Evaluation of Credit Management Practices in Zimbabwe’s microfinance: A Case study of KCI Microfinance

Author

Takawira, Bruce

Title

Evaluation of Credit Management Practices in Zimbabwe’s microfinance: A Case study of KCI Microfinance

Abstract

The main purpose of this research was to evaluate the credit management practices of microfinances in Zimbabwe. Microfinance institutions (MFIs) play an important role in providing access to financial services for low-income households and small businesses. However, MFIs are also exposed to credit risks, which can lead to financial losses. Effective credit management practices are essential for mitigating these risks and ensuring the long-term sustainability of MFIs. In order to achieve the above, the study adopted a descriptive research design in order to obtain the data that is necessary, which in essence facilitated the collection of the private data as a way of getting into the research objectives. The population under study was 98 staff of KCI microfinance and a sample size of 40 were used. The collection of the data was done using structured questionnaires that were tested using Cronbach’s Alpha in order to ensure that there was reliability as well as validity. These questionnaires were distributed using Google form. The coding of the data was done with the use of Microsoft Excel as well as Statistical Package for Social Sciences (SPSS) in order to generate the descriptive statistics for instance frequencies and percentages. The study finds that sound lending policies and procedures helps to ensure that loans are made to borrowers who are likely to repay on time, effective credit risk assessment, consistent loan monitoring and follow-up, and credit recovery strategies. Effective credit management practices allow MFIs to improve its profitability due reduction default of the borrower. The study concludes that effective credit management practices are essential for mitigating risks and ensuring the long-term sustainability of MFIs. The study findings can be used by MFIs to improve their credit management practices and reduce their exposure to credit risks.

Date

June 2023

Publisher

BUSE

Keywords

Credit management

Microfinance

Credit recovery strategies

Supervisor

N/A