Dropout rates amongst women groups participating in micro credit facilities in Soroti Municipality

Abstract

The purpose of this study was to determine the factors influencing dropout rates amongst women groups participating in micro credit facilities in Soroti Municipality a case study of Finance Trust. The study adopted a case study design where both qualitative and quantitative techniques of data collection and analysis were employed. The study population comprised of women groups that had ever accessed financial services from Finance Trust Soroti branch but eventually dropped out. Respondents were drawn from all the three divisions that constitute Soroti Municipality and simple random sampling was used for getting respondents whereas purposive sampling was used for identifying key respondents.

In regards to access to financial services from the institution, the respondents decried of long bureaucratic procedures, lack of collateral security as a requirement for obtaining a loan and in some instances, the credit officers asked for informal payments in order to fasten the process. All these compounded inevitably made it had for clients to get loans in time. The factors influencing dropout rates were threefold; institutional, intervening and the socioeconomic background of the respondents. Amongst the socioeconomic variables, they included individual’s level of education, occupation and level of income earned per month. The institutional factors that influenced dropout rates included unfriendly terms and conditions for acquisition of the loans, strict recovery methods and short payment periods. The intervening factors that influenced dropout rates amongst women included the size of households especially the number of children, ill health and natural disasters. There was significant association amongst the following independent variables (level of education, occupation, level of income, natural disasters, number of children and marital status) with the dependent variable (ability to pay the loan) which in turn led to dropouts. The study recommended for review of approaches for lending and loan recovery from a “stick to carrot” driven approaches where credit officers perceive group members as clients rather than beneficiaries. The study also recommended for a more flexible system that allows the clients to choose and acquire loans as individuals as opposed to group lending. Adequate education on loan handling and management and introduction of insurance systems were also recommended.