The impact of growth strategies on the performance of microfinance institutions in Tanzania : the case of savings and credit cooperatives corganizations (SACCOs)

This study finds the impact of growth strategies on the performance of Microfinance Institutions (MFIs) in Tanzania. It sought to establish a link between the growth strategies and the performance of MFIs. Two intensive growth strategies; product development and market development were linked with both the financial and outreach performances of MFIs, the Savings and Credit Cooperatives Organizations (SACCOs) being the case study. The variables’ relationships were established through explanatory studies under the positivism paradigm. Both primary and secondary data were used in the study. The study adopted a random sampling technique and its sample size was 180 SACCOs. Primary data were collected through questionnaires and 167 SACCOs positively responded. The Chi-square and multiple regression analyses were used to test the four hypotheses. The calculated Cronbach's coefficient alpha for each measured variable and the entire questionnaire provided an excellent reliability. Face validity ensured the validity of the instrument tool. The impact of product development on the outreach performance of MFIs in Tanzania was revealed. Market development was found to be a key driver of the outreach performance of MFIs. It also directly related to the financial performance of MFIs in Tanzania. In order to attain better performances, MFIs need to frequently carryout market researches so that they fully understand the changing needs in the microfinance sector. Their marketing strategies should always focus on increasing the outreach but at the same time influencing a positive financial performance. Also, MFIs need to collaborate with all key industry’s stakeholders in order to better serve their clients.