Abstract:
The main purpose of this study was to examine the challenges of loan recovery in multi-purpose agricultural cooperatives in Angolelana Tera woreda of North Shoa zone. In accomplishing this objective, data were collected from both primary and secondary sources. Sample cooperatives were selected by using random sampling technique. Then, 131 samples of member borrowers and nonmember household respondents were selected using systematic random sampling from each sample cooperative area based on their proportions. Descriptive statistics were used to describe selected explanatory variables from the demographic, socio-economic and institutional characteristics of the respondents which revealed that there was significant mean and percentage difference regarding age, family size, and land size, number of livestock owned, annual income and saving habits. The result of the T-test showed that family size, livestock ownership, annual income and saving habit were the statistically significant factors influencing timely loan recovery performance positively. In general, from the total variables included in the study, education level, number of livestock owned, land size, age of the household, family size and saving habit of the respondents were found to be the most significant variables contributing to the recovery of loan positively. The interview result also shows that poor loan recovery performance of the respective cooperatives emanated from the borrowers and the institutions.
Overall, the study recommended that improving the livestock sector, educating households and their family members, designing a reasonable time period of loan recovery and promoting saving habit of households are deemed to be important priority areas aimed at the achievement of successful loan recovery via the implementation of timely follow-ups and promotion of production increasing technologies and delivery of sustainable loan facilities by the cooperatives. The cooperatives also should use some collateral and expected to improve their leadership commitment in order to enhance the performance of loan recovery.
