Research Paper on Microfinance

These Miff have not applied any strategic management techniques to their businesses and as the results suffer some homonyms 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 MFC performance is the main aim of this study. This being the case, Miff have used different resources in their businesses to make sure they achieve their goals either socially or economically.

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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 ND It Is through the borrower the Miff can achieve their social and economic mission. As the time goes after the borrower accessed the MFC service, the borrower may decide to quit kindly or sadly depending on the reasons behind the move. Borrower or client moving out the MFC 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 studies have been done especially In Tanzania.

The only reported research on the subject matter was that done by Micro Save Africa. For example Maximally et al (1999) in their research of drop outs among Tanzania Micromanage said that among the reasons that lead to clients dropping-out include: the rigidity of products, the narrow range of products and services, the expectation of grants, group Hyannis, time consuming weekly meetings, natural calamities, competition, seasonality factors and overall poor economic conditions.

They studied three Miff and suggested two main classes of dropouts – voluntary dropouts and forced dropouts. In addition, there are clients who ГarrestГ0; from taking loans but anticipate borrowing again in the future. Maximally et al (1999) concluded that very high dropout rates were very expensive due to the cost of recruiting and training very important concluding statement in the executive summary Maximally and others pointed out that the cumulative dropout rate in one of the Miff was over 50%.

The rates for the other Miff were unknown because they were not tracked and this made to fail to analyses the trends, causes and relationships of drop out in those Miff. While most of the aforesaid researches concentrated on identifying the trend and reasons behind customer drop outs, this research will try to identify the reasons and determinants of customer drop outs, the research will go further to determine their relationships and group them in connection to MFC performance. And group them in connection to MFC performance. 1. Micromanage Developments in Tanzania and Customer Dropouts Rate in East Africa Economic reforms have been implemented in Tanzania since the mid-sass which essentially entailed the shift from an administratively managed and public sector led economy to a market oriented and private sector led economy. Financial sector reforms were part of these broader economic reforms. Financial sector reforms took the form of decontrolling interest rates, restructuring existing public sector banks and allowing entry of private banks. (Wangle and Elektra 2004).

Private initiatives, Nags and cooperatives including CACAOS were discouraged, and all financial institutions were state owned. The government provided basic services free (Maximally 1999) . The shift in policy in Tanzania started in 19984 and gradually introduced reforms towards a free market economy. To achieve this sustainability as per national micromanage policy there arises the need for Miff to track and monitor their client drop outs. As stated earlier less is known about drop outs rate for Miff in Tanzania, but much more is known from East Africa Miff.