This chapter presents background of the study, the problem statement, purpose, objectives of the study, research questions, study scope, justification of the study, significance, Hypotheses, conceptual framework, as well as operational definition of key terms and concepts.

1.1Back ground of the study

Savings are considered to be the major source of investment income for the businesses where savings are not enough to run the businesses in order to meet the customer’s demand, the business owners usually get loans from the financial institutions such as commercial banks and other microfinance institutions. However, the coverage of the commercial banks is limited to urban areas and sometimes individual households in the villages do not have access to commercial bank loans.

The history of rural financial intermediation is not encouraging and the recent explosive growth in microfinance globally has concentrated in urban and semi urban areas ( Demirguc Kunt and Klapper 2012, Allen and Panetta 2010), When formal financial institutions are not available, households use informal mechanism instead, to save, borrow loan therefore one intervention which has gained increased popularity in rural Africa, Uganda inclusive and more especially in Lamwo district is the saving groups. Saving groups provide an alternative to the existing informal institutions and provide more flexible, transparency and security to the community. Economic rights are universal and part of the range of legal rights that were promulgated under the United Nations Declaration of Human Rights (UDHR) in 1948, with the goal of increasing access to financial means of living for all. To that effect worldwide, financial systems have been developed that aim at curbing poverty levels among the nationals. International literature is replete with conceptual and empirical works on a wide range of issues pertaining to women’s access to financial resources and their inclusion in businesses enterprises. However, a systematic search of the academic literature demonstrates a striking imbalance where little attention has been given to the women’s access to bank services and household decision-making. The failure to accurately identify the household decision-maker makes it likely that gender effects have not been accurately estimated (Bernasak et al, 2002).

One of the highly standardized type of saving groups is developed and promoted by Care International in 1991 called the village saving and loan association (VSLA) of which the study was carried on. Village Saving and Loan Association are similar to the microfinance institutions. It is a time bound accumulating saving and credit associations. It mainly consist of 15 to 30 members in a group who save regularly on weekly basis and members can borrow from the group funds to do other income generating activities and the loan borrowed are paid back with interest. VSLA normally takes a cycle of one year and the money is shared among the members in proportion to each members saving.

In VSLA members are self – selected to form a group and form an association and save money. The money saved is a source of loan capital from which members can borrow. The borrowing takes place when the amount of money saved by the members in the association is sufficient and interest is charged to repay the money hence which allows the growth of the fund.

VSLAs are autonomous and self – managed. There is no external funding for VSLAs and therefore, an association strictly relies on the resources or savings contributions made by the members. According to Hugh (2006), this is fundamental to the mode of operation and objectives of a VSLA since the association’s goal is institutional and financial independence. Any relationship that may be established say with an MFI or any other agency which can reduce the associations’ ability to control its own affairs needs to be approached in a very cautious manner.

VSLA uses a lockable cash box or heavy – duty lockable canvas pouch for keeping money. This prevents unauthorized movement of cash and the risk of tampering with the records of the association since record books are also kept in the cash box. For ensuring transparency and accountability, all VSLA transactions are carried out at meetings in front of the association, and all the members are in position to witness who has saved and who has not, who has borrowed and who has not and what this means in terms of net worth.

VSLA consists of a General Assembly and a management committee. The General assembly is the supreme body (comprising of all the associations’ members) from which the management committee is elected and from which it derives its authority. Each member has a single vote in case of an election. The management committee of a VSLA is comprised of five people namely a chairperson, secretary, treasurer, and two money counters. The members of the committee are subject to annual reelection at the start of a new cycle and may be removed at extraordinary meetings.

Micro finance, village savings and loan associations inclusive has been introduced to help the poor households save and access small scale loans for enterprise development, increase income and improve their welfare. Collins et al, 2009 states that for the poor households, savings is a much priority than borrowing, as saving builds assets and can help to address the risks as well as planned lifecycle events. They also emphasize those traditional places where the poor save the money are often of risk of theft or temptation. This means that the village savings and loan associations program is based on the belief that it’s for the extremely poor and those in rural areas.

The right approach is to begin by building their financial assets and skills through savings rather than debts. Statistics from the government of Uganda show that although poverty levels in the country have declined from 38% in 2003 to 31% in 2006, poverty in Northern Uganda remains high at 61 % (UBOS 2007). Data from SUSTAIN Uganda; “protect impact assessment in Uganda” demonstrates that, improvement in the livelihoods of the VSLAs members is due to their involvement in VSLA. After saving and borrowing through VSLAs, most members were able to increase their engagement in productive enterprises such as petty trade, beer brewing and livestock rearing as well as start up new business ventures and also send their children to school.

