INFORMATION TECHNOLOGY AND PERFORMANCE OF MICROFINANCE

INSTITUTIONS IN TANZANIA

A Case of SACCOS in Dar es Salaam Region

YEAR THREE, SEMISTER TWO

SEMESTER PROJECT

COLMAN, MIRAJI S

A Research Report Submitted in Partial Fulfilment of the Requirements for the Award of
Bachelor of Science in Aaccounting and Finance of Ardhi University

DEPARTMENT OF BUSINESS STUDIES

SCHOOL OF EARTH SCIENCES, REAL ESTATE, BUSINESS AND
INFORMATICS
ARDHI UNIVERSITY
DAR ES SALAAM JULY 2022

1
 INFORMATION TECHNOLOGY AND PERFORMANCE OF MICROFINANCE
INSTITUTIONS IN TANZANIA

A Case of Saccos in Dar es Salaam Region

YEAR THREE, SEMISTER TWO

SEMESTER PROJECT

COLMAN, MIRAJI S

A Research Report Submitted in Partial Fulfilment of the Requirements for the Award of
Bachelor of Science in Aaccounting and Finance of Ardhi University

DEPARTMENT OF BUSINESS STUDIES

SCHOOL OF EARTH SCIENCES, REAL ESTATE, BUSINESS AND
INFORMATICS
ARDHI UNIVERSITY
DAR ES SALAAM JULY 2022

2
3
 DEDICATION
This research report is dedicated to my mother ZUHURA MNONDWA KALOMANI, my
uncle MKOMBOZI MHANDO, and my sister ZAWADI KILENJA for their sacrifices,
encouragement and motivation.

4
 DECLARATION
I, Colman Miraji s; declare that the content of this report are the results of my study and
funding and, to the best of my knowledge, they have not been presented anywhere for a
Diploma, Degree or any professional award in any institutions of Higher Learning.

…………..…………………………………………
COLMAN MIRAJI S
Department of business studies
School of Earth Science, Real Estate, Business Studies and Informatics
Ardhi university
Dar es salaam

SUPERVISOR’S DECLARATION
This report has been presented as a semester project in partial fulfillment of the requirements
for the award of the B.Sc. Degree in Accounting and Finance of Ardhi university.

………………………………….. ……………………………………….
MR NURDIN HUSAMA KATEBALILE DR SAMWEL SANGA ALANANGA
HEAD OF DEPARTMENT BUSINESS
STUDIES
SCHOOL OF EARTH SCIENCE, REAL
ESTATE, BUSINESS AND INFORMATICS
ARDHI UNIVERSITY
DAR ES SALAAM

5
 ACKNOWLEDGEMENT
This research report is an outcome of the labours and inputs of numerous persons. I take this
opportunity to show appreciation to all of them. It is impossible to mention them all,
nonetheless, I am grateful to the following:
First and foremost, I thank God for assisting me mentally, physically and morally throughout
the entire period of this study.
I would like to give my deepest thanks to my supervisor CPA NURDIN HUSAMA
KATEBALILE who was cooperative in providing his significant clarification and guidance
towards completion of this study. Also, I would like to provide special appreciation to my
lecturer and Head of Department of Business studies Dr SAMWEL ALANANGA for
assisting me on the entire process of report writing.
My heartfelt appreciation should go to the management of all SACCOS for accepting me to
undertake the research study.
Special admiration should go to my parents, relatives, colleagues and friends who assisted me
psychologically, morally and financially for the whole period of the study.

6
 ABSTRACT

Information and communication technologies (ICT) has come to play a crucial role in
extending financial services to low-income individuals, groups and microenterprises.
Services such as small loans, collateral-free deposits, retirement pensions and insurance that
were previously less accessible to majority the poor can now be accessed via microfinance
institutions (MFIs). However, the effectiveness of MFIs depends on the adoption of ICT and
its application. Thus, this study investigated how the adoption of ICT enabled the
performance of MFIs in Tanzania.

