Influence of social networks and social support on credit utilization in the Savings and Credit Cooperatives in Soroti District, Uganda

Microfinance models and programs tend to mimic local people’s support systems, especially their social networks, to ensure high repayment rate, efficient administration, and effective economic decisions. However, there is limited empirical evidence of their influence on credit use decisions. This paper examines the influence of social networks and social support on credit use decisions among SACCO members in Soroti district. Two hundred and fifty seven (257) respondents were randomly selected for study from Eleven SACCOs that were purposively selected from the five sub counties in the district. Data were collected using a cross-sectional questionnaire survey and analyzed using descriptive statistics, Chi-square analysis and regression analysis. Findings from this study revealed that the variability of the social networks was generally high but negatively related to credit utilization. Findings further indicate that effective utilization of credit is not necessarily dependent on the variability of social support accessed from social networks. Therefore, to ensure effective utilization of credit, SACCOs should disburse credit to borrowers with few network members but who are educationally, economically and occupationally privileged.