A report presented by UBOS on Uganda National Household Survey 2007/2010 pg 97 November 2010 release show that there was general increase in demand for loans from 10% in 2005/2006 to 17% in 2009/10. However application for the loans were slightly higher among urban residents 20% compared to rural counterparts 17% irrespective of the source of the loan. It also noted that, 12% of the loan applicants sought audit from informal sources compared to only 4% from the formal sources.

This implies that most of the households get loans from the informal sources such as the VSLAs where interest rates are low and loans are taken in small amounts. These loans are then majorly used for investment with the aim of increasing income while few households may borrow for consumption purposes in periods of hardship. This finds support from UBOS report November 2010 pg97 that 26%of the persons sought of loan for working capital in nonfarm enterprises, 16% for consumption, goods and payment of educational expenses 15%. All these will show how VSLAs contributes in improving household savings, investments and increase in their welfare. Obwona, (cited in World Bank, 2002) emphasized that the people’s living conditions in Uganda is deteriorating greatly. the poor no longer afford the social services that were formerly provided by the government and yet they cannot access financial services provided by the formal financial institutions to meet those needs, diversify household income sources especially from nonfarm activities and expand employment opportunities to ensure increased incomes which will translate into welfare improvements for the poor households.

1.1.2 Theoretical Background

In attempt to explain how sustainability of livelihoods projects are affected by the vulnerability context, the study will use the frame work designed by the UK Department for International Development (DFID) sustainable livelihoods framework

KEY

The framework stresses first that even poor people have assets (and development interventions should work from people’s strengths, their assets, rather than promote dependency by emphasizing their weaknesses and problems), and second that people have many different kinds of asset (or capital) and of livelihood strategy and income. The frame work indicates that Vulnerability to famine is therefore a function of people’s ability physically to access food and of their ability to exchange the assets at their disposal for food. Swift (1993) identified the following range of assets which may be important in determining people’s ability to obtain food.

Investments in; land, labour, and equipment for production, education in learning new techniques or skills and social and farming networks and market and product research. Use of stores; directly of food and financial or of value to buy food. Claims on; other households, for food, production resources or labour, patrons and village chiefs for help in need, the government and the international community.

As in the DFID framework the ability of people to access food therefore depends on their assets. Assets act as a buffer between production, exchange and consumption. Assets are built up in times of surplus and can be converted into food or production inputs in times of need. Peasants, and, more generally, poor people tend to have fewer assets than other groups and may be constrained in the utilization of those assets they do possess due to their partial integration in (imperfect) markets and society. Different assets have different roles in production, exchange and entitlements.

1.2 Problem Statement

Nakawa Division in Kampala is one of the poorest among the divisions in Kampala with large slum network which is sign of high levels of poverty according UNDP, (2019) and World Bank, (2018) state that Slums are unhealthy, unsafe, and socially undesirable residential areas characterized by substandard housing and living conditions as well as overcrowding, Slums characterize poverty and inequality in low and middle income countries (LMICs), with a common thread in such a hodgepodge of poor housing structures being the lack of one or more of the following five amenities; durable housing capable of withstanding extreme climatic conditions; sufficient living area commensurate with the needs of family members and the community they are part of; access to improved and affordable water sources and quality; access to improved sanitation facilities; and secure tenure that protects against forced eviction all this poor slum characteristics exists in Nakawa and majority of the people in these slums are women, according to UBO, 2019) report the women in Nakawa Division experience more poverty than their male counter parts in addition Microfinance support Centre, 2018) records indicates that most of the women involved in the Saacco do not use the funds given to them for business purposes as a result they sale the few assets they have to pay Back Sacco funds , the report further indicates that the poverty in the slum areas among women further increase after receiving Sacco because of lack of business knowledge and as a result failure to pay back the loan and in most cases there is confiscation of the small property the family owns to clear their loan balance with the saacco. NPA, (2018) report further notes poverty is high among women in slummy urban areas like Nakawa division than men in Uganda as a whole and Kampala Nakawa division to be specific , therefore this study further intends to investigate into the contribution of savings and credit cooperative organizations to financial accessibility of rural households Nakawa Division.

1.3 Objectives of the study

The objectives of the study will be

(i). To examine the role of SACCO credit on poverty reduction
(ii). To assess the effect of financial Advise on poverty reduction
(iii). To investigate the influence of saving on poverty reduction.

1.4 Research questions

What is the role of SACCO credit on poverty reduction?
What are the effect of financial Advise on poverty reduction?

What is the influence of saving on poverty reduction?

1.5 Scope of the study

This section includes the content scope, Time scope and Geographical scope.

1.5.1 Content Scope

This study set outs to examine; the role of SACCO credit on poverty reduction, the effect of financial Advise on poverty reduction and the influence of saving on poverty reduction.

1.5.2 Time scope

The research study will focus on a literature related to saacco on poverty reduction written from 2017 to date and the study will also use the information from the organization which will be from 2018 to 2022, this will enable the study use the most update information to enrich the study.

