Analysis of determinants of effective loan repayment by small scale miners in Tanzania

The study deals with analysis of determinants of effective loan repayment by SSMs in Tanzania because of high loan default. Other studies put out borrower, lender and environment related factors to be potential factors that influence repayment. Questionnaires were distributed to various mining offices in Tanzania in order for SSMs to fill them when visiting the offices and mining sites. The distributed questionnaires were around 300 but only 225 were filled and collected. To test hypothesis, multiple regression analysis was used to find relationship of variables. With regards to borrower related factors, the researcher observed that SSMs income, loan utilization, business size, convenience of repayment, requested loan against loan given and number of years in SSM had a significant positive relationship with loan repayment. Whereas, number of dependants had significant negative relationship with loan repayment. In case of lender related factors (supervision and affordable interest rate) had significant positive relationship with loan repayment. Also, environmental related factors (government policy participation and Proximity from lender) had significant positive relationship with loan repayment. The study concluded that all borrower, lender and environmental related factors have significance relationship with loan repayment. The study recommends the government to increase participation policy formulation or renewal and access of energy, borrowers to have financial management skills and lenders to decrease cost of capital and increase supervision to the borrowers. Apart from this study, there are further area need to be studied include finding out if SSM is riskier sector compared to other sectors.