What Are the Best Practices for Evaluating Microfinance Institutions in Gulu?

What are the best practices in microfinance evaluation? This research reveals that while microfinance institutions in Gulu District utilize Balanced Scorecard principles, significant gaps in learning and innovation hinder optimal performance, highlighting critical areas for improvement and reshaping understanding in the field.

CHAPTER 4 – DATA PRESENTATION, ANALYSIS & INTERPRETATION

4.1 – Introduction

This chapter presents and gives analyses and interpretations of data obtained during the study. The chapter starts with a section on background information about the customers, followed by background information about the employees. The customers’ background information gives the socio-economic and demographic data of the respondents, such as gender, educational level, age, period the customers have been with the MFIs, types of loans received, ability to pay back the loans, satisfaction level, their views on the improvement of the MFIs, impacts of the MFIs on their livelihood, and alternative financial services obtained.

Whereas, the employees’ background information presents data related to the number of employees in the MFIs, their educational and positions of responsibilities in the MFIs, and then the periods they have been with the MFIs.

Data obtained related to the research objectives for the study, were used to answer the research questions, which were delineated in Section 1.5. The findings are reported in this chapter under section 4.5, section 4.6, section 4.7 and section 4.8.

4.2 – Customers background information

The researcher sought to get responses from customers, with specific intentions of getting their background information in terms of gender, educational levels, ages, and membership periods with the MFIs. The types of loans accessed, their ability to pay back the loans on time, their satisfaction levels, their suggestions on the kind of improvements of services, impacts of the MFI on their incomes & livelihood, and whether they were getting such services from other sources other than the ones they were registered into.

In this study, the number of customers, which were targeted, was eighty (80), whereby, ten (10) respondents were expected from each of the eight selected MFIs. However, the researcher was able to obtain data from fifty-three (53) respondents only. The result is summarised in Table 4.

Table 4 – Customer responses from the selected MFIs

Source: Research data August 2007

The table shows that, on average, there was a moderately high response rate of 66.3% from the respondents. Then, taking each MFI one by one, the results showed that Parapul SACCO Ltd., Makonya Co. Ltd., and Gulu Municipality SACCO each had a 90.0% response, whereas Gulu Cooperative Savings & Credit Society had 70.0% response. Then Gulu catechist SACCO had a 60.0% response, Gulu district elders Cooperative Society had 50.0% response, and lastly, Lacor workers Cooperative society and Gulu Village SACCO each had 40.0% response.

According to the results, customers of Parapul Co. Ltd., Makonya Co. Ltd., and Gulu Municipality SACCO were quite responsive in filling the questionnaires, whereas customers in the remaining MFIs were not very responsive. The rates of responses from different MFIs depended on a number of factors, including willingness by the customers to participate and in some cases, influences from managements of the respective MFIs. Others shied away from the exercise.

4.2.1 – Gender of customers

The questionnaire forms were equally distributed to both males and females in each of the selected MFIs, to take care of gender balance. However, responses differed as shown from the results represented in Table 5 and Figure 5.

According to the figure and table, 64.2% of the respondents were males, and 35.8% were females. The difference in the percentages came because; some respondents did not give back their questionnaires, and the majority of those were females, which indicated that, the males were more responsive than the females. Also, some of the MFIs were dominated by males only; a typical example is Gulu catechist SACCO. Other factors, which could have caused the difference, are the management influences, since some managers were not very cooperative during the research, and their actions restricted the number of respondents.

Figure 5 – Customer responses by Gender

[12_best-practices-for-evaluating-microfinance-institutions_1]

Source: Research data August 2007

Table 5 – Customer responses by Gender

Source: Research data August 2007

4.2.2 – Educational level

The researcher also collected data on educational levels of the customers, and the results presented in Figure 6.

The figure shows a general view on the educational levels of all the respondents in the selected MFIs. According to the figure, 52.8% of the respondents had secondary education, 22.6% had primary education, 17.0% had certificates, 5.7% had university degrees, and 1.9% had diplomas.

