COOPERATIVE MICRO LOANS AND INDIVIDUAL STANDARDS OF LIVING, A CASE STUDY OF KIHONDO SACCO BUNDIBUGYO DISTRICT

TABLE OF CONTENTS

DECLARATION ........................................................................................ . . .... i

APPROVAL ....................................................................................................................................... ii

DEDICATION ................................................................................................................................... iii

ACKNOWLEDGEMENT .................................................................................................................. iv

LIST OF ACRONYMS ....................................................................................................................... v

LIST OF TABLES ............................................................................................................................. vi

LIST OF FIGURES ........................................................................................................................... vii

ABSTRACT ...................................................................................................................................... xiii

CHAPTER ONE ................................................................................................................................. 1

INTRODUCTION ............................................................................................................................... 1

l.0 lntroduction ................................................................................................................................... 1

1.1 Background to the study ................................................................................................................ 1

1.1.1 Historical perspective .................................................................................................................. 1

1.1.2 Theoretical perspective ............................................................................................................... 3

1.1.3 Conceptual perspective ............................................................................................................... 4

1.1.4 Contextual perspective ................................................................................................................ 5

1.2 Problem statement ......................................................................................................................... 7

1.3 Purpose of study ............................................................................................................................ 7

1.4 Research Objectives ....................................................................................................................... 7

1.5 Research Questions ........................................................................................................................ 7

1.6 Scope of the study .......................................................................................................................... 8

1.6.1 Geographical scope ................ •········;··························································································· 8

1.6.2 Content scope ............................................................................................................................. 8

1.6.3 Time scope ................................................................................................................................. 8

1.7 Significance of the study ................................................................................................................ 8

CHAPTER TWO ................................................................................................................................. 9

LITERATURE REVIEW .................................................................................................................... 9

2.0 Introduction ................................................................................................................................... 9

2.1 Theoretical review ................... , ..................................................................................................... 9

2.1.1 Neo-classical growth models ....................................................................................................... 9

2.1.2 Welfarist theory .......................................................................................................................... 9

2.1.3 The institutionist theory .............................................................................................................. 9

2.1.4 Empowerment Theory ............................................................................................................... 10

2.1.5 Uniting theory ........................................................................................................................... 10

2.2 Conceptual Review ...................................................................................................................... 10

2.2. Conceptual Frame work ......................................................................................................... 11

2.3 Review of related literature .......................................................................................................... 12

2.4 Empirical review ......................................................................................................................... 13

2.5 Relationship between credit facility and standard of I iving ........................................................... 15

2.6 Benefits of Accessing Micro Loans .............................................................................................. 18

2.7 Challenges faced by borrowers .................................................................................................... 20

2.8 Conclusion .................................................................................................................................. 21

CHAPTER THREE ........................................................................................................................... 22

RESEARCH METHODOLOGY ....................................................................................................... 22

3.0 Introduction ................................................................................................................................. 22

3.1 Research design ........................................................................................................................... 22

3.2 Study population .......................................................................................................................... 22

3.3 Sampling design .......................................................................................................................... 22

3.4 Sampling procedure ............................................................... : ..................................................... 22

3.5 Sample size .................................................................................................................................. 22

3.6 Source of data .............................................................................................................................. 23

3.6.1 Primary data ............................................................................................................................. 23

3.6.2 Secondary data .......................................................................................................................... 23

3.7 Data collection instrument ........................................................................................................... 23

3.8 Data collection procedure ............................................................................................................ 23

3.9 Ethical consideration .................................................................................................................... 23

3.10 Data analysis and presentation ................................................................................................... 24

3.11 Limitations of the study ............................................................................................................. 24

CHAPTER FOUR ............................................................................................................................. 25

DATA ANALYSIS, INTERPRETATION AND PRESENTATION OF FINDINGS .......................... 25

4.0 Introduction ................................................................................................................................. 25

4.1 Demographic characteristics of the respondents ........................................................................... 25

4.1.2 Sex of respondents .................................................................................................................... 26

4.1.3 Marital status of respondents ..................................................................................................... 26

4.1.4 Level of education .................................................................................................................... 27

4.2.1 Accessibility to credit facility .................................................................................................... 28

