Challenges of 21st Century Micro-Credit Firms: Debt Recovery and Clients Attitude to Repayment

Abstract

The dual-faced challenge of micro financing has become worrisome among key players in the sector; while microcredit firms are faced with issues relating to debt recovery resulting from clients’ poor attitude towards repayment, clients are faced with the challenge of managing the credit. This study is however aimed at evaluating how firm skill is and structure can enhance debt recovery as well as establish the extent to which attitudinal disposition affect credit repayment by clients. It employed a survey of 40 credit officers drawn from 10 selected micro credit firms in Abeokuta metropolis who were purposively selected as well as random selection of 300 clients who obtain microcredit from the microcredit firms. The questionnaires were adapted from ASPIC Adjusted debt attitude survey and John Watson Materialism and Debt constructs. The analytical technique is multiple regressions. Research findings reveal that skills and structure have a direct effect on debt recovery and attitude disposition of client has a direct effect on credit repayment. It is therefore recommended that microcredit firms should investigate and monitor what the micro credit is meant for and if possible help the borrower in procuring the items/goods the credit is meant for as well as provide useful guide to borrowers on better ways to turnover proceeds from loan instead of diverting the loan