1.5.1 Geographical scope

The study will be conducted in Nakawa division, Kampala district. Nakawa division lies in the eastern part of Kampala city, bordering Kira Town to the east, Wakiso District to the north, Kawempe Division to the north-west, Kampala Central Division to the West. It also borders Makindye Division across Murchison Bay to the south-west and Lake Victoria to the south.

1.7 Justification of the study

The government of Uganda’s financial policy framework aims to improve women’s access to financial services (Uganda National Financial Inclusion Strategy, 2017– 2022). This is seen as a strategy to promote equal opportunities for women to contribute, as well as benefit, from the country’s economic growth. As a result, private commercial banks have responded by investing in financial products that specifically target women. However, women’s subjugation persists.

1.8 Significance of the study

The study findings will help development organizations such as commercial banks, UN Women, International Labour Organization (ILO) and Government of Uganda that invest in women’s

financial empowerment to understand whether their initiatives have improved household decision-making thus contributing to reducing gender inequality.

Further, the study findings will add to the existing body of knowledge on women’s access to financial services and household decision-making.

Lastly, the findings will contribute to the wealth of knowledge of academic research or stimulate more research in the field of women’s access to financial services and household decision-making dynamics.

This study will add on the existing literature and helped the academician by getting more references in future when carrying out research on similar or related topics.

This study will mean to market the selected Sacco and findings will help to formulate appropriate packages for their clients.

The study will equip the researcher with real experience of scientific research and will lead him to acquire more skills of research

CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

In general savings and credit cooperative organization have contributed much towards rural development and rural financial accessibility. This chapter presents what other researchers and writers have written about how savings and credit cooperative organizations have contributed to rural, improving house hold income.

2.1 Theoretical perspective

It is significant to note that changes have been taking place in the credit industry and this is backed up by the recent scenario where most lending institutions have developed sustainable credit appraisal standards that help them when it comes to credit appraisal and risk management (CBK 2011 annual report). Theories have been developed by different scholars that have positively affected rather have a relation to the lending activities and organization of this lending corporations. Discussed below are theories or models related to governance, operation and management of the lending institutions.

2.1.1 Contingency Theory

Contingency theory was developed by Fred Fiedler, 1967, but several contingency approaches were also developed concurrently in the late 1960s. Contingency theory is a class of behavioral theory that claims that there is no best way to organize a corporation, to lead a company, or to make decisions. Instead, the optimal course of action is contingent upon the internal and external situation of the corporation. As far as appraisal systems are concerned, different borrowers come with different scenarios on their ratings. The lending institutions have to scrutinize every individual and view what should be done, who is to be advanced credit with and how much is appropriate at a particular time. The lending institutions too also looks at its position as far as how much they are allowed to give out as credit to strike a balance between their loan portfolio and current deposits. There sometimes is no best mechanism of appraising but looking at the situations currently prevailing.

2.1.2 The effects of Credit Standards on loan recovery

Credit standards according to Mehta (2010), in advancing loans, credit standard must be emphasized such that the credit supplier gains an acceptable level of confidence to attain the maximum amount of credit at the lowest as possible cost. Credit standards can be tight or loose (Van Home. 2010). Tight credit standards make a firm lose a big number of customers and when credit are loose the firm gets an increased number of clients but at a risk of loss through bad debts. A loose credit policy may not necessarily mean an increase in profitability because the increased number of customers may lead to increased costs in terms of loan administration and bad debts recovery.

In agreement with other scholars Van Home (2010), advocated for an optimum credit policy, which would help to cut through weaknesses of both tight and loose credit standards so, the firm can make profits. This is a criteria used to decide the type of client to whom loans should be extended. Kakuru (2010) noted that it’s important that credit standards be basing on the individual credit application by considering character assessment, capacity condition collateral and security capital.

Character it refers to the willingness of a customer to settle his obligations (Kakuru, 2010) it mainly involves assessment of the moral factors. Social collateral group members can guarantee the loan members known the character of each client; if they doubt the character then the client is likely to default. Saving habit involves analyzing how consistent the client is in realizing own funds, saving promotes loan sustainability of the enterprise once the loan is paid. Other source should be identified so as to enable him serve the loan in time. This helps micro finance institutions not to only limit loans to short term projects such qualities have an impact on the repayment commitment of the borrowers it should be noted that there should be a firm evidence of this information that point to the borrowers character (Katende, 2010).

According to Campsey and Brigham (2010) the evaluation of an individual should involve: gathering of relevant information on the applicant, analyzing the information to determine credit worthiness and making the decision to extend credit and to what tune. They suggested the use of the 5Cs of lending. The 5Cs of lending are Capacity, Character, Collateral, Condition and Capital. Capacity refers to the customer’s ability to fulfill his/her financial obligations. Capacity, this is subjective judgment of a customer’s ability to pay. It may be assessed using a customer’s ability to pay. It may be assessed using the customer’s past records, which may be supplemented by physical or observation.