Through a quantitative census survey research design, the study obtained data from seven
SACCOS MFIs located in Dar es Salaam. Data was gathered via self-administered
questionnaires and the obtained data was analysed through descriptive statistics and
regression model. The findings revealed that ICT innovation influenced SACCOS
performance by 70%, ICT infrastructure drove SACCOS performance by 52%, and ICT
awareness induced SACCOS performance by 58%. Hence, ICT was a key factor in the
overall and specific performance of MFIs such as SACCOS in Tanzania.

7
DEDICATION...........................................................................................................................3
DECLARATION.......................................................................................................................4
ACKNOWLEDGEMENT........................................................................................................5
ABSTRACT...............................................................................................................................6
LIST OF TABLES....................................................................................................................9
LIST OF ABREVIATION.....................................................................................................10
LIST OF FIGURES................................................................................................................11
CHAPTER ONE.....................................................................................................................12
INTRODUCTION...................................................................................................................12
1.1 Background to the Study............................................................................................................12
1.2 Statement of the Problem...........................................................................................................15
1.3 Objectives of the Study..............................................................................................................15
1.3.1 General Objective...................................................................................................................15
1.3.2 Specific Objective...................................................................................................................15
1.4 Significance of the Study...........................................................................................................15
1.5 Scope of the Study.....................................................................................................................16
CHAPTER TWO....................................................................................................................17
LITERATURE REVIEW......................................................................................................17
2.1 Introduction...............................................................................................................................17
2.2 Definitions of Key Terms..........................................................................................................17
2.3 Theoretical Literature Review...................................................................................................18
2.3.1 Technological Acceptance Model (Tam)................................................................................18
2.3.2 Resource Based Theory..........................................................................................................19
2.4 Empirical Literature Review......................................................................................................20
2.5 Research Gap.............................................................................................................................22
2.6 Conceptual Framework..............................................................................................................23
2.7 Research Hypothesis..................................................................................................................23
CHAPTER THREE................................................................................................................25
RESEARCH METHODOLOGY..........................................................................................25
3.1 Introduction...............................................................................................................................25
3.2 Research Philosophy..................................................................................................................25
3.3 Research Design........................................................................................................................25
3.4 Description of the Study Area....................................................................................................26
3.5 Target Population......................................................................................................................26

8
 3.6 Sample and Sampling Procedures..............................................................................................26
3.7 Data Collection..........................................................................................................................26
3.8 Data Analysis, Presentations and Findings................................................................................27
CHAPTER FOUR...................................................................................................................28
DATA INTREPRETATION AND ANALYSIS OF THE RESEARCH FINDNGS.........28
4.1 Introduction...............................................................................................................................28
4.1.1 The Study Context..................................................................................................................29
4.2 Demographic Information..........................................................................................................29
4.2.1 Response Rate.........................................................................................................................29
4.2.2 Gender of Respondents...........................................................................................................29
4.2.3 Age of Respondents................................................................................................................29
4.2.4 Education Level of Respondents.............................................................................................30
4.2.5 Work Experience of Respondents...........................................................................................30
4.3 Descriptive Statistics of Study Variables...................................................................................31
4.3.1 ICT Innovations the Performance of SACCOS in Tanzania...................................................31
4.3.2 ICT Infrastructure in the Performance of SACCOS in Tanzania............................................33
4.3.3 ICT Awareness in the Performance Of SACCOS in Tanzania................................................34
4.4 Regression Analysis on Variables..............................................................................................36
4.4.1 Relationship Between ICT Innovation and Performance Of SACCOS...................................36
4.4.2 Relationship Between ICT Infrastructure and Performance Of SACCOS..............................37
4.4.3 Relationship Between ICT Awareness and Performance Of SACCOS...................................38
4.4.4 Relationship Between ICT Innovation, Infrastructure and Awareness in Operational
Performance of SACCOS................................................................................................................39
CHAPTER FIVE....................................................................................................................41
SUMMARY, CONLUSION AND RECOMMANDATIONS.............................................41
5.1 Introduction...............................................................................................................................41
5.2 Summary...................................................................................................................................41
5.3 Conclusion.................................................................................................................................41
5.4 Recommendation.......................................................................................................................42
5.5 Suggestions for Further Studies.................................................................................................42
REFERENCE..........................................................................................................................43
APPENDICES.........................................................................................................................46

