Effects of credit management on financial performance of saccos in Uganda. A case study of kyaka ii farmers sacco in kyegegwa district
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Date
2026-04-10
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Uganda Christian University
Abstract
Saving and Credit Cooperative Societies (SACCOs) are important in advancing financial inclusion and economic empowerment in rural, agricultural and refugee hosting districts in Uganda. However, continuous issues like liquidity shortages, on-performing loans and limited profitability arise from poor credit management practices. This study investigated the effects of credit management specifically debt appraisal, risk monitoring and collateral security on the financial performance of Kyaka II Farmers SACCO in Kyegegwa District, Uganda. Employing a descriptive longitudinal survey design, the research targeted 63 respondents including managers, board members, finance officers, auditors, credit officers and members. A sample of 54 respondents was selected using Yamane’s (1967) formula, with purposive sampling. Data was collected through structured questionnaires on a five point Likert scale and semi structured interviews. Financial performance was measured through return on equity, return on assets and net profit margin. Findings revealed general moderate credit management practices. Collateral security exhibited the strongest positive impact enhancing recovery rates and repayment discipline. Debt appraisal showed significant positive effects improving portfolio quality through rigorous borrower assessments. Risk monitoring also showed a relatively positive impact. The study concludes that prioritizing collateral security and debt appraisal boosts SACCO sustainability in vulnerable contexts. It contributes to insights of microfinance literature and recommends policy enhancement for SACCO management and development partners to foster training and guidelines thus reducing default risks and increasing financial outcomes.
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Undergraduate