Collateral is the property, fixed assets, chattels, pledged as security by clients. Collateral security, This is what customers offer as saving so that failure to honor his obligation the creditor can sell it to recover the loan. It is also a form of security which the client offers as form of guarantee to acquire loans and surrender in case of failure to pay; if borrowers do not fulfill their obligations the creditor may seize their asset (Girma, 201 0).

According to Chan and Thakor (2010), security should be safe and easily marketable securities apart from land building keep on losing value as to globalization where new technology keeps on developing therefore lender should put more emphasis on it. Capital portends the financial strength, more so in respect of net worth and working capital, evaluation of capital may be by way of analyzing the balance sheet using the financial ratios. Condition relates to the general economic climate and its influence on the client’s ability to pay. Condition, this is the impact of the present economic trends on the business conditions which affects the firm’s ability to recover its money. It includes the assessment of prevailing economic and other factors which may affect the client ability to pay (Kakuru, 2010).

Good credit management provide the institution with a reasonable and adequate return on loans and capital employed primarily through improvement in operations efficiency this generates adequate internal resources to finance the institution’s growth (Pandey, 2010). The institution may have tight credit standards that it may extend loan to the most reliance and financially strong customers such standards will result in no bad debt losses and less cost of credit administration (Pandey. 2010).

Pandey (2010) stressed that credit standards are criteria for selecting customers for credit; the fund may have higher credit standards that is extending loans to selected customers with good reputation or record. On the other hand customers have to be evaluated to see if they meet the standards set by the management before loans are extended to them. However, (Van Home. 2010) states that when an institution extends loan to only strongest customers, it will never have bad losses and will incur fewer administration expenses.

2.2. The SACCO credit on poverty reduction

Savings and credit cooperative organization, economically according to Guilford (2007) credit facilities enable impoverished persons to start businesses, rebuild after natural disasters like floods and hurricanes, and to receive both short- and long-term loans to meet their financial needs and improve their overall quality of life. The impact of micro lending is changing the economic landscape of the areas where it is most prevalent.

In Africa, micro finance contributed to productivity of farmers (Anupam, 2004) found that, through credit, farmers obtains inputs and increase their production, micro credit promotes and increase agricultural output with greater equity of farmers to the small-enterprise. Magyezi (2013) states that savings act as collateral security for the savers to acquire more and bigger loans. He confirms that such practices promote saving culture. The extent to which savers benefit from the savings remain unclear as the credit providers attach very low interest to it.

According to Gash, M. (2013) Saacos clients who attend business education and other co-curricular activities provided by Savings and Credit Schemes save on sustainable basis compared to those who do not attend.

Bundervoet, T., Annan, J, & Armstrong, M. (2012).recommends that participants in Microfinance institutions have been encouraged to save in every training session in order to improve their saving culture that leads to people in Seeta to improve their house hold income

Co-operatives have been an important part of development in East Africa. While they have seen many successes and failures, no other institution has brought so many people together for a common cause.

Following the Arusha declaration, cooperatives became the main tool for building a spirit of self-reliance during the Ujaama period. However, following the introduction of free markets, cooperatives have struggled to compete with the private sector and many have not been able to provide their members with services they need. The government responded to this problem by introducing a new cooperative development policy (2002) to help cooperatives regain their importance in the economic lives of people. A policy aimed at how government plans to facilitate the development of particular area of the economy such as agriculture, education or cooperatives. (Tanzania Federation of Cooperatives)

Brunie A, et al. (2014) contends that what SAACOs do by establishing clients’ interests and feeling through education is essential. He clarifies that education enhances learners’ self-motivation by developing inquiring mind; they gain proficiency in speaking, reading, and writing and can communicate effectively as individuals or as groups. He adds that business education develops attitudes for group work, social justice, cooperation, friendship and respect for humanity .

Sinclair, M. (2013) describes the need for education for developing participants’ skills for transfer in the new and changing situations. It develops the creativity and potential for communication. He explains that the participants apply a range of skills and techniques to develop a variety of ideas in the creation of new and modified products which win market and improves on people’s economic income.

Sacco also plays a crucial role in smoothing of incomes of households of members, where members can borrow to increase their consumption to acquire household items that they might not be able to purchase immediately. (Sinclair, M. (2013).

2.3 Financial Advise on poverty reduction

SACCOS in Uganda gain support from Co-operative Society Acts and Policies. For the example, The Co-operative Societies Act, 2003 ensure that the government created conducive environment for Cooperative Societies and their members to perform their functions in a free democratic manner and Promoting economic and social interest of the members for economic growth by setting International Cooperative Alliance (ICA) principles (Komba et al. 2005). The Co-operative Development Policy of 1997 and revised 2002 recognizes the importance of the National Poverty Reduction Strategy Paper (PRSP) accords to cooperative development. Also provide the structure of cooperative society from primary society at base level and federation at top as stressed by Section 14(1) of the Co-operative Societies.

