SACCO LOAN DEFAULT TRENDS AND THEIR IMPACT ON ENTREPRENEURIAL SUCCESS: UNDERSTANDING REPAYMENT CHALLENGES AND SOLUTIONS

This study investigates the persistent challenge of loan defaults in Rwanda's Savings and Credit Cooperative Organizations (SACCOs) and their impact on entrepreneurial success. Using a mixed-methods approach, quantitative data from SACCO loan records and surveys of 250 members were analyzed alongside qualitative interviews with 30 SACCO managers. Findings reveal an average annual default rate of 10%–11%, driven primarily by business failures (35%), misuse of loan funds (25%), and lack of financial literacy (20%). Statistical analysis, including regression and correlation tests, confirmed significant negative relationships between loan defaults and entrepreneurial outcomes such as business growth (r = -0.72, p < 0.001). Financial literacy training increased repayment likelihood by 2.5 times (OR = 2.5, 95% CI [1.8–3.6]). The study concludes that enhancing financial education and implementing flexible repayment schedules can significantly reduce default rates, fostering SACCO sustainability and entrepreneurial growth. Recommendations include comprehensive borrower education, tailored repayment plans, and robust risk management practices to ensure sustainable financial ecosystems.