Managerial Competency and Profitability of Village Savings and Loan Associations in Mitooma District
Abstract
The research investigates how managerial competency affects the financial success of Village Savings and Loan Associations (VSLAs) operating in the Mitooma District of Uganda. The research investigates rural VSLA underperformance because these organizations serve as essential tools for financial inclusion and community development. The research uses human capital and resource-based theories to define managerial competency through its knowledge and skill, and ability dimensions while studying their effects on Return on Equity, Return on Assets, and Net Interest Margin financial performance metrics. The research used a cross-sectional quantitative approach to gather data from 138 participants who including 124 VSLA chairpersons and 14 Community Development Officers, through structured questionnaires. The analysis of data through Pearson correlations and multiple regression analyses showed that all managerial competency components, including knowledge (? =.147), skills (? =.644), and abilities (? =.194), produced positive and significant predictions of VSLA profitability. The results show that managerial skills play the largest role in determining VSLA profitability. The regression model demonstrated that 48.6% of profitability variation exists, while other contextual elements influence the results. The research demonstrates that leadership capacity-building investments should be considered essential for improving financial outcomes in rural savings groups. The research supports the implementation of customized managerial training programs and practical financial governance modules, and structured mentorship initiatives to boost VSLA sustainability in low-resource settings.
Downloads
References
Agrawal, A. (2021). Impact of Leaders' Competency on the Profitability of the Micro, Small, and Medium Enterprise. Global Journal of Enterprise Information System, 13(3), 20–34.
Ahmad, I., & Ahmad, S. B. (2021). Effect of managerial skills on the performance of small- and medium-sized enterprises: A case study in Pakistan. The Journal of Asian Finance, Economics and Business, 8(4), 161–170.
Al-Dmour, A., Al-Dmour, R., & Rababeh, N. (2021). The impact of knowledge management practice on digital financial innovation: the role of bank managers. VINE Journal of Information and Knowledge Management Systems, 51(3), 492–514.
Alesane, A., Yussif, K., & Tetteh Anang, B. (2019). Determinants of Village Savings and Loans Association membership and savings amounts in Awutu Senya West District of Ghana. Cogent Economics & Finance (just-accepted), 1707004.
Ameer, A., Naz, F., Gul Taj, B., & Ameer, I. (2022). The impact of managers’ personality traits on project success through affective professional commitment: the moderating role of organizational project management maturity system. Journal of Facilities Management, 20(2), 284–305.
Amponsah, D., Awunyo-Vitor, D., Wongnaa, C. A., Prah, S., Sunday, O. A., & Acheampong, P. P. (2023). The impact of women groundnut farmers’ participation in Village Savings and Loans Association (VSLA) in Northern Ghana. Journal of Agriculture and Food Research, 11, 100481.
Anggraini, P. G., & Sholihin, M. (2023). What do we know about managerial ability? A systematic literature review. Management Review Quarterly, 73(1), 1–30.
Apreku-Djan, P. K., Ameyaw, F., Ayittah, S. K., Opare, E. A., & Apreku, I. K. O. (2022). Effect of managerial competence on value-based financial performance of banks. International Journal of Academic Research in Business and Social Sciences, 12(7), 692–726.
Bhutta, M. K. S., Rana, A. I., & Asad, M. (2021). Trade Facilitation Reforms and Firm Performance: Evidence from an Emerging Market. Journal of International Trade and Economic Development, 30(8), 1172–1191.
Bode, B. B. (2020). A Review on the Influence of Managerial Skills of Managers on Performance of Corporate Organizations in Nigeria. International Journal of Management Science and Entrepreneurship, 19(7), 196–208.
Byukusenge, E., Munene, J. C., & Orobia, L. A. (2021). Managerial competencies and business performance: innovation as a mediator in Rwandan SMEs. International Journal of Law and Management, 63(5), 445–463.
Davies, M., Nutley, S., & Hughes, J. (2018). Evidence-Based Policy Making: What is it? How does it work? What relevance for developing countries? University of St. Andrews, Research Unit for Research Utilization (RURU).
Dawuni, P., Mabe, F. N., & Tahidu, O. D. (2021). Effects of village savings and loan associations on agricultural value productivity in the Northern Region of Ghana. Agricultural Finance Review, 81(5), 657–674.
?onlagi? Alibegovi?, S., & Mešanovi?, M. (2022). Knowledge management implications for the financial performance: A survey analysis. Management: Journal of Contemporary Management Issues, 27(2), 247–260.
Gazi, M. A. I., Al Mamun, A., Al Masud, A., Senathirajah, A. R. B. S., & Rahman, T. (2024). The relationship between CRM, knowledge management, organization commitment, customer profitability, and customer loyalty in the telecommunication industry: The mediating role of customer satisfaction and the moderating role of brand image. Journal of Open Innovation: Technology, Market, and Complexity, 10(1), 100227.
Inam Bhutta, A., Sheikh, M. F., Munir, A., Naz, A., & Saif, I. (2021). Managerial ability and firm performance: Evidence from an emerging market. Cogent Business & Management, 8(1), 1879449.
Kabii, L. K. K., & Kinyua, G. (2023). Managerial competencies and business continuity: A review of literature. International Journal of Education and Research, 11(2), 65–90.
Kiruru, A. K. (2022). Effect of Management Efficiency on Financial Performance of Deposit-taking Saccos in Kenya (Doctoral dissertation, University of Nairobi).
