Loan recovery techniques and financial performance of SACCOs: a case study of Sebei Farmers' SACCO
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Date
2026-05-08
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Uganda Christian University
Abstract
This study examined the effect of loan recovery techniques on the financial performance of Sebei Farmers' SACCO in Kapchorwa District, Uganda. The study was guided by three specific objectives: to establish the effect of proactive reminders on financial performance, to establish the effect of loan rescheduling on financial performance, and to assess the effect of legal action on financial performance. A cross-sectional survey design with a quantitative approach was employed. The target population consisted of 3,525 individuals (3,500 members and 25 staff), from which a sample of 384 respondents was selected using Yamane's formula. Stratified sampling was used for staff (purposive, n=25) and members (simple random, n=359). A structured questionnaire measured loan recovery techniques and perceived financial performance on a five-point Likert scale. Data were analyzed using descriptive statistics (frequencies, percentages, means, standard deviations) and inferential statistics (Pearson correlation and multiple regression) via SPSS version 26. The response rate was 76 percent. The study found that proactive reminders had the strongest positive correlation with financial performance (r = 0.412, p < 0.01), followed by loan rescheduling (r = 0.384, p < 0.01), with legal action having the weakest but still significant correlation (r = 0.156, p < 0.01). The regression model was significant (F = 84.294, p < 0.001), with the three techniques explaining 46.8 percent of the variation in financial performance (R Square = 0.468). Proactive reminders had the largest contribution (β = 0.324, p < 0.001), followed by loan rescheduling (β = 0.286, p < 0.001), and legal action (β = 0.102, p < 0.05). The study concluded that proactive reminders are the most effective loan recovery technique, followed by loan rescheduling, while legal action is least effective due to cost concerns. The
SACCO should prioritize proactive reminders, improve rescheduling policies to consider seasonal agricultural income patterns, and reserve legal action for deliberate default cases only
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Undergraduate