Can microfinance performance evaluation reveal hidden strengths and weaknesses? This study uncovers how Gulu District’s microfinance institutions utilize the Balanced Scorecard framework, highlighting critical insights that could reshape service delivery and performance measurement in the sector.
4.2.6 – Customers ability to pay the loans on time
The result for the data collected to find out whether the customers had the ability to pay back the loans on time is presented in Figure 10. The result shows that, 88.7% of the respondents were able to pay the loans on time, whereas 11.3% were not able to pay the loans on time.
Figure 10 – Ability to pay the loan on time
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Source: Research data August 2007
A cross tabulation was also done, to examine further the type of loans customers were able to pay promptly and the ability of the customers to pay the loans on time. The result was presented in Table 8. The result shows that mainly the business loans and cash loans were more readily paid back compared to other types of loans.
Table 8 – Type of loan received & Ability to pay the loan on time
| Table 8 – Type of loan received & Ability to pay the loan on time | |
|---|---|
| Parameter/Criteria | Description/Value |
| Business loans | More readily paid back |
| Cash loans | More readily paid back |
| Other loan types | Less readily paid back |
Source: Research data August 2007
The highest number of respondents who got business loans, and were able to pay the loans on time, were a good indicator that the customers were benefiting and making good use of the loans given to them.
In this case, they were able to sustain themselves through generated incomes from their businesses, resulting to improved standards of living and levels of poverty in their households. This result may be interpreted as a sign of good social and economic performance of the MFIs.
4.2.7 – Customers Satisfaction survey
A survey on customers’ satisfaction with the products or services was presented in Figure 11.
Figure 11 – Satisfaction with the products or services
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Source: Research data August 2007
The result showed that 83.0% of the respondents were satisfied with the products or services offered by the MFIs and 17.0% of them were not satisfied. In addition to this survey, the customers were also asked to give their opinions on whether they were satisfied with the kinds of treatments they got from the MFIs. The result was presented in Figure 12.
Figure 12 – Satisfaction with the treatment
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Source: Research data August 2007
The result showed that 90.6% of the respondents were satisfied with the treatment they got from the MFIs although 9.4% were not satisfied.
Customer satisfaction is one of the key performance indicators in the customer perspective of the balanced scorecard. Also in the strategy mapping of the BSC, high level of customer satisfaction is due to an effective and efficient internal business processes, which in turn comes because of effective and efficient learning, innovations, and internal growth of the organisation.
4.2.8 – Customers views on improvement of MFI Services
The result on the data collected concerning the views of the respondents on how they would want the MFIs to improve their services, processes, procedures, and products, was presented in Table 9.
Table 9 – Data on how MFIs should improve their services
| Table 9 – Data on how MFIs should improve their services | |
|---|---|
| Parameter/Criteria | Description/Value |
| Loan costs and repayment | 52.8% of respondents indicated high costs and difficult repayment terms |
| Service improvements | 26.4% requested better technology and more staff |
| Public awareness | 9.4% suggested advertisements and workshops |
| No response | 5.7% did not respond |
Source: Research data August 2007
According to the table, 52.8% of the respondents indicated that the costs of getting loans was high because of the registration fees, and it was not easy to pay back the loans due to high interest rates. Some in the group requested that the repayment periods be extended and there should be no delays whenever they applied for the loans.
In addition, the amount of loans applied for should always be given in full. Then, 26.4% of the respondents indicated that the MFIs should improve on their services, by installing more computers, introduce ATMs, or increase the number of tellers, in order to ease congestions in the MFI offices, and speed up transaction processes.
Within the same group, some mentioned that the MFIs should introduce new products to suit market demands, and they should always collaborate with other more powerful financial institutions and lobby for funds to finance the SACCOs or the MFIs. Another 9.4% of the respondents indicated that giving public awareness through advertisements, talk shows and workshops, would improve on the services of the MFIs.
In addition, the services should cover rural areas as well. Then lastly, 5.7% of the respondents did not respond to this part of the questionnaires.
4.2.9 – Impact of the MFIs on Customers’ income & Livelihood
The data collected for assessing the impact of MFIs on customers’ income and livelihood are presented in Table 10.
Table 10 – Impact on Customers’ income & living standard
| Table 10 – Impact on Customers’ income & living standard | |
|---|---|
| Parameter/Criteria | Description/Value |
| Positive impact | 69.8% had increased incomes, savings, and improved living standards |
| Business improvement | 15.1% were able to improve or expand their businesses |
| No impact/no response | Remaining customers either did not respond or had not received loans |
Source: Research data August 2007
The results showed that 69.8% of the respondents had increases in their incomes, savings, and improved standards of living and were able to pay fees for their children more easily than before. 15.1% of the respondents were able to improve or expand on their businesses and the rest of the customers either did not respond, or had not yet received the loans so there was no impact on them.
A significant number of customers indicated that, the impact they got from the MFIs was, increase of household incomes and improved standards of living, and were able to use the money in paying fees for their children at schools. These are some of the indicators used in evaluating performance and service delivery of the MFIs.
According to the Critical Microfinance triangle mentioned in the literature review, the results obtained from the study showed that there were welfare impacts on the customers, or good social performance of the MFIs.
4.2.10 – Alternative financial services for the Customers
A presentation of the alternative sources of financial services for the customers other than the MFIs they were registered at is shown in Table 11.
Table 11 – Where customers accessed financial services
| Table 11 – Where customers accessed financial services | |
|---|---|
| Parameter/Criteria | Description/Value |
| Multiple sources | 50.9% got services from banks, SACCOs, groups, businesses, employment |
| MFIs only | 49.1% got financial services only from their registered MFIs |
Source: Research data August 2007
The results showed that, 50.9% of the customers got financial services from other sources such as banks, SACCOs, group organisations, businesses, and employments; whereas 49.1% got financial services only from the MFIs, they registered in. The difference between these groups of respondents is insignificant.
This means that the customers were not restricted to only one source of financial support. The result also showed that the financial supports to the customers’ livelihood were not only attributed to one financial source.
Frequently Asked Questions
What percentage of customers were able to pay their loans on time?
88.7% of the respondents were able to pay the loans on time.
How satisfied were customers with the services offered by microfinance institutions?
83.0% of the respondents were satisfied with the products or services offered by the MFIs.
What improvements do customers want from microfinance institutions?
52.8% of respondents indicated high costs and difficult repayment terms, while 26.4% requested better technology and more staff.