The very high percentage of respondents with secondary education followed by those with primary level of education could probably mean that, either those respondents were school dropouts seeking financial support for starting businesses, or students still in school and were seeking financial support for school fees or even starting businesses. Those who obtained certificates, diplomas, or university degrees were few, probably because most people who have attained higher education tend not to join MFIs as customers, but in most cases as employees or shareholders or owners of the MFIs.

Figure 6 – Educational levels of the customers for the MFIs

[12_best-practices-for-evaluating-microfinance-institutions_2]

Source: Research data August 2007

4.2.3 – Age of the customers

The result of the data collected on ages of the customers, was presented in Figure 7.

Figure 7 – Age in years

[12_best-practices-for-evaluating-microfinance-institutions_3]

Source: Research data August 2007

According to the result, 50.9% of the respondents were in the age range of 21-35, 28.3% were in the range of 36-45, 13.2% were in the age range of 46-55, and 3.8% of the respondents were either in the age range of 0-20 or over 55. The results indicate that most of the customer respondents were young people, within the economically active ages between 21 and 45 years.

A cross tabulation analysis was done between the ages and the educational levels of the respondents, and the results are presented in Table 6.

Table 6 – Educational level & Age in Cross tabulation

Source: Research data August 2007

The result indicate that most of the customers who attained primary education were between the ages of 21 and 45, and those who attained secondary education were predominant in the age range of 21 and 35 years. This confirms the earlier assumption that these groups were either school dropouts or continuing students seeking financial support. Those who attained diplomas and University degrees were seen to be predominant in the age range of 21 and 35 years. These groups were most likely young graduates who were unemployed, and were looking for financial support.

4.2.4 – Period for the Customers with the MFIs

The findings on the periods the customers had been with the MFIs are presented in Figure 8.

Figure 8 – Periods of being with the MFIs

[12_best-practices-for-evaluating-microfinance-institutions_4]

Source: Research data August 2007

The highest percentage of the customers, 39.6% had been with the MFIs for periods between 1 to 2 years, those who had been with the MFIs for less than 1 year accounted for 34.0% and 26.4% of the customers were with the MFIs for more than 2 years. The figure explains the fact that most of the MFIs had just been established and therefore, the customers had not been with them for long.

However, a few of them had been in existence for more than two years. The periods the customers have been with the MFIs, are significant factors in determining the reliability of the information, provided by the respondents. According to the researcher, the longer the periods the respondents had been with the MFIs, the more reliable were their information given, in relation to the organisations.

Their levels of satisfactions with the services provided were high and, had good customer loyalty to the MFIs. A cross tabulation analysis was done between the age ranges and the length of periods the respondents had been with the MFIs, and was presented in Table 7. The results indicate that those in the age range of 21-35 years were predominantly found in all the three categories of the periods the respondents had been with the MFIs.

Table 7 – Age in years & Periods with the MFIs in years

Source: Research data August 2007

4.2.5 – Type of loans received by customers

The researcher also collected data on the type of loans received by customers, and the result presented in Figure 9.

Figure 9 – Type of loans received by customers

[12_best-practices-for-evaluating-microfinance-institutions_5]Source: Research data August 2007

According to the figure, 50.9% of the respondents obtained business loans, 26.4% got cash loan, which could not necessarily be for business, 11.3% went for school fees loans, and 5.7% went for motorcycles loans. Other loans not specified were 4% and those who did not get the loans were 2%. The high percentage of respondents, who got business loans, joined the MFIs with the main purpose of getting some capital to start income generating activities.

Frequently Asked Questions

What is the Balanced Scorecard framework used for in microfinance evaluation?

The Balanced Scorecard framework is used for performance measurement through its blend of financial and non-financial metrics.

How many respondents participated in the study of microfinance institutions in Gulu?

A total of fifty-three (53) respondents participated in the study.

What were some weaknesses identified in the performance of microfinance institutions?

Weaknesses were identified in learning, growth, and innovation perspectives, affecting overall service delivery and performance levels.