Abstract
Research on performance of Microfinance Institutions (MFIs) has attracted a great attention as the demand for microfinance services increases. One of the popular microfinance models is reaching the poor through Savings and Credit Cooperative Societies (SACCOs). A critical area is to assess what drives the SACCOs performance. Most research on SACCOs concentrate on assessing their performance without looking at the contribution of key performance drivers such as growth strategies. Little research has been done on the influence of intensive growth strategies (product development and market development) particularly on the SACCOs outreach performance in Tanzania. This study investigates the contribution of both product development and market development on outreach performance (increased number of SACCOs’ members). Through a multiple regression analysis, the study tests seven hypotheses which are geared towards finding the contribution of both product development and market development on outreach performance. A cross-sectional survey design and multistage probability sampling technique enabled the participation of 167 key SACCOs’ managers (loan officers) from three zones of Tanzania whose views were collected through questionnaires. The study has revealed the significant contribution of both product development and market development on outreach performance. SACCOs need to design growth strategies which suit the needs of their clients and their characteristics. Although an outreach performance can be driven by intensive growth strategies, we suggest that, the SACCOs’ growth should also be harmonized with their financial performance.
Highlights
Microfinance has been receiving a great deal of positive publicity (Lieberman, Anderson, Grafe, Campbell, & Kopf, 2008)
We define Savings and Credit Cooperative Societies (SACCOs)’ product development as frequent introduction of new types of loans, flexibility in changing the types of loans depending on the circumstance, frequent reduction of time to process and deliver the loan to the borrowers, and frequent changing of loan requirements
On average, surveyed SACCOs set aside Tanzanian Shilling (TZS) 697.62 million annually for lending their borrowers
Summary
Microfinance has been receiving a great deal of positive publicity (Lieberman, Anderson, Grafe, Campbell, & Kopf, 2008). It has evolved as popular development aid tools and a major component of most financial systems in many less developed countries (Bogner & Koivulehto, 2008; Gonzalez, 2007). Its aim is to serve individuals who would face difficulties to access finance from banks, thought not to need financial services, considered un-creditworthy or too costly to serve It can be offered, often without collateral, to an individual or through group lending (Hien, 2008)
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
