Abstract

Whereas it is often argued that state intervention with credit to reduce poverty is a futile venture, our research findings in Uganda show that while this thesis may be true in some cases, it should not always be taken for granted. Hence, we argue that state-sponsored credit schemes can also perform better provided their programme designs are fortified with best practices. We demonstrate this case using a comparative study of two state-sponsored micro-credit schemes targeted at reducing poverty. While the performance of ECS was dismal, PAP was able to register impressive performance in terms of institutional efficiency and participants’ welfare.

Key words: State, micro-credit, poverty, rural, Uganda.