9
 LIST OF TABLES
Table 4.1: Gender of respondent …………………………………………………….
Table 4.2: Age of respondent…………………………………………………………
Table 4.3: Education level of respondent……………………………………………
Table 4.4: Work experience of respondent………………………………………….
Table 4.5: ICT innovation……………………………………………………………
Table 4.6: ICT innovation……………………………………………………………
Table 4.7: ICT infrastructure………………………………………………………..
Table 4.8: ICT awareness…………………………………………………………….
Table 4.9: Relationship between ICT innovation and performance of saccos……
Table 4.10: Relationship between ICT infrastructure and performance of saccos..
Table 4.11: Relationship between ICT awareness and performance of saccos……
Table 4.12: Relationship between ICT innovation, ICT infrastructure and ICT
awareness and operational performance of saccos…………………….

10
 LIST OF ABREVIATION
ATM - Automated Teller Machine
ICT - Information Communication Technology

IT - Information Technology

MFIS - Microfinance Institutions

POS - Point of Sales

SACCOS - Saving and Credit Co-operative Society

SSPS - Statistical Package for Social Sciences

11
 LIST OF FIGURES
Figure 4.1: composition of saccos under study………………………………..

12
 CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Microfinance can be understood as the provision of financial services in the form of small
collateral-free deposits, loans, retirement pensions and insurance to low-income groups and
microenterprises. Microfinance institutions also often add to their financial services’
portfolio, a provision of social services such as health care, insurance, pensions, business
development or literacy training and consulting services.

In terms of funding sources and organizational missions, the microfinance industry in

Indonesia is competitive and fragmented. Commercial banks definitely play an essential role
in microfinance because they are self-sufficient and serve both economically active and poor
people. Conventional banks including the government-controlled People's Bank of Indonesia,
People's Credit Banks, Islamic banks, BinaArtha Microfinance Institute (BAMFI), and
cooperatives, represent the five main types of microfinance institutions (MFIs). They serve a
total of 36.4 million borrowers and amount to US$240.4 million in the aggregate outstanding
loans. The local units of the Bank of Indonesia, Private People's Credit Banks, and BAMFI
are the largest suppliers, extending 98 percent of loans and serving 97 percent of the
population. (Suryadi, 2020)

In some sections of Bangladesh, information technology has been integrated into all financial
affairs, allowing organizations such as enterprise and microfinance to better their operations
and expand. Prior to the 1970s, most financial services were offered by governments or
donors through subsidized rural credit programmes. As a result, there were often large loan
defaults, huge losses, and limitations in reaching disadvantaged rural communities.
(Robinson, 2001). More recently, the public sector accounting in Bangladesh has reported
increasing benefits of integrating ICT in its daily operations (Rajib & Hoque, 2017).

In Africa, the relationship between information technology and microfinance is still

developing whereby just about a third of MFIs are computerized, and they are rapidly using
other technologies to expand their reach and profitability. Information technology may
dramatically reduce costs while also increasing the speed and precision of data processing, all
of which have significant implications for portfolio quality (Frankiewicz, 2003). Information
technology allows organizations to handle and retain data in a quicker, neater, and consistent
manner compared to manual approaches. It also makes information flow easier and faster,
13
considerably boosting communication both within and beyond the institution (ibid). In recent
years, digitial financial services have expanded in the continent, enabling the registration of
about 338 million accounts as of 2017, signifiying increased inclusion (Bersudskaya et al.,
2018).

14
Information technologies (IT) have recently emerged as a useful tool for reducing operational
expenses in east African nations such as Kenya, Uganda, and Tanzania, enabling financial
institutions to grow and reach rural areas and low-income locales. IT in the form of laptops
and personal computers with internet access, mobile phones, automated teller machines
(ATMs), or point-of-sale (POS) devices in postal or retail stores may be cheaper to set up and
more convenient for customers than branches in rural locations (Ivatury, 2005).

