Abstract:
The study examined the effect of credit management on financial performance of Small Sized Enterprises (SSEs) in Juba, South Sudan. A Case of Rural Finance Initiative (RUFI). The study was guided by the following objectives; examine the effect of credit appraisal on financial performance of SSEs in Juba, to assess the effect of credit risk control on financial performance of SSEs in Juba, to establish the effect of loan collection policy on financial performance of SSEs in Juba. The hypothesis of the study was: There is no statistically significant effect of credit management on financial performance of SSEs in Juba. A sample size of 159 was determined from a population of 265 using Slovene Method. Purposive and Convenience sampling techniques were used to select the respondents from the MCI and the SSEs. The respondents were issued with self-administered questionnaires which had closed ended questions and face to face interviews were conducted among administrative staff of RUFI.
The correlation results indicated a significant positive effect of credit appraisal on financial performance (r = 0.763 with probability value (p = 0.000). Credit risk control on financial performance of SSEs (r = 0.668 with probability value (p = 0.002). Loan collection policy on financial performance of SSEs (r = .583 with probability value (p = 0.003) and 68% of financial performance of SSEs in Juba was explained by credit management through credit appraisal, credit risk control and loan collection policy. Therefore, improving credit management through credit appraisal, credit risk control and loan collection policy guarantees financial performance of SSEs as it was revealed that both credit appraisal, credit risk control and loan collection policy predict variances in financial performance of SSEs.
The study, concludes that improving credit management through credit appraisal, credit risk control and loan collection policy guarantees financial performance of SSEs as it was revealed that both credit appraisal, credit risk control and loan collection policy predict variances in financial performance of SSEs.
It was recommended that there is need for MFIs to enhance their client appraisal techniques so as to improve their financial performance, there should be prior customer evaluation before loans are granted, and a continuous process of assessment before and during the course of loan repayment, there is also need for MFIs to enhance their credit risk control this will help in decreasing default levels as well as their non-performing loans and that MFIs should enhance their collection policy by adapting a more stringent policy to a lenient policy for effective debt recovery, this will improve the credit management and overall financial performance of the MFI.
