL: https://mpra.ub.uni-muenchen.de/42374/1/MPRA_paper_42374.pdf
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    References listed on IDEAS

    as
    1. Niskanen, William A, 1975. "Bureaucrats and Politicians," Journal of Law and Economics, University of Chicago Press, vol. 18(3), pages 617-643, December.
    2. Marguerite S. Robinson, 2001. "The Microfinance Revolution," World Bank Publications - Books, The World Bank Group, number 28956.
    3. George A. Akerlof, 2009. "How Human Psychology Drives the Economy and Why It Matters," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(5), pages 1175-1175.
    4. Mueller,Dennis C. (ed.), 1997. "Perspectives on Public Choice," Cambridge Books, Cambridge University Press, number 9780521553773, September.
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    Cited by:

    1. Sekabira, Haruna, 2013. "Capital Structure and Its Role on Performance of Microfinance Institutions: The Ugandan Case," Sustainable Agriculture Research, Canadian Center of Science and Education, vol. 2(3).

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    More about this item

    Keywords

    Political Economics; Microfinance; Policy; Uganda; Regulation; Policy Making; Economic Develoopment;
    All these keywords.

    JEL classification:

    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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