Analysis of Credit Management Practices in Selected Savings and Credit Cooperatives in Eswatini

Thandeka Dube (MBA), & Happyson Bimha (DBA)
Department of Business Administration, Kwaluseni Campus, University of Eswatini, Eswatini

ABSTRACT

The focus of the research was understanding credit management strategies used in savings and cooperative societies with the view to improve management effectiveness. The research analysed  practices such as vetting  of loan applicants, rating of borrowers, classification of credit and reporting of credit. Thirty five participants participated in in-depth interviews and focus group discussions. The participants gave insight on how Eswatini savings and credit cooperatives managed the issuance of loans to clients. Results showed that the participants were generally satisfied with the manner in which credit was managed in their cooperatives.  However, it emerged that some of the processes in use were not cost effective as they were implemented to meet regulatory requirements at the expense of credit management principles and customer requirements. There was high risk of giving loans to potential defaulters because there was no integration between local cooperatives and the international credit bureau. The fact that information gathered during the vetting process was not effectively implemented when loans were issued to clients exacerbated the risk of advancing loans to potential defaulters. The research recommends the adoption of appropriate pricing strategies for savings and cooperative society’s services, training of staff and borrowers, encouraging cooperation and collaboration among stakeholders.

Key words: Credit management practices, Credit management principles, Issuance of loans, Potential defaulters, Savings and Credit Cooperatives (SACCOS).

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