The Use of Mobile Technology to Enhance the Interaction Between Microfinance Institutions and Micro Businesses in the Tanzanian Context.

Abstract

Micro businesses (MBs) are operations run by their owners in various fields of activity, and are located in areas with high footfall, such as bus stands, markets, and around road junctions. The owners of MBs are characterised by low levels of education, a lack of finance, full-time business activities, and a lack of collateral for loans. However, the first two of these are the most pressing challenges, and require the attention of microfinance institutions (MFIs) to provide microfinance services, including training, which is an important service. This can help in capacity building for MBs, and allows MFIs to reduce loan defaults, thus strengthening the interaction.Although training can enhance the business performance of MBs in Tanzania, it may lack continuity due to the geographical distances and times involved. There is also limited research to explain how training can be delivered effectively and efficiently without affecting the working schedules of MBs. Against this background, this study focuses on the development of a pilot prototype for a mobile training application that can contextualise MBs needs in terms of addressing the relevant geographical and time constraints.This project employs a design science research (DSR) approach, reinforced by design thinking, frugal innovation, and usability evaluations, to design and develop a pilot prototype of a micro business-microfinance (MBMF) mobile training application. To accomplish this, several studies are conducted that correspond to the various activities of the DSR framework: problem explication, definition of requirements, design and development, demonstration, and evaluation. A qualitative study was conducted at the problem explication to explore the nature of the interaction between MFIs and MBs, and to identify the services offered in this interaction, the challenges encountered during the interaction and the proposed solution to the practical problem. Quantitative and qualitative studies were conducted at the definition of requirements to describe the general requirements for mobile microcredit services and specific requirements for the provision of mobile training to MBs. In addition, the functional and non-functional requirements of the potential end users were identified.The qualitative study carried out at the design and development focused on interpreting the defined requirements to create a workable pilot prototype of an MBMF mobile training application. The study also implemented the developed prototype to determine its feasibility in terms of training. At the evaluation, we established the perceptions of potential users of the features and utility of the pilot prototype. This study contributes to existing research by using design thinking, frugal innovation, and usability evaluation to reinforce the stages of the DSR framework to produce a ‘good enough’ solution to a practical challenge. Furthermore, this work sets out design principles for mobile training in the context of MFIs and MBs in Tanzania.