EFFECT OF INSTITUTIONAL FACTORS ON SOFT LOAN REPAYMENT PERFORMANCE OF YOUTH GROUPS IN KILOLO DISTRICT

Author

David Msauka, Theobald Kipilimba, Cornelius Simba

Abstract

 Soft loan repayment performance remains an important issue affecting the sustainability of youth loan programs administered through Local Government Authorities (LGAs) in Tanzania. This study examined the effect of institutional factors on soft loan repayment performance of youth groups in Kilolo District. Specifically, the study focused on institutional factors related to borrower training, loan monitoring, communication between loan officers and borrowers, follow-up activities and loan administration procedures. A cross-sectional research design employing a quantitative approach was adopted. Data were collected from 111 members of youth groups benefiting from the youth soft loan program through structured questionnaires administered to respondents selected using stratified random sampling. Documentary review was also used to supplement the primary data. The data were analyzed using IBM SPSS Statistics Version 32 through descriptive statistics and regression analysis. The findings indicated that institutional factors significantly affected soft loan repayment performance of youth groups in Kilolo District. Effective institutional support mechanisms, including regular loan monitoring visits, borrower training, timely communication between loan officers and borrowers, systematic follow-up activities and proper loan administration procedures, were found to be important in improving soft loan repayment performance. The study concludes that strengthening institutional support is important for improving loan repayment performance among youth groups. Therefore, the study recommends that Kilolo District Council should strengthen borrower training, enhance post-disbursement monitoring and business mentorship, improve communication and follow-up activities and strengthen loan administration procedures to improve loan recovery rates and ensure the sustainability of youth revolving funds and youth economic empowerment programs.

Keywords

Institutional factors, soft loans, loan repayment performance, youth groups, Kilolo District, Tanzania.

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