What are the future perspectives of microfinance in Gulu District? This research reveals that while microfinance institutions utilize Balanced Scorecard principles, significant gaps in learning and innovation hinder their performance, underscoring a critical need for strategic enhancements in service delivery.
CHAPTER 3 – RESEARCH METHODOLOGY
3.1 – Background
This chapter starts with a description of the chosen method and its implications for this research.
The research design, area of study, study population, sampling procedure, and sample size, are discussed, followed by descriptions of the processes that were used in data collection, and analysis.
The chapter concludes with a discussion on the limitations of the study.
3.2 – Research Design
The research design is a plan, structure, and strategy of investigation made to answer the research questions.
The researcher therefore used a descriptive and analytical survey research design methods in carrying out the study.
The descriptive design involved examining the four perspectives of the balanced scorecard in relation to the selected MFIs in Gulu district, and the analytical design was used in the evaluation of the facts gathered.
This approach was preferred because of the nature of the study, which depended on the opinions of the individual employees and the clients of the MFIs, and the researcher felt there was no other better design than the ones used.
3.3 – Study Area
The research was conducted at the selected MFIs located in Gulu Municipality and within the radius of about 2 km from the centre of the town.
This was done because most of the MFIs were concentrated within the municipality due to insecurity.
People still had fears in setting up such institutions in the villages.
In addition, at the time of the study, most people were still in the camps concentrated either close to the roadside, or/and near the town or trading centres.
The researcher made an evaluation of the performance of the MFIs operating in the district, using the BSC approach.
Although BSC is a new concept, and many organisations including the microfinance sector are, unknowingly practicing or not practicing, the researcher examined the extent of the use of the concept, by assessing the levels of organisational performance and service delivery, in the selected MFIs.
3.4 – Study Population and Sample Size
The target population for this study was all the customers and employees of all the MFIs operating in Gulu district.
According to the Acholi private sector report, of 2006, there were 21 Microfinance Institutions operating in Gulu district, as represented in Appendix D, Figure 28.
Therefore, all the staffs and all the customers of those MFIs constituted the study population.
For each MFI, the researcher took into account a sample of five (5) employees, and ten (10) customers for the study.
By considering all the MFIs, in the district, the sample population was expected to be 315 respondents.
3.5 – Sampling Procedure
Sampling procedure explains how a particular sample size is obtained.
In determining the sample size for the study, the researcher used the following non-probability sampling methods.
Purposive or Judgemental sampling method was used in determining the characteristics of the respondents required for the research, namely employees and the customers, with relevant experience and knowledge about the selected MFIs.
Quota sampling method was used in determining the number of employees and customers required for the study.
The aim was to obtain a sample that was representative of the population.
Using this method, the researcher set quotas for the employees in each of the selected MFI at five (5), since each MFI in a normal setup, is expected to have a supervisor, a loan officer, an account assistant, and a secretary.
Again, in each of the MFI, the quota for the customers in each of the selected MFI was set to ten (10).
Since the researcher had planned to get responses from at least ten (10) customers from each of the selected MFI.
The sample size for the study was then calculated as follows.
Sample Size = Number of MFIs in Gulu (21) * Sample of respondents (5+10) = 315.
The researcher also used convenience-sampling method in getting, as much as possible, the right quotas for the respondents in each of the selected MFIs.
However, getting the exact quotas for the respondents was not possible due to various circumstances, as explained in the limitation section.
From the total number of MFIs of 21 in the district, some of them did not have any physical location although they were in record that they existed.
In this case, the researcher used the following formula in determining an appropriate sample size for the study, which was assumed the most representative of all the MFIs in the district.
The formula, by Taro Yamane (Ram Ahuja, 2005), is given as,
Where,
N = total population, e = error or confidence level and n = sample size.
By applying the formula, and taking the confidence level as 95% or error (e) as 0.05, and the sample population, N as 315, the actual sample size, n = 315/ (1 + 315*0.05*0.05) = 176.22(180), i.e. the appropriate sample size for the study was calculated to be about 180.
Therefore, since the number of respondents for each MFI were less than 100, all the 15 respondents for each MFI, were considered for the study and the number of selected MFIs for the study was then found to be 180/15 = 12.
However, during the research, only eight (8) out of the calculated twelve (12) MFIs could be reached.
In addition, not all the 15 respondents from each of the MFI could be engaged in filling the questionnaires.
So instead of getting a sample of 15*8 = 120, the researcher was able to get responses from only 74 respondents, an average of 62% response rate.
Table 2 indicates the number of questionnaires distributed and returned and the response rates for the respondents in each of the eight MFIs.
Table 2 – Distribution of respondents during the study
| Table 2 – Distribution of respondents during the study | |||
|---|---|---|---|
| MFI Name | Questionnaires Distributed | Questionnaires Returned | Response Rate |
| Gulu SACCO | 15 | 9 | 60% |
| Parapul SACCO | 15 | 12 | 80% |
| Makonya Co. Ltd | 15 | 12 | 80% |
| Gulu District Elders SACCO | 15 | 6 | 40% |
| Lacor workers SACCO | 15 | 7 | 47% |
| Gulu catechist SACCO | 15 | 9 | 60% |
| Gulu Municipality SACCO | 15 | 11 | 73% |
| Gulu Village SACCO | 15 | 8 | 53% |
Source: Research data August 2007
Fifteen (15) questionnaire forms were distributed to each of the eight selected MFIs.
Duly completed questionnaire forms were returned as shown.
Gulu SACCO returned nine with a response rate of 60%.
Parapul SACCO returned 12 with a response rate of 80%.
Makonya Co. Ltd returned 12 with a response rate of 80%.
Gulu District Elders SACCO returned six with a response rate of 40%.
Lacor workers SACCO returned seven with a response rate of 47%.
Gulu catechist SACCO returned nine with a response rate of 60%.
Gulu Municipality SACCO returned 11 with a response rate of 73%, and Gulu Village SACCO returned eight with a response rate of 53%.
According to Baddie and Mounton (2001), a response rate of more than 70% is considered very good.
However, in this study, the average response rate was 62%, which is comparatively fair.
Frequently Asked Questions
What research methods were used to evaluate microfinance institutions in Gulu?
The study employed both descriptive and analytical survey research design methods.
What was the sample size for the study on microfinance institutions in Gulu?
The sample size for the study was calculated to be 315 respondents, consisting of employees and customers from the MFIs.
What limitations were identified in the performance of microfinance institutions in Gulu?
Weaknesses were identified in learning, growth, and innovation perspectives, affecting overall service delivery and performance levels.