IMPACT OF INVESTMENT IN INFORMATION AND COMMUNICATION TECHNOLOGY ON PERFORMANCE AND GROWTH OF MICROFINANCE INSTITUTIONS IN UGANDA

This study assesses the impact of investment in information and communication technology on performance and growth of microfinance institution in Uganda. Performance is measured as a change in total factor productivity and growth as change in scale of operation. Two level growth models were used to determine the impact of investment in information and communication technologies on total factor productivity and scale change trajectories of individual microfinance firms. Results indicate that about 18% variation in performance and 19% variation in growth across firms were due to investment in information and communication technologies. The shrinking customer base, decreasing marginal returns, and increased competition are necessitating selecting optimal input-mix and investment in information and communication technology by microfinance institutions in Uganda. This will ensure providing service at lower cost and sustainability and microfinance institutions in Uganda.