2003, revised Edition, 2004. Further, The National Micro-finance Policy of Tanzania, 2000 emphasized on serving the low-income segment of the society whose incomes are very low with limited access to financial accessibility.

In the implementation of Public Finance Authority (PFA), the Government of Uganda has developed a strategy for RFSPP aimed at developing a financial infrastructure that can reach every sub- county in Uganda. The infrastructure is a channel for encouraging savings mobilization across the country this contributes to success of Sacco’s performance in rural area.

According to Food and Agricultural Organization (FAO) Economic and Social Development Department (2002) in their document, “savings mobilization to microfinance: A historical perspective on Zimbabwe”, it is stated that the first savings club in Eastern Africa was started by a Catholic missionary, Brother F. Waddelove, in 1963. This is certainly true of what came to be known as the savings movement in Zimbabwe. However the idea of developing means of saving amongst the poor in Zimbabwe, pre-dates the savings movement, and can be traced to the emergence of burial societies from the early years of colonial occupation after 1890. Burial societies were developed by migrant workers, often from outside of what was known as Rhodesia, namely Portuguese East Africa and Nyasaland, to both assist newly arriving migrants and assist with funeral arrangements of such workers. The average sizes of these societies were between 10 and 100. Most had a formal leadership structure of Chairman Secretary and treasurer, with some producing formal constitutions even at this early stage. In terms of fees, family, members paid a joining fee and monthly subscriptions. In the event of a death in the immediate family, members are paid lump sum payment.

Credit programmes in Uganda can be traced as far back as the early 1960s when two credit schemes namely the cooperatives credit scheme (CCS) in 1961 and the progressive farmers loan scheme (PFLS) in 1964 respectively with a focus of transforming farmers from subsistence to commercial practitioners and as a strategy to reduce poverty. Another state directed credit programme, the rural farmer’s scheme (RFS) was launched under the support of the Uganda commercial bank (UCB) in April 1988 also with similar objectives as the two credit programmes already mentioned above. All the above three credit programmes failed and were suspended due to high default rates and their failure was attributed to reasons ranging from incorrect mechanisms used to choose credit beneficiaries. Ferguson, M. (2012)

Cumbersome appraisal procedures which resulted in delayed disbursement, lack of sufficient staff to monitor the credit, the absence of readily available market for farmers’ produce. Other reasons for the failure of these credit programmes were top-down deficiencies such as bureaucracies, questionable integrity of loan officers, poor disbursement policy (in-kind), high transaction costs, and lack of security for the loan which is also affecting people .

Public Finance Authority (PFA) programme, which is planned to be achieved through the rural development strategy (RDS), emphasizes the need to enhance production, competitiveness and commercialization of the economy. This is to be achieved through increased production and productivity, promoting value addition and marketing, improved access to information and increased access to affordable financial services (Microfinance support Centre limited report, 2007).

Social capital enhances trust and through trust cooperation grows faster which involve risks (Dusuki 2008 and Clarisse’s 2005). Microfinance industry relies on social capital as part of its building blocks. Due to the membership of Sacco’s borrowers can enhance their credit worthiness as their debt is secured by their friends in the Sacco hat and Tang (2008) argued that the moral hazard that would subsequently arise due to default is greatly reduced due to the existence of strong networks within the group. They further support this claim by emphasizing on the monitoring that would arise from the guarantee mechanisms (the members guaranteeing each other) whereby members would guarantee other members with a good repayment history and ability to secure the other parties .Social adopt in place of other tangible assets when approving a loan to a member of a microfinance i.e..Sacco have been able to embrace the benefits that beget them due to social intermination..

Persons of a same vision and unifying factors are usually encouraged to join Sacco, this factor can not be left out. SACCOS are the saving grace for the persons with lower incomes and are usually viewed as the stepping stone from alleviation of poverty and growth of wealth. The major reasons that may encourage people to join Saccos include: easy access to finance through cheaper and simplified borrowing processes; there’s the mobilization of saving for further investments e.g. Uganda micro credit Sacco which has an in-investment vehicle where members save and investments and thus they get a return on investment as a dividend at the end of the financial year; Also for the interaction between members of a common bond through Sacco sanctioned activities e.g. financial literacy training; there’s also the issue of insurance in numbers where members guarantee each other for loans.(Luyirinka, 2010) in her research, her paper tested the relationship that exists between Microfinance Institutions and the socio-economic development of women in Uganda

2.4 Saving on poverty reduction

SACCOS have continuously suffered with economic constraints that can not enable them mobilize savings from the members and not be able to create investments that will have a favorable return on investment to the members which limits on financial basket hence inadequate funds making accessibility of rural finance difficult ( Gatete,2004).

