The challenges facing microfinance institutions in supporting entrepreneurship in tanzania case study of Mombo Talanta saccos in Korogwe district
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Date
2011
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Publisher
Sokoine University of Agriculture
Abstract
Financial institutions play an important role in Tanzania’s economic progress.
Failure of financial institutions, particularly insufficient or ineffective institutions
result in high transaction costs limiting poor people’s accesses to formal financial
services. This research paper discusses the importance of SACCOS in mobilising
savings and credit through providing low-income people with financial services in
Tanzania. The main purpose of this study is to find out weather savings and credit
cooperative societies face problems in supporting the growing entrepreneurial
activities in respective areas of the country. This is done by analysing the Mombo T
SACCOS as a case study. Results obtained show a number of challenges which need
to be addressed these include: Weak sources of income for the organization, poor
loan repayment, lack of effective strategic planning skills, lack of entrepreneurial
skills among SACCOS stake holders, increased competition, poor remuneration of
employees, lack of adequate capacity to assess and manage risks, increased loan
demand, poor accessibility of cooperative services from the district level, failure in
supporting the small entrepreneurs, use of traditional technology in daily activities,
lack of publicity programme on the firm’s activities, lack of research on customer
wants/services, and lack of external auditing. To improve performance of Mombo T
SACCOS the following are recommendations of the study; use of Strategic
management which applies effective strategic planning as the best alternative, putting
in place an effective information system to facilitate decision making, putting efforts
in place to sensitize members and the general public on SACCOS benefits, facing up
the challenges of providing innovative products and services; strengthening capitaliii
and loan base; provision of key knowledge /skills to leaders and staff to modernize
their activities; encourage use of better loan appraisal and follow-up methods,
introduce use of corporate and other planning tools.
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Keywords
Microfinance institutions, Entrepreneurship, Economic progress.