The impact of microfinance involvement on uplifting the socio-economic conditions of the marginalized people: Special reference to batticaloa district, sri lanka

Microfinance is considered as a tool for socio-economic development used to mitigate several social and economic problems ofpoorest families due to poverty. The study was developed with the primary objective to find out the contribution of MFIs to the social and economic upliftment of beneficiaries in Batticaloa District, Sri Lanka. Household survey was conducted in the 14 DSDs in Batticaloa District in a stratified random sampling method with the total sample size of 200 households targeting the beneficiaries of MFIs from each DS Division. Key interviews were conducted from the selected MFIs functioning in Batticaloa District based on the questionnaire survey to analyse their role in financial and social responsibility in the society.

Women from the poorest of the poor families are the prime customers in the MF programme. Obtaining loan is the main reason to be a client in a MFI and beneficiaries primarily use the credit facility as a capital investment for self-employment opportunity. Results reveal that MF facility (after obtaining) has given a significant (p < 0.01) improvement (t-test) in the livelihood status of the beneficiaries ’ families in terms of overall wealth. Further, finding indicates that that there is a relationship (ANOVA, Chi-square test) between clients’ satisfaction in MFIs role on their service, quality and attitude behaviours at significant level (p <0.01) and Pearson correlation reveals the Service, Attitude and Quality factors are positively highly correlated with the clients ’ satisfaction on MFIs role at significant level (p< 0.01). Role of MFIs in the district indicates that the outreach, social capital and social responsibility were identified as “Important objectives” to reach the social objectives while adaption of services considered as “Major objectives ” to reach the social objectives by MFIs.

Results indicate that the customer satisfaction survey can be used as a tool to assess the economic and social impact of the MIFs in beneficiaries ’ livelihood improvement. The overall success of the MFIs services in alleviating the poverty and to reform the social structure in the poor community not only depend on the financial aspects such lending and recovering loans and other financial benefits, but also in the long-term sustainability of the benefits that have accrued to the borrowers. Thus, the study implies that MFIs should consider the importance of social reform of the families along with the economic uplifment.