External Loans and the Growth of Savings and Credit Co-Operatives: A Case Study of Nakawa Trader's Sacco.
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Date
2018-10
Authors
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Journal ISSN
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Publisher
Kampala International University, bachelors degree in business administration
Abstract
The overall purpose of the study was to find out the relationship between external loans and the
growth of SACCOs using Nakawa Traders SACCO as a case study. The study was guided by
four objectives including: to establish the effects of external loan on the growth of SACCOs; to
establish the relationship between external loans and the profitability of SACCOs; to find the
relationship between external loans from the government and the level of outreach of SACCOs
and to establish the relationship between external loans and the sustainability of SACCOs. The
study used a cross sectional survey design where 5 board members, 3 staff members and 42
SACCO members participated in the study through interviews and filling in questionnaires. Data
was analyzed using descriptive statistics and tables. Several effects of external of external loans
were reveled from the study findings and these included: Increases loan portfolio, Increases
Share capital, Leads to Expansion in Members businesses, Leads to increased Voluntary savings
and Loan sizes and interest earned increase. The positive effects of external loans on the
profitability of SACCOs include increasing loan portfolio, enabling disbursement of larger loans,
increasing membership and share capital among others. The negative effects of external loans on
the profitability of SACCOs include; increasing delinquency and default, poor loan appraisal,
fraud among others. External loans affect the SACCOs level of outreach through enabling the
SACCO to; extend more loans, serve the active poor, serve more women, attract more members
among others. External loans have both positive and negative effects on the sustainability of
SACCOs. The positive effects include: external loans acting as a cheap source of capital,
improving on the SACCO's liquidity, reduces on the SACCO's debt load among others. The
negative effects include: lower repayment rate, staff members ignoring loan appraisal and issuing
bad loans, leading to fraud and collapse of the SACCO among others. The study recommended
that before extending external loans to SACCOs they should train board, staff and the members,
should ensure that SACCOs have a technical staff with at least a diploma in any business course who
will manage the funds effectively among others. The study suggested further research to
investigate the: factors affecting loan default in SACCOs that access government support in
Uganda in Uganda; motivational factors leading to high repayment in SACCOs' that access
government support in Uganda; and the effect of fraud and government support through MSC
on the sustainability of SACCOs in Uganda.
Description
Dissertation Submitted To The College Of Economics And Management In Partial Fulfillments Of The Requirements For The Award Of A Degree In Business Administration Of Kampala International University
Keywords
External Loans, Growth of Savings and Credit Co-Operatives, Nakawa Trader's Sacco