Krsti?, B., Boni?, L., Ra?enovi?, T., Jovanovi? Vujatovi?, M., & Ognjanovi?, J. (2023). Improving profitability measurement: impact of intellectual capital efficiency on return on total employed resources in smart and knowledge-intensive companies. Sustainability, 15(15), 12076.
Lagu, Y. E. (2023). Financial Management of Village Savings and Loans Associations in West Nile, Uganda. Financial Management, 9(1).
Maganga, A. (2021). Impact of microfinance village savings and loan associations on women’s empowerment and resilience against vulnerability in Malawi. International Journal of Rural Management, 17(2), 190–212.
Messabia, N., Beauvoir, E., & Kooli, C. (2023). Governance and management of a savings and credit cooperative: The successful example of a Haitian SACCO. Vision, 27(3), 397–409.
Muhunga Kule, B. J., Kamukama, N., & Nsambu Kijjambu, F. (2020). Credit management systems and financial performance of savings and credit cooperatives (SACCOS) in mid-western Uganda.
Muwereza, N. (2024). Village saving and loan associations and their contribution to employment creation: Evidence from smallholder farmers from eight districts in Uganda.
Namara, B., Oyagi, B., & Bateyo, A. (2023). Managerial competences and financial performance of savings and credit cooperatives in south western Uganda; A cross-sectional study.
Ndichu, J. K. (2021). Effect of Credit Management Practices on Loan Performance in Self-Help Groups in Kenya (Doctoral dissertation, KCA University).
Okello, T., & Mwesigwa, D. (2022). Analyzing the significance of village savings and loan association (VSLA) to community development in Uganda.
Okwurume, C. (2023). Managerial skills development and organizational profitability of multinational companies in Rivers State. International Academy Journal of Management, Marketing and Entrepreneurial Studies, 10(1), 16–32.
Oskouei, Z. H., & Sureshjani, Z. H. (2021). Studying the relationship between managerial ability and real earnings management in economic and financial crisis conditions. International Journal of Finance & Economics, 26(3), 4574–4589.
Sarwoko, E., & Nurfarida, I. N. (2021). Entrepreneurial marketing: Between entrepreneurial personality traits and business performance. Entrepreneurial Business and Economics Review, 9(2), 105–118.
Sedai, A. K., Vasudevan, R., & Pena, A. A. (2021). Friends and benefits? Endogenous rotating savings and credit associations as an alternative for women’s empowerment in India. World Development, 145, 105515.
Sedgwick, P. (2014). Cross-sectional studies: Advantages and disadvantages. BMJ, 348, g2276.
Shi, J., Mo, X., & Sun, Z. (2012). Content Validity Index in Scale Development. Journal of Central South University (Medical Sciences), 37(2), 152–155.
Simelton, E., Mulia, R., Nguyen, T. T., Duong, T. M., Le, H. X., Tran, L. H., & Halbherr, L. (2021). Women’s involvement in coffee agroforestry value-chains: Financial training, Village Savings and Loans Associations, and decision-making power in Northwest Vietnam.
Sreejesh, S., Mohapatra, S., & Anusree, M. R. (2014). Business Research Methods: An Applied Orientation. Springer.
Sseremba, J. K. (2022). Managerial competence and performance of savings and Credit co-operative societies (SACCOs) in Uganda. A case of Walimu Sacco in Kampala (Doctoral dissertation, Nkumba University).
Strugar Jela?a, M., Bjeki?, R., Berber, N., Aleksi?, M., Slavi?, A., & Mari?, S. (2022). Impact of managers’ emotional competencies on organizational performance. Sustainability, 14(14), 8800.
Ting, I. W. K., Tebourbi, I., Lu, W. M., & Kweh, Q. L. (2021). The effects of managerial ability on firm performance and the mediating role of capital structure: evidence from Taiwan. Financial Innovation, 7, 1–23.
Yamane, T. (1967). Statistics: An Introductory Analysis (2nd ed.). Harper and Row.
YEDI. (2018). African Youth Empowerment and Development Initiative (AYEDI); Village Savings and Loan Associations. Paper presented at The Bantwana Initiative of World Education, Inc., Bantwana.
Zainal, F. N. P., & Nurdasanah Putri, F. (2021, December). Government Management in Village-Owned Enterprises in Increasing Village Original Income In Kampar District. In ICLSSE 2021: Proceedings of the 3rd International Conference on Law, Social Sciences, and Education, ICLSSE, 9, 169.
Zell, E., & Lesick, T. L. (2022). Big five personality traits and performance: A quantitative synthesis of 50+ meta?analyses. Journal of Personality, 90(4), 559–573.
Copyright (c) 2025 Ronald Tugume, John Kule Baguma, Benjamin Musiita
This work is licensed under a Creative Commons Attribution 4.0 International License.
Author (s) should affirm that the material has not been published previously. It has not been submitted and it is not under consideration by any other journal. At the same time author (s) need to execute a publication permission agreement to assume the responsibility of the submitted content and any omissions and errors therein. After submission of a revised paper, the editorial team edits and formats manuscripts to bring uniformity and standardization in published material.
This work will be licensed under Creative Commons Attribution 4.0 International (CC BY 4.0) and under condition of the license, users are free to read, copy, remix, transform, redistribute, download, print, search or link to the full texts of articles and even build upon their work as long as they credit the author for the original work. Moreover, as per journal policy author (s) hold and retain copyrights without any restrictions.
