Factors influencing repayment of constituency youth enterprise scheme loans: a case of Kaiti constituency

Abstract

The aim of this project was to determine the factors that influence the repayment of the Constituency Youth Enterprise Scheme Loans; it starts with background information on the fund's formation and its objectives as well as its mandate. The objectives of the study ware highlighted as; determining whether business enterprise success determines rates of loan repayment, exploring the relationship between group cohesiveness and loan repayment, assessing whether motivation for individual loan influences group loan repayment and evaluating the effects of institutional policies on loan repayment. Research questions in the project ware based on research objectives, while the project will be significant to researchers, academicians, financial institutions, policy makers, and it will also contribute to the whole body of knowledge. Other areas covered ware basic assumptions of the study, its limitations of the study and definition of significant. The project also explored research done by others covered in background information, the four C's of credit, theoretical framework, motivation for access of individual loans, group dynamics and solidarity, institutional policies, group lending in perspective, theoretical model and a conceptual frame work of the project. The project further highlighted qualitative research design which was used on the sample frame of forty groups, from which sample units were selected. Questionnaires were used as the instruments of data collection. Data was analyzed based on objectives, in tables based on percentages mean and standard deviation based on response rate and generalization. The study established that there was no business success with groups which was grounded on the levels of skills training and group composition, while most groups were found to have never established any businesses enterprise which was the key reason for funding. Group repayments were found not to motivate individual members to graduate to individual loans thus there was low loan repayment. The study recommended the adoption of stringent policies on recovery, the Grammeen bank lending model, small groups manned by the fund, establishment of skills training tailored for local investment, and the establishment of Youth Enterprise Development Fund own bank, it further recommends further studies to be carried on opportunities for investment in the constituency and review of YEDF's Credit Administration Policies to arrest defaults in order to promote the funds sustainability.