Collection policy, repayment performance, delinquency management and financial sustainability of microfinance institutions in Jinja District, Uganda.

Abstract

The purpose of the study was to examine the relationship between the collection policy, the repayment performance, delinquency management, and financial sustainability of microfinance institutions in Jinja District. In order to understand how the variables relate to each other, theoretical literature of micro financing, the institutions, their policies, procedures and more specifically the variables were reviewed. The study was cross sectional and used a sample taken from 3 Tier 3 and 49 Tier 4 Microfinance Institutions in Jinja district. Data was analysed using a SPSS correlation analysis, descriptive analysis, series of regression and other analytical tools. The findings indicated that collection policy is positively related to the repayment performance, delinquency management and therefore financial sustainability of the MFI. The study recommends that the collection policy should be prioritised, and well communicated to the employees and to the clients by the MFIs management to ensure that they understand their obligations and the clients pay their dues as agreed. The clients should be properly monitored to ensure that their loan obligations are met, for improved performance. The MFIs should widen their portfolio to reduce their risks and for better sustainability.