Challenges of individual lending in microfinance: the case of PRIDE Tanzania

The objective that guided this study was to explore challenges facing MFls when introducing individual loan product. The study was carried out al PRIDE Tanzania Dar es Salaam region because the institution was selected for a case study Findings from the study indicated a number of challenges facing both MFls and clients in the micro finance industry including institutional capacity to meet financial, human resource and MIS requirements for new product. Other challenges at institutional level are failure of many clients to meet collateral requirements and poor knowledge on record keeping. For clients, the challenge was lack of registered properties and high costs of accessing loans. Major recommendations that were drawn from the study include the need for MFls to conduct market research aims at studying clients' profiles and establish expected demand for new products and level of competition to assist institution during product designing phase. The need for strengthening human resource and MIS capacities was phase recommended for smooth implementation of the pilot processes as well as rolling out of the product. Review of pricing policies was suggested to minimize clients' costs of borrowing. For MFls' clients, the need to undergo training for capacity building on business management and record keeping was recommended to improve performance of their businesses and facilitate assessment processes. In addition, sensitization of clients to register landed properties was recommended. Furthermore, efforts of creating conducive environment for the support of MFls' initiatives done by government and its agencies should be continuous in order to bring positive results, not only to MSMEs but also to the informal sector and for improvement of country's economy at large.