Examining the joint liability lending model in Uganda a case study of pride microfinance limited (MDI), Nakulabye branch

Abstract

The study examined the joint liability lending model in Uganda particularly Pride Microfinance Limited (MDI), Nakulabye branch. The study objectives were to examine the different approaches used in the implementation of the joint liability model, to identify the challenges faced while implementing the joint liability lending model and to develop a strategic framework that will ease the implementation of joint liability lending model. A descriptive research design and quantitative and qualitative approaches were adopted. Primary data was collected from a sample of Pride microfinance staff and group members subscribing to the joint liability loan products at Pride Microfinance Limited, Nakulabye Branch.

Results revealed that joint liability approaches included group members' ownership and guarantorship of disbursed loans, group member sensitization and training, member self-selection during formation of groups, and attendance to weekly meetings where all group activities are conducted, However, loan defaults, failure to enforce group guarantorship, limited bank support in recovery, delayed loan processing, high member attrition were challenges affecting the implementation of the joint liability lending model at the bank. The identified strategies to improve the implementation of the model include regular group member trainings and sensitizations, enforcing compliance to laid down policies, improved bank support in recovery, introduction revenue sharing to group members to incentivize good repayments and recoveries, flexible repayment schedules and digitization / automation of processes to improve customer convenience and experience.

The study recommends that the Pride Microfinance limited and other joint liability lending implementing institutions; enhance the operating control environment, be deliberate about encouraging group activities that nurture group cohesion, enhance the recovery support rendered to group members, explore the possibility of offering flexible repayment options, digitize processes and embrace technological solutions. These interventions collectively form a comprehensive framework for improving the implementation of the Joint Liability Lending Model in Uganda.