Management Competence, Credit Terms, and Loan Recovery. The Case of Saccos in West Nile Region.
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Date
2025-09-26
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Makerere University Business School
Abstract
The study examined the relationship among management competence, credit terms, and loan recovery of SACCOs in West Nile region, Uganda. The study sought to determine the extent to which loan recovery of SACCOs is attributed to management competence and credit terms. The research problem was that the SACCOs Strategic Plan 2013 - 2018 set a target of maintaining the repayment rate at 95%, implying that the management’s expected default rate was to be 5%. It was established that the loan recovery rate by SACCOs was low at 62% in West Nile, which was below the target of 95% (Auditor General report, 2021/2022). The study used a cross-sectional survey design using a sample of 53 SACCOs, giving a response rate of 79.2%. The data was collected using a questionnaire and was analysed using SPSS version 22. Pearson correlation and regression analysis were used to determine the degree of the relationship among management competence, credit terms, and loan recovery of SACCOs in West Nile in Uganda. Findings of the study revealed a significant positive relationship between management competence, credit terms, and loan recovery of SACCOs. The regression analysis results show that management competence and credit terms predict 77.4% of the observed variance in loan recovery of SACCOs. This implies that there are other predictors of loan recovery of SACCOs besides management competence and credit terms; thus, further research is called for to find the other predictors of loan recovery of SACCOs. The study recommends that the district commercial officers should monitor the activities of SACCOs and train them so that they can be able to know where they are going wrong. Also, they should initiate auditing of SACCO books of account quarterly and yearly. The management of SACCOs should put more emphasis on credit terms since it has more predictive power (45.5%) on loan recovery of SACCOs by putting affordable interest rates and appropriate policies for borrowers that would enable them to repay the loans borrowed. SACCO management should also enforce management competence through improvising Loan officer is knowledgeable on SACCO management, the loan officer communicates effectively with the SACCO team, the loan officer trains SACCO members on a regular basis to achieve SACCO objectives, and the loan officer guides SACCO members on a daily basis to achieve SACCO objectives, as it improves the loan recovery of SACCOs by 31.3%.
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This is a master's thesis
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Citation
Ajobe, B. A. (2024). Management Competence, Credit Terms, and Loan Recovery. The Case of Saccos in West Nile Region. Makerere University Business School.