Group Loans Repayment Problems of Women Borrowers

Abstract

Economic growth and development is a dream without having well focused and effective strategies to eradicate poverty through extending credits to women. The mobilization of funds comes directly from the participant's savings and therefore the use of funds is under group scrutiny. This paper aims to examine the repayment problems of women borrowers of microfinance. A sample of 100 respondents comprising 20 groups were interviewed. The groups utilized self-selection of members so that a strong degree of promise, trust and consent exists among members. Limited amount of loan and procedural hurdles were found to be the two major problems in group loans. The strengthened social ties and trust in groups reduce the repayment problems to a large extent. In addition the study noted that groups that were formed by the borrowers themselves had less repayment problems. Surprisingly, group members belonging to different levels of education and income groups had lesser repayment problems. The present study therefore recommends that microfinance institutions in targeting women should improve and smoothen the loaning procedure, extend higher credit limits to socially heterogeneous groups.