Drop-Outs Amongst Ugandan MFIs
Wright, G., Mutesasira, L, Sempangi, H., Hulme, D. & Rutherford, S.
Publication Date: 1999
Published by: MicroSave
Document Type: Paper
Why are microfinance institutions in Uganda suffering high levels of drop-out and how can this be addressed?
MFIs in Uganda have excessively high (often above 25% p.a.) levels of drop outs compared to most African, Latin American and West African MFIs. Study on qualitative research undertaken with management, credit officers, clients and ex- clients of PRIDE, FINCA, Faula, FOCCAs and Centenary Rural Development Bank in both rural and urban areas
Suggests main reasons for drop-outs are related to socioeconomic and rural/urban status
Finds that:- relatively well-off urban drop-outs leave to seek higher loans and to avoid ?locked-in? compulsory savings
- not-so-poor drop outs are forced out as weekly repayment size mounts. In rural areas, keeping up with a rigid loan system is difficult given seasonal variations
- poorer drop outs pushed out as have problems repaying loan. Also more prone to drop-outing through illness and death.
Other reasons include:- system of attached savings unappealing
- decisions and leadership of credit officers unsatisfactory
No significant gender differentiation was found amongst drop outs
Recommendations are presented on how MFIs can design products more towards their clients need in the future
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