Microfinance And Correlation Analysis

Table 15: Regression and correlation analysis of the effects of microfinance Credit on Small Businesses

Correlations

credit facility revenue growth profit growth business expansion credit facility Pearson Correlation 1 .268** -.032 .281** Sig. (1-tailed) .000 .330 .000 N 194 194 194 194 revenue growth Pearson Correlation .268** 1 -.077 .517** Sig. (1-tailed) .000 .143 .000 N 194 194 194 194 profit growth Pearson Correlation -.032 -.077 1 -.067 Sig. (1-tailed) .330 .143 .176 N 194 194 194 194 business expansion Pearson Correlation .281** .517** -.067 1 Sig. (1-tailed) .000 .000 .176 N 194 194 194 194

**. Correlation is significant at the 0.01 level (1-tailed).

Table 15 shows the correlation and effect of microfinance credit

He does not have in him the aspect of discipline that he must exactly follow the repayment schedule. Some require that the Credit Officer collects the money from their places of work or homes, and in most cases, it will be there.These types of delinquents require special treatment when dealing with them. What is important is to identify and categorize the defaulters and find ways of handling them, explain the managers of SACCOs.

4.3 Causes of delinquency

When asked the causes of delinquency, the management ofUmurenge SACCOs highlighted that this may be either institutional or client based.

For Umurenge SACCO-based causes, they highlight:

• theFailure of the Board of Directors to establish a proper loan policy,

• Inefficient loan committees that fail to do proper review of loan applications before approval. They should not be rubber stamps.

• Poor organizational policies and strategy e.g. loan term, frequency.

• Inability of the staff to discharge their duties and roles as per the institutional rules and policies

• Improper use of guarantors

• Lack of effective delinquency control

Managing Delinquency

When the managers of Umurenge SACCOs were asked about delinquency management, they said that there are some strategies taken by BNR like its commitment to conduct on site inspection in the 416 Umurenge SACCOs from July, 2015 to June, 2016. This inspection targeted mainly loan portfolio management and it was using a coaching approach. But they said that at SACCO’s level measures have taken such as:

Client Orientation:they say thata logical first step toward developing a zero-tolerance institutional culture is to communicate this concept to each new client before receiving the loan. An orientation curriculum should be prepared along with graphics and teaching aids to simply and clearly describe the terms of services being offered, the expectations of each client, and procedures that will be followed in the case of arrears.

Delinquency Penalties. Clients should be penalized for not on time payment. This could include delinquency fees fixed to the number of days the repayment is late and restraining access to replicate loans based on reimbursement performance

Enforcing Contracts: they say that SACCOs will quickly lose control of portfolio quality if it fails to enforce contracts. SACCOs should not have any policies in their contracts that they are not prepared to