Assessment of Loan Management Practices in Nabukalu Sacco, Mukono District.
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Date
2025-12-03
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Makerere University Business School
Abstract
This study assessed the loan management practices of Nabukalu SACCO in Mukono District. The study was guided by three objectives: to examine the existing loan management practices, identify the challenges affecting loan management, and propose strategies for improving loan management practices in the SACCO. The study was anchored on the Information Asymmetry Theory and adopted a quantitative cross-sectional survey design. A sample of 86 respondents was drawn from a population of 113 employees and group leaders using the Krejcie and Morgan (1970) sample size determination table. Data were collected using structured questionnaires and analyzed using descriptive statistics with the aid of SPSS version 22.
The findings revealed that Nabukalu SACCO has established sound loan management practices, including clearly defined credit policies and loan terms, borrower awareness of loan conditions, effective borrower tracking systems, maintenance of up-to-date records, flexible repayment schedules, financial literacy initiatives, and regular communication with borrowers (aggregate mean = 4.40). However, the study identified several challenges affecting effective loan management, including weaknesses in client appraisal, inappropriate repayment periods, inadequate loan thresholds, limited use of technological infrastructure, high interest rates, and increasing loan default rates (aggregate mean = 3.58). The study further established that strategies such as continuous review of borrowers' files, adoption of prompt communication systems, training borrowers in loan utilization and business skills, strengthening monitoring mechanisms, implementing efficient loan information systems, enforcing clear debt collection procedures, and adopting appropriate legal recovery measures would significantly improve loan management practices (aggregate mean = 4.20).
The study concludes that although Nabukalu SACCO has effective loan management practices, persistent challenges in credit appraisal, loan monitoring, technology adoption, and borrower compliance continue to affect loan recovery and sustainability. It recommends that the SACCO strengthen its credit management framework by reviewing its credit terms, enhancing financial literacy programmes, investing in technology-driven loan monitoring systems, improving borrower follow-up mechanisms, and adopting enforceable legal and regulatory frameworks to improve loan recovery and overall financial performance. These measures will enhance the sustainability and effectiveness of loan management within SACCOs.
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This is a master's thesis.
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Citation
Wabwire, D. (2021). Assessment of Loan Management Practices in Nabukalu Sacco, Mukono District. (Unpublished master’s dissertation). Makerere University Business School, Kampala, Uganda.