TABLE OF CONTENTS
DECLARATION ..... ................. ....... ............ ........... ...... ................. ........ ....... ........ ... i
APPROVAL ... .. ..................................................... ...... ........... ... ... ... .................. .. .. ii
DEDICATION .... ... .... ... .... .............................. ..... ......................................... ... ...... iii
ACKNOWLEDGEMENTS ............................ .... .... ................................................... iv
LIST OF ABBREVIATION .......... ................................................. .... ............ ..... ...... v
TABLE OF CONTENTS .......... ............................................ .... ............. ...... .......... ... vi
ABSTRACT ......... ........... ................................................................. ........ ...... ...... ... x
CHAPTER ONE .......................................... ............ ... ........................................... l
1.0 Introduction ......... ...... ... .................................................. ........ ........................... l
1.1 Overview ..... .................. ............ .... ..... ..... ......................... .... ..... .... .... ......... ...... l
1.2 Backgruond of the Study ... ..... ..... .................... ................................. .. ................... l
1.3 Statement of the Problem .... .. .... ........................................................................... 2
1.4 Purpose of the Study .... .......... ... .. .. ......................... .. ............ .............. .............. ... 3
1.5 Specific Objectives of the Study ............................................... ............................. 3
1.6 Research Questions ...................................... .... .. ... ................ ............................. 3
1.7 Scope of the Study .................................. ..... ..... ... ...................................... ........ 3
1.8 Significance/ Rational of the Study ......... .... ....... ............ .... ...................... .......... ..... 4
1.9 Conceptual Framework .......... ... ... ......... ............ .. .... ... ..... ...... ....................... ... ..... 5
vi
CHAPTER TWO .................................. .................. ... ........................................... 7
Literature Review .......................................................... ...... ... ............... ................. 7
2.0 Introduction ................... ... .... ..... ......................... .................... ..... .... ................. 7
2.1 Overview ......................................................................................................... 7
2.2 Micro Finance Credit. ... ................. .. ..................... .......... .... .. ....... ...................... 7
2.2.1 Credit Risk .......... ............................... ............................................................ 8
2.3 Credit Management ... ... ...................... ................................................................ 8
2.4 Credit Policies ..... ......... ............... ............... ....................................................... 9
2.4.1 Credit Terms ..................... .................................................. ........... ...... .......... 9
2.4.2 Credit Standards .............................................................................................. 9
2.4.3 Collection Procedures Efforts ............... ...... ............. .............. ...... ...................... 10
2.5 MFIS Credit Management Policy Elements ................................ ..... ........... ...... ....... 10
2.5 Types of Credit Exetended to Small Scale Business by MFIS ...................................... 12
2.5 .1 Other Services or Products of MFis ..... ..... ...... .. ................................................... 13
2.5.2 Non-Financial services ofMFI'S ............. ....................................................... .... 14
2.6 Performance of Small Scale Business Performance Indicators ......... .... ......................... 14
2.7 Relationship between microfinance credit and performance of small scale businesses ........ 15
2. 7 .1 Contrasting relationship Between Micro finance .............................................. ....... 16
CHAPTER THREE ....................................................... ................................ ....... 18
METHODOLOGY ................................................................................................. 18
vii
3.0 Introduction ............................ ....... .................................................................. 18
3.1 Overview ...................................... ............... ................................. ......... ......... 18
3.2 The Study Area ..... ..... ................................. ..... ............ .... ............................... 18
3 .2 Research design ................................................................................................ 18
3.2.1 Survey Population ....................................................... .................................... 18
3.2.2 Sampling Design/Procedure ................. ..................................................... ........ 19
3.4 Methods and Instruments of Data Collection ..................................... .................. ... 20
3.4.1 Administered questionnaires ...... .. ................................. ................................... 20
3.4.2 Interview Guides .................... ...... ......................................................... ........ 20
3.4.3 Face to face interview ..... .. ................................................................... .......... .. 21
3.4.4 Quality assurance ............. .... ........................................ ....... ... ..... ................... 21
3.5 Data Collection ...... ...... .. ... ................................................................................ 21
3.5.1 Secondary Data ...... .. ... .. ... .. ................................. ........... ............................... 22
3.5.2 Documentation ................................... ..... ... .. .............. ... .................... ............ 22
3.6 Data Processing .......................... ..... .................................................. ....... ....... 22
3.6.1 Data editing ............. .... ............... ..... ............................................................. 22
3.7 Data Analysis ............................................... ............................ .......... ............. 22
3.7.1 Qualitative Analysis .............................. ...................... ............ ....................... 22
3.8limitation of the Study ................................................................. .... .... ......... ...... 22
3.9 Organization of the Research Report ................ .. ................................................... 23
CHAPTER FOUR ....................................................... ............................... : ........ 24
viii
4.0 Introduction ..................................................................... .. ............ ............. .... 24
4.1 Data presentation and Analysis of the Study ...................... .. ................................... 24
4.2 Analysis on tue Types of Credit MFIS Extend to SMES ... ......................................... 24
4.3 Finding on Credit Management Policies ................... ........... ............................. ..... 25
4.4 Findings on The services I products of MFl S .......................................... .. .............. 27
4.5 Findings on Performance of Small SMES .............. ........................................ ........ 28
4.6 Microfinance Credit Analysis .................................................................. ............ 29
4. 7 Findings on the Relationship between mfi Credit and Performance of SMES .................. 29
4.8 MFI'S Analysis ....................................................................... ........................ 29
CHAPTER FIVE .................................................. ... .............. ............................. 30
5.0 Summary of Findings, Conclusion and Recommendation .......................................... 30
5. I Introduction ............................... ..... ...................... .................... ........... .......... . 30
5.2 Summary ofFindings ...................................................... .................................. 30
5.3 Conclusion .......................................................................................... ........... 30
5.4 Reco1runendations ........................................................ : ..... ............................... 31
5.5 Areas of Further Research ................................................................................... 31
REFERENCES ........................................ .................................... ....... ................. 32
APPENDIX 1 ... ................................................................................................... 34
QUESTIONNAIRE ................... .......................... .................... ....................
ABSTRACT The research aimed at finding out more about two variables, that is, Microfinance Credit and Performance of Medium and Small scale Businesses where the first objective of the study was to examine the types of credit that MFI' S extend to SMEs. In this circumstance the researcher established that MFI's basically have three types of credit, the consumption loan, short-term loans, long-term loans which all incorporate the poverty lending approach and the financial system approach. SME's performance is generally measured in terms of financial sustainability which is mainly achieved only when the returns on equity in SME's exceed the opportunity cost of the funds. Also quality of services access to financial services and savings mobilization measures performance. However, there is need for a proper implementation of credit management policies in order to ensure optimum utilization of credit to enhance better performance of SME's through credit. Generally, there is a significant relationship that exists between MFI credit and SME's performance which is mainly due to the sound MFI credit management policies that enhance better credit performance like, credit standard, credit terms, loan amount and collection procedures. Among the recommendation and suggestions made were; training of staff advising SME's owner and also recruiting credit expertise personnel for better credit management.
