Examination of the Effects of Internal Factors on Performance of Microfinance Institutions in Rural Tanzania: A case of Chamwino District.

Abstract

Micro Financial Institution provide financial services to low-income earners who lack access to ordinary banking system, but the truth is that this service to a large extent remain in urban area leaving the rural people who are in a great need over such service. This study analyzed internal factors for performance of microfinance institutions in rural Tanzania. The study was conducted at Chamwino District in Dodoma region. The study adopted convergent mixed methods design whereby a total of 50 loan officers from different microfinance institutions were selected and involved in the study. Data were collected through questionnaires and interviews. Qualitative data were analyzed by using content analysis whereas quantitative data were analyzed through multiple regressions. The study findings revealed that institution capacity, quality of loan portfolio and saving mobilization and outreach were internal factors that were positive significantly related to the performance of microfinance institutions in the rural Tanzania whereas capita asset ratio was negative and significantly related to the performance of microfinance institutions in rural Tanzania. This study recommends the financial institutions to understand and focus on specific internal factors that relate with performance of their institutions, government through the ministries concern should work hand in hand with this micro finance to determine those forces that limit their performance.