4.2.3 How many times have you borrowed from HEDA Sacco .......................................................... 29

4.2.4 How did you borrow? ............................................................................................................... 30

4.2.5 Are there collaterals required to access a loan ............................................................................ 31

4.2.6 What collateral did you give to HEDA ...................................................................................... 31

4.2.7 Which loan product did you receive .......................................................................................... 32

4.2.8 Do you know anything about use of the following? ................................................................... 33

4 .3 .0 Benefits of accessing credit faci Ii ty ........................................................................................... 34

4.3.2 Has the loan facility improved your standard of living ............................................................... 35

4.3.3 If yes? How has the credit facility improved your standard of living .......................................... 36

4.3.5 !-low have you managed to pay back the loan facility ................................................................. 37

4.4.0 Challenges encountered by borrowers ....................................................................................... 38

4.4.1 Have you ever encountered any challenge as a result of borrowing from HEDA Sacco .............. 38

4.4.2 If yes, what challenges respondents !)ave encountered as a result of borrowing .......................... 39

4.4.3 What do you think should be the solution should be the solution to the above ............................ 40

CHAPTER FIVE ............................................................................................................................... 42

DISCUSSION, SUMMARY OF FINDINGS, CONCLUSION, RECOMMENDATIONS .................. 42

5.0 INTRODUCTION ....................................................................................................................... 42

5.1. Discussion of findings ................................................................................................................. 42

5.1.1 Relationship between accessibility to credit facility and standards of living ............................... 42

5.1.2 Benefits of accessing credit facility ........................................................................................... 42

5.1.3 Challenges faced by borrowers .................................................................................................. 43

5.2 Summary of findings ................................................................................................................... 44

5.3 Conclusion ................................................................................................................................... 44

5.4 Recommendations ....................................................................................................................... 44

5.5 Areas for further study ................................................................................................................. 45

References ......................................................................................................................................... 46

APPENDICES .................................................................................................................................. 49

APPENDIX I .................................................................................................................................... 49

RESEARCH QUESTIONNAIRE ................................................ : ..................................................... 49

APPENDIX II ............................................................................. : ..................................................... 52

PROPOSED BUDGET ...................................................................................................................... 52

APPENDIX III .................................................................................................................................. 53

TIME FRAME ................................................................................................................................. 53

APPENDIX IV ................................................................................................................................. 54

INTRODUCTORY LETTER FROM THE UNIVERSITY ................................................................ 54 

ABSTRACT 

The research report was entitled "Cooperative Micro Loans and Individual Standards of Living, A Case Study of Kihondo SACCO Bundibugyo District". The study research was guided by the following research objectives; to determine whether poor people improve standards of living through accessing micro loans, to explore benefits of accessing micro loans on the standard of living of poor people and to determine challenges faced by borrowers. The researcher used both open and closed ended administered questionnaires in order to obtain first-hand information. The open ended questions was used because it saved time, helped the researcher to easily compare the responses from different groups, permit greater depth of response. Closed questions, the researcher used closed questions because they were economic to use in terms of money and time and were also easy to administer since each item was followed by alternative answers. From the field study respondents revealed that accessibility to credit facility gives chance to borrowers to start business by accessing business loans. These respondents were in agreement with,(Bajwa. 2001) who elucidated that easy accessibility to credit facility from a micro credit institution enables the borrowers to engage in businesses that can increase their productivity and ownership of assets. Basing on data from the field the researcher concludes that accessibility to credit facility is a tool tor improving the standard of living of people, if used well for the intended purpose by the borrowers because most of the respondents who said that they had used the loan for the intended purpose said that they had improved their standard of living through various ways such ways such as attainment of basic needs, construction of houses, expansion of their businesses, taken their children to school. Therefore if all people most especially the poor are given the chance to access credit facility and when the interest rate is user friendly the researcher believes credit racility can improve st.indard or living and the general welfare or all people at large if used well. The researcher further recommends that the time financial institution such as SACCOS and micro finance institution take to process loans should be reduced because clients go to access loans after planning for what to do with the funds but at times they are delayed hence this affects clients in repaying the loan back because they end up using the loan not for the intended purpose they borrowed for due to the delays caused by financial institutions.