Unlike predominantly cash-related transactions, transactions conducted through IT systems

and devices require less time and eliminate the need for a teller. Instead of handing cash over
to a teller when making a deposit or repaying a debt, a customer may simply give cash to a
clerk at a store, swipe a debit card through a POS card reader, and punch in an identification
number to approve the transaction. In wide areas, although with many internal and external
challenges, microfinance institutions would be debited by an amount equivalent to the cash
deposit, and the customers would be credited. Given that the transaction is electronic, the
institution considers it to be cheaper to process.

Commercial banks have also entered the microfinance market by opening microfinance
windows, putting MFIs under further pressure. Information technology is used by these banks
to support their financial services. They are requiring financial institutions to use information
technology as a means to cut operational expenses, allowing them to grow into rural areas.
Mobile banking, an Automated Teller Machine (ATM), or a Point of Sale (POS) device at a
retail or postal store are examples of information technology developments (Hishgsuren,
2006) are examples of services provided through Information Technology. IT has and
continues to cause noteworthy modifications in the way microfinance operations are
conducted. Specifically, there are three areas where these changes will be most critical:
payment systems, operating systems and in credit algorithms (Rhyne, 2006.)

Henceforth, the main objective of this study was to advance the knowledge of how IT
contributes to the performance of microfinance institutions in the process of providing
financial services to the poor in order to help to combat poverty and foster the institutional
development.

15
1.2 Statement of the Problem
Despite the complication of IT in the microfinance institutions and the rapid development of
technology in the world, majority of the institutions in the developing countries still demand
the potential of applying information technology effectively as is the case in the developed
world. Contemporary advancement in various fields have gone hand-in-hand with the
increase in ICT application. ICT has revolutionized the daily operations of organizations
around the world. Yet, the impact of ICT has mostly been felt where the technology has been
embraced. In developing countries like Tanzania, ICT potentials have not fully been unlocked
especially by microfinance institutions such as SACCOS.

In order for SACCOS to not only survive but also ensure its sustainability, it needs to adopt
long-term initiatives which will allow it to effectively adopt and utilize ICT to solidify its
competitive. Therefore, the study intends to identify the contributions of information
technology in the performance of SACCOS in Tanzania.

1.3 Objectives of the Study

1.3.1 General Objective

The main objective of this study is to evaluate the perceived effect of ICT in the performance
of SACCOS in Tanzania.

1.3.2 Specific Objective

i. To evaluate the ICT infrastructure on performance of SACCOS in Tanzania.
ii. To evaluate the ICT innovations in SACCOS performance.
iii. To evaluate the ICT awareness in performance of SACCOS.

1.4 Significance of the Study

The study was intended to bring changes in microfinance context through which it will help
to simplify all manual work and to extend the financial services to remote rural areas. The
study intended to strengthen the knowledge of the critical issues about the benefits and
relevant approaches of applying information technology to the Microfinance Institutions. The
study will help the policy makers in both microfinance policy and ICT policy to formulate the
policies that promote the application of information technology. But also, the study pinpoints
out areas for further research, thus providing the chance for further studies in the fields of
information technology in the microfinance industry.

16
1.5 Scope of the Study
Kothari, Kumar, and Uusitalo (2014) defined scope of a study as the demarcation of the
study. This study focuses on Information technology and performance of SACCOS in
Tanzania. The study involved the SACCOS associations located in Dar es salaam region.

17
 CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction
This chapter begins by presenting the definition of key terms relevant to this study. This is
followed by a review of theories and then an assessment of various literature on ICT
application in financial institutions. The final segments include the research gap and
conceptual framework illustrating the role of Information and communication technology in
performance of Microfinance institutions in Tanzania.

2.2 Definitions of Key Terms

Microfinance

The National Microfinance Policy (2017), defines microfinance as the delivery of financial
services that range from micro-saving, money transfers, microloan, micro-leasing, micro
insurance, micro-pensions, micro-housing, financial training and business expansion to the
low-earning people (individuals, households, and enterprises) that are structurally ignored by
the financial system.

Microfinance institution

According to (Haji, 2013), microfinance institutions are financial institutes that are
responsible for the provision of financial services to the poor who are normally excluded
from the official banking systems due to their lack of collateral and low repayment capacity.

