The performance of women group guaranteed loans promoted by MFI on women welfare in Zirobwe sub county:

Abstract

In Uganda, like in many developing countries, empowering women through micro-credit finance is viewed as a means of reducing women poverty, empowering them, reducing their vulnerability and improving their well-being. One way of empowering women has been through promotion of women group guaranteed loans (WGGL) by development partners such as BRAC, which enable client identification, saves time, no collateral and eases access to loans. Despite women group guaranteed loans, women access to financial services is still low about 20%. In addition, even those who have accessed have not assessed the impact the loan product has on women’s welfare. This study aimed at assessing empirically the performance of women guaranteed loan, with a focus on evaluating women group lending methodologies on household welfare, examining perceptions and attitudes of women towards WGGL microfinance services and determining the factors that influence women’s willingness to pay back WGGL easily. A random sample of 75 respondents consisted of 40 women guaranteed clients and the rest being women guaranteed loan non-clients were randomly selected. Descriptive statistics were used to display the findings as well as a multiple linear regression was used in analyzing the factors that influence willingness to pay back women guaranteed loans. The results show that majority (98%) of the surveyed respondents were willing to pay back women guaranteed loans; nevertheless majority of clients reported that the loan duration period was too short. Further, this study revealed that access to women guaranteed loans had a great impact on women’s welfare especially asset accumulation and food security status. The results further show that statistically ability and willingness to pay back women guaranteed loan product is significantly and positively influenced by family income, experience in business, and frequency of credit officer visits in a month, and frequency of trainings conducted in a year. However, willingness to payback women guaranteed loans is significantly negatively influenced by the number of people living in the household, total annual household expenses, loan owed to other credit providers and distance between residence and bank. Overall, the respondents were willing to pay back loans and thus there is need to promote and scale up access to women guaranteed loans in the communities at an interest rate that is affordable. The clients were confortable if interest rates were 6.5 % per annum at the same time if the loan grace period could be 1 month. Therefore interest and the duration of the loan should be given much focus as these affect loan recovery. Lastly, the socio economic characteristics like education, number of trainings and visits to clients should be given priority so as to improve recovery and proper utilization of women guaranteed loan