This thesis analyses microcredit as a means to overcome the problem of inefficiently working financial markets in Uganda. Empowerment of women and the benefits of targeting women with microcredit are similarly discussed. The conclusion of the study is that microcredit provides a way of giving poor people access to credit through accepting untraditional collateral and reaching out to remote rural areas. However, obstacles such as lack of funds, underdeveloped complementary institutions, and corruption on management level in financial institutions prevent the microfinance sector from functioning efficiently. Women are found to face more market failures than men. It is argued that including women in economic activities is essential for growth and development. Women’s and men’s spending patterns have not been found to differ as much as presumed in theory. There are indications of positive effects on children’s schooling when targeting women with microcredit, but it has not been proved that it will increase the wellbeing of the family. It is believed that access to credit has a positive impact on women’s empowerment.