The extent of delays of loan requests to members in Saccos Operating at Nairobi Province

Abstract

According to SACCO star (2006), quite a number of SACCOs have a long string of pending loan applications from members. Some SACCOs payout little or no dividendi interest on members' savings. Some others still have a low loan multiplier and I or limited concurrent loans. The study was undertaken in order to determine the extent of delays in payment of loan requests and investigate factors contributing to delays in loan payment to the members after requisition. The study was a sample survey that targeted SACCOs operating in Nairobi province. Senior members of SACCOs committee were the respondents. A questionnaire was used to collect the information. The data collected was analysed using percentages and mean scores. The finding of the study revealed that there have been delays in receiving loan money by Saccos members after making loan requests. This has delays has taken main forms such as delay in release of loan application forms, a lot of paper work in the process and lack of know how among applicants on the application process. These delays affect customers' satisfaction negatively. Further, study found that savings mobilization, loan duration, borrower check-off remittance system, strategic alliances and management policies and practices are some of factors contributing to delays in payment of loan application by Saccos. However, the effect of loan duration is most high followed by the management policies and practices then strategic alliances and savings mobilization. Strategic alliances with other institutions have the least effects. The study recommended that there is need to employment of additional personnel to handle large number of applications and computerization of the application process. Also there is need to charge higher interest rates for loans with repayment period above three years as indicated by respondents.