Information Technology (IT)

Refers to the technology which uses computers together, process, and store, protect and
transfers information (Djazair, 2011). It involves the utilization of software, hardware,
services and the supporting infrastructure in managing and delivering information. In today’s
world, the term Information and Communication Technology (ICT) has become a commonly
used word, because of the increased use of computers that are not connected to the network
(Djazair, 2011).

Development of microfinance institutions

This refers to the changes to the entity specialized in provision of financial services to low
income earners by proper processes in the provision of the services, quality of the services,

18
simple and well-designed system, efficiency, productivity and financial management,
(Jansson et al., 2020).

Information and Communication Technology (ICT)

ICT is an umbrella concept that entails any communication device or application including
network software and hardware, radios, mobile phones, televisions, computers, satellite
systems and so forth, together with their associated services and applications, for example,
video-conferencing and distant learning. ICT is made up of three components: IT equipment
(computers and related hardware), communications apparatus, and software. Software
encompasses the procurement of pre-packed software, modified software and in-house
advanced software. As a form of technology, ICT involves the improvement, maintenance,
and use of computer systems, software, and networks for handling, processing and
distribution of data. Also, it can be understood as the broad subject area concerned with all
aspects of processing and managing information, particularly within a large organization or
firm (Regina 2015).

Microfinance performance
Refers to a subjective measure of how well a microfinance institute utilizes it assets to
achieve its objectives (Ortega, 2010). Performance may be subdivided into two minor
concepts of efficiency and effectiveness. The microfinance sector is driven by a two-way
objective, often referred to as the micro finance schism, that is, how to reach the maximum
number of the poor population (social performance) while also maintaining financial
sustainability (financial performance).

2.3 Theoretical Literature Review

In this section the researcher explained theories that did guide the study. These included the
theory of technological acceptance model and the Resource Based Theory.

2.3.1 Technological Acceptance Model (TAM)

TAM is a theory of information systems that describes why and how users come to embrace
and utilize a technology (Venkatesh & Davis, 2000). The model is derived from another
theory known as the Theory of Reasoned Action (TRA) which explains a person’s behaviour
through his or her intentions (Fishbein & Ajzen, 1975). While the TRA aims to create a
theory that explains general human behaviour, TAM concentrates on the factors that motivate

19
a person’s overall technological acceptance. TAM consists of two primary factors, Perceived
Usefulness (PU) and Perceived Ease of Use (PEU), both acting as triggers to a person’s
intention in the use of a certain technology (IBID, 1975).

Perceived usefulness proclaims that, technology can be adopted by the person or community
if he/she or they believe that such technology will have utility and add value in their daily
work performance (Davis, 1986). The presence of such an intention influences the user to
have a certain attitude towards using the system. In turn, this attitude will affect their actual
system use. The TAM assumes that the extent of usefulness, in part, relies on how easy the
system is to utilize.

Perceived Ease of Use (PEU) usually describes that the acceptance of a particular technology
base depends on how easy and effortless it is to use. Basically, society is willing to adopt any
type of technology so long as it requires less effort to use it due to its minimal complication
(Davis, 1986).

The assumption of this theory are that, we need to make sure that any given technology finds
the correct level in each of these two factors. A technology that is very useful may, for
example, be accepted by users, even when it appears difficult to utilize. Similarly, a
technology that is not particularly effective might still be used in case it is very easy to
comprehend and utilize. But a technology that receives higher marks in both perceived
usefulness and perceived ease of use will always tend to be the most readily accepted.

Moreover, the theory also asserts that the more aware people are in utilizing a newly
introduced technology, the easier it will be for them to accept it within the society compared
to a difficult technology which tends to make people hesitant in using it. In relation to
SACCOS in Tanzania, some staff can be hesitant to use ICT because of the complex system
associated with it.

