Factors influencing loan repayment among borrowers in SACCOs in Uganda: a case study of Kawempe Division

Abstract

This study examined the factors affecting loan repayment among borrowers in SACCOs in Kawempe division. The study utilized four specific objectives namely; to investigate the influence of gender on loan repayment among borrowers in SACCOs, to investigate the influence of age of the borrower on loan repayment among borrowers in SACCOs, to assess the influence of marital status of the borrower on loan repayment among borrowers in SACCOs, and to assess the influence of family size on loan repayment among borrowers in SACCOs. Simple random technique and convenient sampling were employed to select targeted 113 borrowers in SACCOs to participate in the study and a structured questionnaire was used to collect the required data and STATA 15.0 software was used in data analysis. The result of the analysis revealed that the registered a response rate of 100 percent. More than a half (63.7 percent) of the respondents were male. The study established that, female borrowers were 0.52 times less likely to default a loan compared to their male counterparts. Borrowers aged 36 – 49 years old and their counterparts in the age group of 50 years and above were 7.60 and 1.40 times, respectively more likely to default loans compared to their colleagues aged 35 years old and below. Widowed/ separated borrowers and married borrowers were 1.60 and 7.40 times, respectively more likely to default loans compared to borrowers who were single. And, borrowers with medium sized families (3 – 5 members) and large family size (6 members and above) were 5.50 and 1.83 times, respectively more likely to default loans compared to their counterparts with a small family size of 1 – 2 members. Based on the findings of the study, the researcher recommends that Proper pre-borrowing evaluation of borrowers should be conducted and timely follow-up of clients (borrowers) to ensure the borrowed fund is being invested in the primary activities it was borrowed for all categories of borrowers. This is in a drive to ensure higher loan performance rates and reduce the loan default rates among borrowers as the loan funds will be invested in the productive economic activities that can generate funds to service both the principle and the accrued interest.