The services of Saccos and MFIs largely do not reach the rural poor because of high costs of reaching such clients and high borrowing requirements. In addition, the MFIs who are better placed to reach the rural poor have a disconnection or gap in the service (products) that they offer, considering the services that the poor may require. This is because most MFIs tend to focus on credit rather than savings services either because of their profit motives or because most of them are not licensed to take deposits. The poor people who may prefer to build their wealth or assets via savings are therefore left without the providers of such services. SACCOs therefore addresses such challenges that the rural poor do experience by allowing these poor people to access financial services in the rural setting or in a setting that is more convenient for them.

The methods used in collecting borrowed money is not favorable to clients of selected saaco in Nakawa Division for example charging high interest rates .There has been a great shift from the traditional financial products to high returns investments e.g. real estate development and investment in government securities in which Sacco engage in. The vision 2030 blueprint has emphasized the role to be played by financial intermediaries in the mobilization of saving and development so as to achieve economic growth and realization of the vision. But majority rural people especially those in Nakawa Division find hard ships in accessing financial services due to use of harsh loans officers unfavorable interest rates and among others

The principals followed when collecting loans from rural people of Nakawa Division have also affected on the financial accessibility. For example collecting methods by loans officers some times are brutal which give hard time to rural house holds for example people of Nakawa Division difficult to access those services (Harambee Sacco, 2014).

According to Boston University Center for Law and Policy (2014), financial institutions involved in microfinance in Uganda include formal institutions (banks, non-bank financial institutions, licensed Savings and Credit Cooperatives (SACCOs)). SACCOs are regulated by the SACCO Societies Regulatory Authority (SASRA), which began operations in 2010.Under the new SACCO regulations, all deposit-taking SACCOs are required to apply for a SASRA license by June 17, 2011.ccording to Lidgerwood (1999), these licenses have discouraged saving hence a big challenge in the accessing rural finance

Credit terms and conditions is among the challenges that rural household find in finance accessibility .Financial cooperatives should make it possible for the poor to access reasonably priced credit and at terms and conditions that are favorable to them. Most of the low and medium income group who have no land tittles/security to offer and in absence of SACCOs, it would be difficult for them to access credit and would perpetually remain poor. Cooperatives empower people to fully raise their productive potential. Objectively, MFIs including SACCOs should provide services with favorable terms namely interest rates on savings, interest rates on loans, loan period, repayment schedule and loan size among other financial services to the existing small enterprises which are not start ups so that they can grow and add value to their owners and employees, create a savings culture and improve the national economy in general. In conclusion credit terms and conditions have affected rural accessibility. (Allen H & Panetta D, 2010)

2.5 Conceptual frame work

Saving and Credit Cooperative Poverty Reduction

-Sacco credit

-Financial advice

-Savings services

-Training services

-Increase in income

-Improved quality of life

-Improved standard of living

-Government policy

-Political stability

-Technological development

Moderating Variables

CHAPTER THREE

METHODOLOGY

3.0 Introduction

This chapter presents a detailed description of the methodology that will be employed in the study. It will focus on the adopted research design, the population, sampling strategies, data collection methods, research procedure, ethical considerations, validity and reliability of research instruments, and methods of data collection.

3.1 Research Design

The research will adopt descriptive cross sectional survey design. According to Amin (2005), this is one of the most commonly used research method used to gather data from a sample population at a particular time. Opedun (2013) says that this design helps to define better and understand respondents’ opinions and attitudes when gathering information from a sample population at a particular time. The researcher will use the sample survey design because it is also less expensive way of gathering data from the large number of respondents who will be involved in this study. In this study, both quantitative and qualitative techniques will be employed in data collection process, analysis, presentation and discussion of findings. Quantitative method will be used in order to establish the extent and rate of the problem while qualitative shall fill the gaps that will be left by quantitative data

3.2 Study Population

Population refers to an entire group of individuals, events, or objects having a common observable characteristic as Mugenda and Mugenda (2003) posit. The population of the study will comprise of clients, executive committee members, and heads of department, team leaders and loans officers

3.3 Area of the study

The study the research study will be carried out in Nakawa Division , Kampala District. The area will be chosen because of its proximity to the researcher and accessibility of the SAACOs within the study area. The study will be conducted within the proposed budgetary planned time frame.

Will focus particularly on development staff, executive committee members, heads of department, loans officers

3.4 Sampling procedure

The study will basically focus on top and middle level management members because they are the custodian of the contributions of SAACOs on financial accessibility on house holds.

Accordingly, all departmental heads will be targeted as respondents however; greater importance will be laid on capturing members of executive committee, loans offices and other related offices.

