“Factors Affecting Credit Collection Performance Of Awach Microfinance”

Abstract

The purpose of this study is to assess factors affecting credit collection performance of awach microfinance. To achieve this objective, both descriptive and explanatory research designs were employed. The target population comprised all customers of Awach Microfinance, from which a sample of 384 respondents was selected using probability sampling, specifically the simple random sampling technique. Data were collected through structured questionnaires and interviews. While qualitative data from interviews were analyzed subjectively, quantitative data from the questionnaires were examined using descriptive statistics, inferential statistics, correlation, and regression analysis with the aid of SPSS software. The study identified bureaucracy, borrower education and training, risk management practices, and social collateral as key factors influencing credit collection performance. The results revealed a statistically significant and positive relationship between these factors and effective credit collection management. Specifically, streamlined bureaucratic processes, enhanced borrower training, robust risk management systems, and strong social collateral mechanisms contribute positively to improving loan repayment rates. Based on the findings, the study recommends that Awach Microfinance strengthen its communication strategies to clearly convey repayment terms and build trust with borrowers. Simplifying bureaucratic procedures and improving loan collection workflows are also advised to enhance efficiency. Furthermore, implementing continuous training programs in financial literacy and risk management for both staff and borrowers is essential. Encouraging borrower participation in educational and community-based programs can foster stronger relationships and commitment, ultimately supporting improved repayment performance.