Assessment of loan repayment behaviour among boda-boda operators: a case of Tugende in Kampala, Uganda

Abstract

The study purposely examined loan repayment behavior among boda-boda operators in Kampala, with a specific focus on Tugende, a prominent player in the Ugandan Market. The study was premised on three objectives which included to assess the key factors influencing loan repayment behavior among boda-boda operators in Kampala, Uganda, to identify solutions to the challenges faced by boda-boda operators in repaying loans acquired from Tugende and to develop strategies for tugende to improve the loan repayment process for boda-boda operators. The study adopted a descriptive research design. The study employed both quantitative and qualitative approaches. An interview guide and questionnaires were the main tools to use in data collection, which combined qualitative and quantitative techniques, respectively. In this study, the population was composed of bodaboda operators and representatives of Tugende Limited. In the study on factors influencing loan repayment behavior among boda-boda operators, several outstanding results emerged. Respondents generally understood their loan terms, scoring a mean of 3.55 (SD = 1.219), indicating a solid grasp of the agreements. Operators reported having a clear repayment strategy, with a mean of 3.44 (SD = 1.236), suggesting proactive planning for repayments. However, there was significant dissatisfaction with loan interest rates, reflected in a low mean of 2.51 (SD = 1.133). Regarding challenges faced in repaying loans, many operators indicated difficulties due to inconsistent income, scoring a mean of 3.44 (SD = 1.277). They viewed Tugende’s support positively, with a mean of 3.45 (SD = 1.245), while feeling pressured to repay quickly, evidenced by a mean of 3.57 (SD = 1.268). Lastly, in terms of strategies to improve the loan repayment process, strong support for financial education programs was noted, scoring a mean of 3.85 (SD = 1.213). The demand for tailored loan products aligned with income patterns received the highest mean of 4.01 (SD = 1.239), and flexible repayment options scored a mean of 3.83 (SD = 1.184), reflecting operators' preference for adaptable financial arrangements. Therefore, the study recommends that lending institutions like Tugende implement comprehensive financial education programs for boda-boda operators to enhance their understanding of loan terms and empower informed borrowing decisions. Additionally, introducing flexible repayment options that align with the income fluctuations of operators can help them manage financial commitments more effectively, reducing default risks. Lowering interest rates on loans is also suggested to enhance affordability, encouraging timely repayments and fostering a positive borrowing experience. Improved communication regarding loan terms is crucial for addressing operators' moderate understanding, ultimately building trust in the borrowing process. Finally, developing tailored loan products designed for boda-boda operators would cater to their unique financial needs, enhancing their overall repayment capabilities.