The researcher therefore will use purposive sampling techniques in selecting interviewees with a choice of replacing those who may not wish to react to the Researcher’s request.

Purposive sampling is where the Researcher deliberately decides who to include in the sample. It will be used simply because the study will target basically custodians of the SAACOs. It will also ensure that only people with applicable information will be sampled.

3.4 .1 Sample Size and composition

A sample size is the portion representing the population and selection involves the process of choosing the elements from the population Amin, (2005). Given that the study population is large, a sample size will be selected from the population and used to represent the views of the entire population.

Table 3.4.1 showing composition of the samples size

Directorate	Population	Sample size
Executive committee	15	9
loans officers	5	4
SAACO members	20	12
Total	40	25

3.4.2 Composition

The respondents comprised of males and females

An aggregate of 45 respondents will be selected and considered appropriate for research purposes

3.5 source of data

Both primary and secondary data collection methods will be used

3.5.1 Primary data

Primary data will be gathered basically through structured questionnaires and interviews with key informant members.

3.5.2 Secondary data

Secondary data on the other hand will be gathered through review of available SACCO records like Audited Financial Statements, SACCO ledgers, journals, Minutes of top committee members and other. SACCO publications

3.6 Data collection methods

The section presents data collection methods which include questionnaire and interview.

3.6.1 Questionnaire

The questionnaire will be the main instrument to be used in the study .The questionnaire will consist of structured or close – ended questions .They will be administered in loans departments. This method is appropriate because it saves time and money and respondents are given chance to answer questions at their convenient time.

3.6.2 Interview

In personal interviews, there is a face- to- face contact between interviewer and interviewee. This can take place at door to door interviewing, executive interviewing’s. Amin (2005. In this study, the researcher will conduct interviews with the accounting staff. Silverstein, (2003) maintains that case study design accompanied by interviews help a researcher to get information from insiders’ views.

3.7 Data collection procedure

The researcher will obtain an introductory letter from the Head of Department, as an authorization to seek permission from the Nkumba University. Once the management approves, the researcher will continue to collect the necessary and relevant data. This is purposely to build confidence among the respondents.

3.8 Data quality control of instruments

The data collection tools will be pre-tested on a smaller number of respondents from each category of the population to ensure that the questions are accurate both reliability and validity will be carried out.

3.8.1 Reliability of data

To obtain data free from errors introduced by those responsible for collecting them, it will be necessary for the researcher to do pilot and to verify data being collected. The researcher will make checkups to ensure that the data collected by SACCO officials performs its duty honestly and without prejudice. When data is collected, it will examine for completeness, comprehensibility, consistency and reliability. The accuracy of tabulation and accuracy of punching will be checked and ensured. Finally statistical computations as such averages, percentages will be emanated at completion of the research

3.8.1 Validity of data.

The validity of the data collection instruments will be done with the help of the Supervisor to edit the questionnaire and the Interview guide. The Researcher will forward the Questionnaire to Supervisor who is an expert in the area covered by the research for editing and reviewing necessary areas.

3.8 Data Processing

After the data collection exercise, the data collected will be edited to eliminate errors, ensure completeness, accuracy and relevancy. It will then be coded to allow the use of frequencies and percentages as units of measurement this will be through sorting and summarizing so as to make meaningful information for the betterment of Saccos and then presented in tables.

3.8.1 Data Analysis

Data analysis will be done using the statistical package for social sciences (SPSS). Data will be analyzed using percentages, tables and frequencies so as to reflect the contribution of SACCOs on the financial accessibility of Saccos on households over the year under consideration to be able to suggest recommendations for improvement. Open-ended questionnaire and interviews were used with an intention to produce quality work.

3.9 Data presentation.

Data will be classified and presented using tables, charts, graphs, MS Excel and MS word computer packages were used.

3.10 Ethical l consideration

Ethical considerations will be taken into reflection by first looking for approval from the top management of Nkumba University.

Questionnaires will be prepared in such a way that there will be no state of the Interviewee’s name. A statement as to the severe confidentiality with which data will hold will be specifically stated in the interview guide

Further, responding will be optional, basically explaining the reason for replacing respondents who did not wish to respond as mentioned in the “Sample Size and Sample Selection techniques” above.

Ethical considerations will be taken care of by the researcher meeting the respondents as to the purpose of their search, their significance in the research process, and prospect from them.

3.11 Anticipated Limitations of the study

Study area. The study will be conducted at Sacco offices, with a supposition that the results can be simulated and practical to related offices

It will not be efficiently feasible or operationally possible to study all SACCO branches, thus culminate into the choice on SACCO branches so as to have an in-depth acceptance of Fraud management using computerized accounting system SACCO branches seem to have similar or related objectives and have the same customers.

