The Effect Of Loan Recovery On The Performance Of Microfinance Institutions In Uganda A Case Study Of Opportunity Bank Gayazabranch

ABSTRACT

The main purpose of carrying out this study was to examine the effect of loan recovery on

the performance of microfinance institutions in Uganda. The study based on the following

objectives which aimed at examining the methods used in loan recovery by Microfinance

institutions in Uganda, establish the degree of loan recovery towards the performance of

".icrofinance institutions and find out the relationship loan recovery and performance

Microfinance institutions (Opportunity Bank Uganda; Gayaza Branch).

The study was descriptive in nature where the researcher described the relationship between

loan recovery and performance in form of highlighting on some of the desired attributes of

financial services, products and analytical by looking for gaps that existed and suggested the

possible remedies whereby, a total of 50 respondents were selected to participate in the study.

The procedure design, was purposive sampling techniques. The technique was preferred

because of the categories of respondents. After data processing, quantitative data analysis

,-;as carried out by the use of different methods such as single frequency tables, pie charts

and graphs by the support of Microsoft Excel.

The major findings revealed that the majority of respondents said that loan security is mostly

considered when addressing the challenges of loan recovery. This is because clients are

supposed to surrender· a security in order to obtain a loan from these financial institutions

while there are other methods used in loan recovery for example credit rationing, loan

syndication, credit worthiness, etc, therefore banks also set actions to be considered in loan

recovery.

:~ was recommended that product package and delivery should be the one to keep

Opportunity Uganda in this error of competition, despite other competitors in the district,

which range from banks, MFis and NGOs which are also offering financial services.

Furthermore, microfinance institutions in the area will not be the only a solution for each and

every problem in Nansana but a Combination of several players like government, NGOs,

churches who put their hands together to achieve clients welfare. The researcher recommends

that more research should be conducted to further findings of this study using other

methodologies like the relationship between loan processing and the growth of MFis as well  debt recovery and the profitability of borrowers.