Assessment of conflict between clients and management perception as a factor limiting sustainability of microfinance institutions: a case study of Pride Tanzania.

Microfinance is a new method of offering financial services to the low-income sector of a population. During the 1990's the world witnessed the flourishing of Microfinance Institutions (MFIs) - mostly NGO's that relied heavily on donor funds. Of recent there has been tendency for the donors to withdraw from financing the MFIs. As a result, the MFIs have now evidently acquired commercial motives in reaching the low-income clients. Consequently there is currently a lot of emphasis in transforming the MFIs from being donor dependent into being self sustainable. The Promotions for Rural Initiatives and Development Enterprises (PRIDE Tanzania) is one of such MFIs. The conceptual frame-work and literature reviewed suggested that the issue of sustainability is of paramount importance to the MFIs, and the client is the core determinant of this. The main objective of this study was to find out if there is any gap between the clients' and management's perception on the quality of service of the MFIs and thus determining the sustainability of the institutions. The results were expected to establish what MFIs can do to improve the quality of service so as to attain their sustainability. ACCION CAMMEL was used to analyze the sustainability of the MFI while SERVQUAL instrument was used to analyze the gap between the clients' expectations and perceptions, and the perceptions of the management on the quality of service. The results show that: there indeed exists a gap between the expectations and perceptions of the clients and those of the management. The findings indicate that service quality specifications are not based on market research orientations to determine exactly what clients expect from the MFI as service providers. Apparently upward communication is inefficiently affecting change of policies to improve services to clients. Recommendations on how to improve the services and thus meeting the customer expectations, leading to customer loyalty and lowering cost of attracting new customers are given at the end. With these recommendations to breech the gap between the perceptions of the two groups, it is expected that the MFIs will attain sustainability in time and thus remaining operationally in existent in the wake of donor independence.