Analysis of loan performance in Uganda’s financial sector causes of loan defaults (non-performing loans): A case study of Real People Financial Services (U) limited

Abstract

This study aimed at analyzing the performance of Uganda’s financial sector to find out the causes of loan default. To undertake the study Real People financial services Ltd was used as a case study. A total of 200 clients and 50 staffs were randomly selected. Two sets of questionnaires were constructed, one set for the clients and another for the staff. The responses of the participants were analyzed using the statistical package for social sciences (SPSS) to come up with conclusions and recommendations. The study findings revealed that loan default is mainly caused by charging high interest, increase in business operating costs, political climate, poor risk assessment and poor loan monitoring. The study recommended the introduction of close monitoring, reduction in interest rates and diversification of the markets.