This can be solved by increasing on the time of study so that the sample size of selected SACCOS branches to be included in the study to be large to represent all other SACCO branches in Uganda

The design of the research will be cross section, implying that it will be short term in nature. It will be therefore likely not to confine an in-depth understanding of the state of affairs.

This can be solved by applying analytical and survey designs to study the variable in depth.

Financial constraint will be also a challenge in carrying out the research since the available fund may not be enough to sustain the vast research proposals; it will be a challenge in that regard.

This can be solved by allocating enough funds through prior budgeting for this exercise

QUESTIONNAIRE

TOPIC: SAVING AND CREDIT COOPERATIVE SOCIETY SERVICES AND POVERTY REDUCTION AMONG WOMEN IN KAMPALA DISTRICT.

A CASE STUDY: A CASE STUDY IN NAKAWA DIVISION, Saccos

Dear respondent;

I am KOMUKYEYA MARTHA a student of Nkumba University; pursuing Bachelor and carrying out a study on the above stated topic. You are one of the respondents randomly selected to participate in the study. The information given shall be treated with at most confidentiality and shall only be used strictly for academic purpose. Your response to the following questions will be highly appreciated and supported by utmost gratefulness.

SECTION A: GENERAL DATA

Sex: Male Female

Age a) 18 -29 b) 30 – 39 c) 40 and above

Educational level

Master’s degree 1^st degree Diploma others

For how long have you been operating business at Nakawa Division, Saccos?

Less than two years 3-5 years

6-10 years 10 above

SECTION B: Roles of saacco on poverty reduction

SA=strongly agree, A=agree, N=neutral, D=disagree, SD=strongly disagree

Roles of saacco on poverty reduction	Response
Roles of saacco on poverty reduction	SA	A	N	D	SD
Provision of capital for start-up
Trains farmers on Identifying ne opportunities
Trains In marketing of produce for farmers
Capital for business expansion is acquired by the local people
Loans with little conditions is readily available
Creativity among farmers is enhanced
Small scale business a readily linked with market by saacco
Members develop friendship

SECTION C: Financial Advise on poverty reduction

Key: SA=strongly agree, A=agree, N=neutral, D=disagree, SD=strongly disagree

Please tick one appropriate.

Financial Advise on poverty reduction	Response
Financial Advise on poverty reduction	SA	A	N	D	SD
Saacco members save together
Saacco members give one another financial advice as a group
Members have one goal in saving
Money saved in saacco is used for investment
Members invest as a group
Saacco members receive training on finance as a group
There is trust among members

SECTION D: Saving on poverty reduction

Key: SA= strongly agree, A=agree, N=neutral, D=disagree, SD=strongly disagree

Please tick one appropriate.

Saving on poverty reduction	Response
Saving on poverty reduction	SA	A	N	D	SD
Saved funds are invested
Interest accrues on members savings
Members savings are loaned to other members
Members get loans at low interest rates
The ability of members to borrow depends on their savings
Interest is only given to members at the end of the year

THANK YOU FOR YOUR RESPONSES

REFERENCES

2 AMFIU (2008). Uganda micro finance industry assessment report: Friends consult LTD, Kampala.

3 AMFIU (2010). Uganda micro finance industry assessment report: Friends consult LTD, Kampala.Anupam et al (2004)

Mbwana, K., and J. Mwakujonga. (2013). Issues in SACCOS Development in Kenya and Tanzania: The Historical and Development Perspectives, Tanzania. Developing Country
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Labie, M. (2008). Corporate Governance in Microfinance: Credit Unions, Center for European
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Jake Kendall, B. &. (2010). Improving People’s Lives through Savings. Global savings forum

Wright, G. a. (2011, August 18). “The relative risk to the Savings of Poor People,”. Retrieved from http://www.microfinancegateway.org

Assenga. (2008). Saving and Credit Cooperative Societies and Poverty Reduction among the Women in Morogoro RSaccosl District. M.A dissertation.

Beck, T. B. (2008). “Who Gets the Credit? And does it Matter? Household vs. Firm Lending
across Countries”,. World Bank

Abadie A & Imbens GW, 2008. On the failure of the Bootstrap for matching estimators. Econometrica 76(6): 1537–57.

Allen H & Panetta D, 2010. Savings groups: What are they? Savings-led Financial Services Working Group, The SEEP Network, Washington DC.

Allen H & Staehle M, 2007. Village savings and loan associations (VSLAs): Programme guide and field operations manual. CARE International, Atlanta, Georgia, USA.

Annan J, Bundervoet T, Seban J & Costigan J, 2013. Urwaruka Rushasha (New Generation): A randomized impact evaluation of village savings and loans associations and family-based interventions in Burundi. New York, NY: International Rescue Committee.

VSL Associates, 2015. Reaching the very poor: The need for a new microfinance model. Available at http://www.vsla.net/ (Accessed 8 November 2015).