Impact of information & communication technology (ICT) on micro finance institutions (MFIs) performance: the case of MFIs in Dar es Salaam region.
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Date
2004
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Publisher
University of Dar es Salaam
Abstract
In recent years, microfinance institutions (MFIs) have found themselves in environments that are more challenging and dynamic than ever before. Technology and practice have changed very rapidly as a result of the revolution in ICTs. Technological developments and breakthroughs often give rise to varying productivity rates and standards of living. In Tanzania, information about how MFIs have benefited from using ICTs are scarce and not much is very well understood especially in relation to how these benefits have actually been realized. The objective of this study was to ascertain the impact of ICTs on MFIs performance. A survey of five MFIs was conducted to evaluate how they have benefited from adoption of new technologies. Findings reveal that MFI workers perceive efficiency, productivity and growth (outreach) levels in business operation have been improved due to adoption of ICTs. ICTs have been effective in time saving, cost reduction, allowing timely as well as accurately produced information and reports; minimize data entry process; and help to monitor loan repayments. Also, ICTs have been effective in eliminating many steps previously taken to arrive at similar decisions. Financial performance has been improved by 10% to 20%. However, most of MFI workers have not received adequate in-house ICT/IT training, which has been seen to be a great constraint to effective utilization of ICTs especially computers and its basic technologies. Findings also reveal that the constraint is due to lack of ICT adoption policy and strategies in institutions. From the findings, it is recommended that MFIs should, without delay, develop an institutional ICT adoption policy and strategies or formulate a common ICT policy within the sector. Through training, MFIs should invest on ICT manpower resources. The importance of MFIs diversifying and introducing new services including products as a strategy to a more sustainable and viable operation was also highlighted. The government should give support to MFIs on ICTs adoption, as micro-finance and ICTs play an important role in poverty alleviation such that exploring mutual benefits and synergy between the two disciplines can yield promising dividends.
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Keywords
Information and communication technology, Banks and banking, Microfinance
Citation
Killagane, K. (2004). Impact of information & communication technology (ICT) on micro finance institutions (MFIs) performance: the case of MFIs in Dar es Salaam region. Masters dissertation, University of Dar es Salaam. Available at (http://41.86.178.3/internetserver3.1.2/detail.aspx?parentpriref=)