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 (β =.147), skills (β =.644), and abilities (β =.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.