The relationship between microfinance credit policies and loan repayment a case study of Pride Micro Lugogo Branch

Abstract

Pride Microfinance Uganda traces its roots to a project which started its operations in western Uganda in December 1995 funded by the Austrian Regional Bureau in Development Co-operation. The emergence of Microfinance industry is to extend financial services to the vast majority of the economically active population. The main objective of this research was to determine how the credit policies of Pride microfinance enhance or affect loan repayment. The beneficiaries of loans from microfinance are considered as the clients or debtors of the lenders (microfinance institutions). Donors and practitioners have to set and advocate for policies that will ensure accountability and growth throughout loan repayment. The researcher used descriptive research design. Primary data was obtained by interviews using questionnaires and was analyzed in frequencies and percentages. Data was presented in tables and figures. Findings indicate that credit policies are relevant because they favored most of the clients and they assisted the organization in reducing the bad debts. Therefore, there is a significant relationship between credit policies and loan repayment. The researcher therefore recommends that Pride microfinance Lugogo Branch should try to cultivate a culture of voluntary repayment among its customers. There is also need to diversify services to embrace advisory and knowledge based activities, which could help improve on future loan repayment.