TABLE OF CONTENTS
DECLARATION
APPR OVAL
DEDICATiON
ACi~NOWLEDGEMENT iv
TABLE OF CONTENTS v
LIST OFTABLE vii
LIST OF FIGURES viij
LIST OF ABBREVIATiONS ix
ABSTRACT x
CHAPTER ONE: INTRODUCTION 1
1.1 Background of the study 1
1 .2 Statement of the problem 2
1.3 Objectives of the study 3
1.3.1 General objective 3
1.3.2 Specific Objectives 3
1.4 Research Questions 3
1.5 Significance of the study 3
1.6 Scope ofthe study 4
1.6.1 Geographical Scope 4
1 .6.2 Content Scope 4
1.6.3 Time Scope 4
1.8 Operational Definitions 4
CHAPTER TWO: LITERATURE REVIEW 6
2.1 Introduction 6
2.2 Eligibility Policy and Servicing of Small Loans in PML, Kampala 6
2.3 Interest Rate Policy and Servicing of Small Loan in PML, Kampala 8
2.4 Risk Management Policy and Servicing of Small Loans in PML, Kampala 10
CHAPTER THREE: METHODOLOGY 14
3.0 Introduction 14
3.1 Research Design 14
3.2 Study Population 15
3.3 Sampling Design 15
3.4 Sample Size and composition 15
3.5 Sources of data 16
3.5.1 Primary data 16
3.5.2 Secondary data 16
3.6 Data collection Instruments 16
3.6.1 Questionnaire 16
3.6.2 Interview Method 17
3.7 QualityControl 17
3.8 Data collection procedure 17
3.9 Data Presentation and analysis 17
3. 10 Limitations 18
CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND INTERPRETATION
19
V
4.0 Introduction .19
4.1 Presentation of findings 19
4.1.1 Background information 19
4.1.2 Eligibility policy and Servicing of Small Loans in PML 22
4.1.2 Interest rates policy and Servicing of Small Loans in PML 24
4,1.3 Risk Management policy and Servicing of Small Loans in PML 26
CHAPTER 1’I\7E: DISCUSS1ONS, SUi~~MAi~Y, CONCLU’S SIONS AND
RECOMMENDATIONS 29
5.1 Discussions of the findings 29
5.2 Summary of findings 30
5.3 Conclusions 32
5.4 Recommendations 32
5.5 Areas for further research 33
REFERENCES 34
APPENDIX I: WORK PLAN 40
APPENDIX II: BUDGET 41
APPENDIX III: QUESTIONXAIRES 42
ABSTRACT This study was on the effect of payback policy on servicing of small loans with the case study of Pride Microfinance Limited (PML), Kampala. The objectives of the study were to; examine the effect of Eligibility Policy on the Servicing of Small Loans; explore the effect of Interest Rate Policy on the Servicing of Small Loans; and ascertain the effect of Risk Management Policy on the Servicing of Small Loans in PML, Kampala. The review of the literature revealed three payback policies in microfinance institutions (MFIs) and their effect on the servicing of small loans. The literature was reviewed in accordance to the stated objecti~’es. In order to achieve the objectives, both qualitative and quantitative methods were used in this study. The study used probability sampling and most specifically stratified sampling method. Data was got from both primary ai~d secondary sources. Primary data was collected using questionnaires that were administered to a sample size of 54 staff and 19 customers of PML. lnterviews were also carried out by the researcher on top managers and some cu~tomers of PML. Secondary data was gathered from; publications, internet, and unpublished documents. Data was analysed and presented both in tables and graphical forms. The findings of the study revealed that, PML had payback policies of eligibility, interest rates and risk management in place. The eligibility policy and risk management had a more positive significant effect on the servicing of small loans in PML than Interest rates policy. The positive effects were harnessed mostly due to the level of implementation of these policies although challenges were seen in the areas such as: poor attendance of meetings by clients; lack of consultation of stakeholders by PML while setting interest rates charges; limited diversification of investment by PML; and ineffectiveness of the risk management policy in ensuring that they are neither avoiding risk nor ignoring risks. It was recommended in the study that; clients regularly attend meetings; PML consults all stakeholders while fixing interest rate charges; PML diversifies her investrnepts and PML reviews regularly her payback policies.
