The Financial Performance dilemma in Agricultural Cooperatives of Kamwenge and Sheema districts in Uganda. The Credit Facilitation Decisions perspective

Abstract

This paper argues that forming agricultural cooperatives was to mitigate agricultural financing deficiencies experienced by small holder farmers. These cooperatives however, are experiencing financial performance challenges; decline in accessible credit compared to farmer’ credit demand and increased loan non- repayments. The paper examined this dilemma from a credit facilitation decision perspective. A cross- sectional research design along a mixed methods approach for data collection was utilized. The sample size was 113 credit facilitation decision makers from six agricultural cooperatives in Kamwenge and Sheema districts in Uganda, with an 88.5% response rate. The bivariate findings reflected a positive significant relationship between credit facilitation decisions and financial performance. A breakdown of which reflected: A positive significant relationship between credit capital sourcing decisions and financial performance with r of 0.300** Sig (=0.002). A positive significant relationship between credit terms and screening decisions and financial performance with r of 0.504** Sig (=0.000). A positive significant relationship between credit terms and screening decisions and financial performance with r of 0.309** Sig (=0. 0.002). The multi-variate findings reflected r2 of 21.8%. To mitigate the financial performance dilemma, agricultural cooperatives need to adopt optimal techniques of making credit facilitation decisions with emphasis on setting credit terms and screening decisions