A Dissertation Submitted in Partial/Fulfilment of the
Requirements for Award of the Degree of Master of Business Administration in
Corporate Management of Mzumbe University
This study assessed effectiveness of NPLs collection by loans recovery agencies in
Tanzania and was guided by three specific objectives. The first was to assess NPLs
collections rate among loans recovery agencies. The second was to assess extent of
NPLs collections using loans recovery agencies compared to NPLs collections by the
commercial banks. The third which is the last one was to assess the effectiveness of
the strategies used by loans recovery agencies as compared to those employed by the
commercial banks. The case study research design was used based on Dar es Salaam
City and involved five commercial banks which used loans recovery agencies to
collect their NPLs. A total of 100 respondents were selected using judgemental
method whereby 80 were from five commercial banks and 20 were from loans
recovery agencies. Questionnaire and documentary review were used to collect data
which were then analysed quantitatively using descriptive statistics and simple
mathematical computations. The results were presented using tables, numbers,
percentages and Bar charts. The findings showed that NPLs collections rate among
loans recovery agencies was generally low and their actual NPLs collections were
below expected collections. Further, it was revealed that NPLs collections by
commercial banks were comparatively higher than collections made by the loans
recovery agencies. Moreover, the commercial banks were found to use effective
strategies in NPLs collections compared to loans recovery agencies that is why NPLs
collections by commercial banks were above the collections by loans recovery
agencies. The conclusion drawn by this study is that loans recovery agencies in
Tanzania were not effective in NPLs collections of NPLs because they were not yet to
developed best technologies, internal resources and external networks. For the loans
collections agencies to achieve effectiveness in NPLs collections, they must develop
and use best technologies, internal resources such as staff and external networks to
facilitate close supervision and monitoring and follow-ups of the borrowers.