A dissertation in Partial Fulfillment of the requirement for the award of Degree
of Master Business Administration in Corporate Management (MBA-CM) of
Mzumbe University Dar es Salaam Campus College
This study assesses various factors affecting micro entrepreneurs in servicing their
loan from microfinance institutions in Tanzania. Promotion for Rural Initiative and
Development Enterprises (PRIDE) Tanzania, Kariakoo branch was the study area
chosen for this study. Officials at PRIDE Kariakoo branch formed the unit of
analysis and they were divided into three categories of head of departments,
supervisors and operational staff. Another unit of analysis was PRIDE Kariakoo
branch customers.
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Despite growing in number of microfinance institutions, access to finance by micro
entrepreneur is still a challenge as most of them lack credit history and holding
defaulting history. This study then tries to dig into details to understand what other
factors that affect micro entrepreneurs in servicing their loans; specifically the
research also seek to examine the operating environment of micro entrepreneurs, to
assess loan usage and its impact on micro entrepreneurs business, to assess viability
of the loan write up (identify gap between write ups and implementation) and
assessing the effectiveness of the Business Development Services (BDS) provided to
the clients before and after accessing the loan. The research used both primary and
secondary data sources. For primary data, observation, questionnaire and interview
were used to collect data.
The study found that lack of good business infrastructure, poor record keeping, poor
and misuse of loan received, PRIDE direct microfinance scheme in place, high
interest rates, poor capital base and low operating capital, withdrawing from the
business and lack of saving culture are some of the factors affecting MSME’s to
service their loan from microfinance institutions.
The research suggests a need for a serious turnaround from Direct Microfinance
Scheme to Triangular Credit Extension scheme and a need for all stakeholders to join
hands for developing a sound business infrastructure for MSME’s growth and
development in the country.
The researcher really hopes that output from this study will be of practical use to
PRIDE.