Research Paper on Microfinance
1.1 Background to the Study.
Microfinance in the form of different informal institutions in Tanzania was provided through different means such as âUpatuâ and lending between friends either at work or between family members. The formal microfinance services in Tanzania started in the early nineties and we can say it is still at its infant stage. Because of this infancy, the competition in microfinance industry is still low and the clients were expected to be loyal to their institutions. These MFIs have not applied any strategic management techniques to their businesses and as the results suffer some symptoms that are linked to their general performance. Among these symptoms are low repayment rate, high portfolio at risk and high client drop outs rate. Client drop outs rate as one indicator of MFI performance is the main aim of this study. This being the case, MFIs have used different resources in their businesses to make sure they achieve their goals either socially or economically. These resources include clients for those offering different products such as savings, insurance, money transfers and loans. But for those offering only loans we call this resource borrower and it is through the borrower the MFIs can achieve their social and economic mission. As the time goes after the borrower accessed the MFI service, the borrower may decide to quit kindly or sadly depending on the reasons behind the move. Borrower or client moving out the MFI service is termed as client exits or drop outs and it has cost implications to the institutions in concerned.
The cost implication referred in this research proposal is what pushes so many researchers, practitioners and academicians to worry about it and try to found out reasons behind the client drop outs for better business management.
All researchers agree on the importance of knowing the reasons behind client exits and have tried to suggest approaches to manage them. Despite the importance of the subject few
Microfinance in the form of different informal institutions in Tanzania was provided through different means such as âUpatuâ and lending between friends either at work or between family members. The formal microfinance services in Tanzania started in the early nineties and we can say it is still at its infant stage. Because of this infancy, the competition in microfinance industry is still low and the clients were expected to be loyal to their institutions. These MFIs have not applied any strategic management techniques to their businesses and as the results suffer some symptoms that are linked to their general performance. Among these symptoms are low repayment rate, high portfolio at risk and high client drop outs rate. Client drop outs rate as one indicator of MFI performance is the main aim of this study. This being the case, MFIs have used different resources in their businesses to make sure they achieve their goals either socially or economically. These resources include clients for those offering different products such as savings, insurance, money transfers and loans. But for those offering only loans we call this resource borrower and it is through the borrower the MFIs can achieve their social and economic mission. As the time goes after the borrower accessed the MFI service, the borrower may decide to quit kindly or sadly depending on the reasons behind the move. Borrower or client moving out the MFI service is termed as client exits or drop outs and it has cost implications to the institutions in concerned.
The cost implication referred in this research proposal is what pushes so many researchers, practitioners and academicians to worry about it and try to found out reasons behind the client drop outs for better business management.
All researchers agree on the importance of knowing the reasons behind client exits and have tried to suggest approaches to manage them. Despite the importance of the subject few
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