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Interdisciplinary Studies on Information Technology and Business (ISITB)


Editor-in-chief: S. S. Msanjila , Mzumbe University, Tanzania, Email: simon.msanjila@gmail.com
Published: Quarterly
Copyright: 2012, North American Institute of Science and Information Technology (NAISIT)
ISSN: ISSN 1923-970X (Print) - ISSN 1923-9718 (On-line) - ISSN 1923-9726 (CD-ROM)

Impact of ICT Utilization on Efficiency and Financial Sustainability of Microfinance Institutions in Tanzania
1 : Volume 1, Issue 1: January -March 2013 ( 2013-03 )

Abstract:

Problem Statement: This article examines the impact of ICT adoption on efficiency and financial sustainability of Microfinance Institutions in Tanzania. Most of microfinance institutions in Tanzania operate in losses due to high costs associated with operations and service delivery to the poor. Evidences around the world have reported increased importance of ICT usage as a means for cost reduction, better service delivery, increased efficiency and high customer satisfaction in Microfinance Institutions. The article seeks empirical evidences on the level of ICT usage and its impact on efficiency and financial sustainability of Microfinance institutions in Tanzania. Methodology: The study used DEA model to estimate technical efficiency of Microfinance institutions in Tanzania. Financial self sufficiency was estimated using operating self sufficiency ratio while ICT usage level was measured using ICT usage index. Regression analysis model was used to test for association and cause and effect between ICT with efficiency and financial sustainability. Results: The study reports the presence of positive but weak association and insignificant course and effect between ICT usage with efficiency and financial sustainability. ICT adoption was found to have a positive correlation with efficiency and financial sustainability in Microfinance Institutions. The correlation results imply that ICT usage has a positive impact on efficiency and sustainability as they move in the same direction. The strength of the impact was found to be low due low investments in ICT among Microfinance firms. Conclusions: Microfinance Institutions in Tanzania should increase their ICT investments; expand their customer base and increase ICT usage level to realize the benefit of ICT in their organizations. The Government of Tanzania should review the current ICT policy in order to create better and supportive ICT policy than the current policy.

Author(s): ERASMUS FABIAN KIPESHA - China - Dongbei University of Finance and Economics
Keywords: Microfinance Institutions, Efficiency, Financial Sustainability, ICT usage
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