Characterising Loan Default among Women Microcredit Borrowers an Empirical Study in Wolaita Zone, Southern Ethiopia

Aims: Credit is a critical input for agriculture and women empowerment. Rural Savings and Credit Cooperatives (RuSACCOs) are important financial institutions in remote villages of Ethiopia offering avenues for savings and credit for farmers and the poor. The aim of this study was to find out the repayment status of loans obtained by women farmers who were members in RuSAACOs.

Study Design: The Study design followed was Ex-post facto Design through survey research.

Place and Duration of Study: This study was undertaken in Kindo Koysha Woreda (district) in Wolaita Zone, Ethiopia. The study was held between December 2015 and May 2016.

Sample: From four randomly selected RuSACCOs of the study district, 96 women farmers who had been members of RuSACCOs were selected as respondents.

Methodology: Primary and Secondary data were gathered respectively from women members and district government agencies respectively. The sample size was determined using Yamane formula. The primary data yielded quantitative information on repayment status (Repaid regularly or otherwise). Similarly, data was gathered on 17 personal, socio-economic characteristics of the women members to provide the backdrop for their loan repayment status and to analyze the possible linkage between such characteristics and the repayment status.

Results: Descriptive statistics of the study showed that out of 96 respondents 50 per cent repaid the loan before due dates and the rest 50 percent could not repay the loan before due dates. The following categories of women borrowers were found to have higher tendency to repay rather than not to repay on time: Younger women, more educated, married, with lower dependency ratio, with higher household income and expenses, with higher livestock holding, with prior business engagement, having better access to road and market, who availed higher loan amount and having higher amount as savings in RuSACCO, higher level of training, following weekly repayment rather than fortnightly or monthly and higher economic motivation. Interestingly, the characteristics of women like family size, household social ceremony expense, timeliness and adequacy of loan did not show any association with repayment status.

Conclusion: The study recommended that RuSACCOs must follow up closely with women borrowers having the characteristics opposite of those aforementioned (in “Results” paragraph) for ensuring prompt repayment of loan. The cooperative management could consider frequent cooperative training of women members for ensuring prompt repayment of loan.