2.3.2 Resource Based Theory (RBT)

This theory evaluates the relationship between IT utilization and institutional performance.
Specific institutional IT resources include IT infrastructure, IT human resources, and IT-
enabled intangibles. The resource-based theory, according to Ortega (2010), allows an
organization that possesses strategic resources to develop a golden opportunity in securing a
competitive advantage over its rivals in areas such as strengthened financial situation,
adequately-managed processes, innovative ideas and maintaining a global presence. A value
of a resource remains important only in relation to how it helps a firm create strategies that

20
permit it to exploit opportunities and reduce threats. Also, a resource cannot be substitutable
when alternative ways to gain the benefits provided by the resource are impossible to come
across. A rare resource affords strategic advantages to the company that possesses it. Usually,
competitors find it difficult to duplicate resources that are hard to imitate. Some of these
resources are protected by various legal provisions, for instance, patents, copyrights, and
trademarks.

The RBT incentivizes a microfinance institution to question on what makes it distinctive or

unique? Why do certain customers only buy from them and not others? What crucial success
factors to aim for in their business field? The basic answers to some of these questions could
include the provision of excellent service, elevated technical literacy, teamwork,
responsiveness to consumer expectations and market needs, as well as investment in research
and development.

Furthermore, Ortega (2010), argues that institutions often aim to attain two major objectives
namely, control over resources so as to lessen their dependence on other firms, and retain
control of resources that heighten dependence of other firms on them. Hence, firms align their
resources, knowledge, skills and expertise into core competences in order to gain a
competitive edge over competitors.

2.4 Empirical Literature Review

This section reviews the different studies that have been carried out that are either directly or
indirectly related to this study. This review leads us to identify the knowledge gap that this
study aims to bridge.

Juma (2012), used a descriptive survey to investigate the impacts of ICT adoption in the
financial performance of commercial banks in Kenya. Through the analysis of information
obtained via semi-structured questionnaires it was revealed that ICT improved the operations,
liquidity, and asset quality of commercial banks in Kenya.

Likewise, Imran, Abdul et al. (2012) examined the role of IT in bank efficiency and whether
there existed a relationship between IT adoption and bank efficiency measures? The findings
showed that the adoption of information systems contributes to the increase in market share,
lowers operational costs, improves customer service, and assists banks in introducing new
products and services to consumers.

21
On another note, Gurbaxani (2018), explored the contribution of information technology in
the performance of firms. The objective of the study was to determine impact of ICT on
SACCOS performance. The study employed cross-section design. The population in the
study was 50 SACCOS personnel and customers. Questionnaires, interview guide,
observation and documentary reviews were used as data gathering tools. The study found out
that the information technology is valuable in the improvement of the organization
performance. The study recommended that information technology resources may create
temporary competitive advantages that motivate performance differences among firms
therefore it is important to invest on it so as simplify provision of financial services to the
financial institutions.

Furthermore, Mathias (2019), assessed the use of ICT in the functioning of microfinance
institutions in Tanzania, particularly by the microfinance Tanzania limited. The study was
interested in examining the challenges facing the adoption of ICT in the functioning of
microfinance institutions. The study adapted case study design. From a sample of 73
respondents, the study found that ICT utilization had a direct correlation with microfinance
institution performance. ICT helped microfinance firms improve their efficiency and
effectiveness in offering services to customers, promoting business operations, improving
managerial decision-making, promoting online and offline easy access to customers and
strengthening certain competitive positions of microfinance firms in the market. The study
recommended that the internal ICTs challenge ought to be resolved via proper staff training,
that is, the delivery of ICT-related knowledge to workers with respect to the strategic plans
and operational administration of the microfinance firms and also recruitment of external
specialized consultants.

Kipesha (2018), also examined the efficiency of microfinance organizations in East Africa.
By employing a production methodology to approximate the efficiency scores of about 35
MFIs under both constant and variable returns to scale, the study depicted MFIs to have
higher average efficiency scores. The findings further showed banks and non-banking
financial firms to be relatively more efficient than cooperatives and NGOs. On the other
hand, country efficiency averages indicated that Kenya and Rwanda featured higher average
efficiency scores over the last three years under constant returns to scale while Uganda and
Tanzania had higher average efficiency scores under variable returns to scale. It was
recommended by the study that, microfinance firms in the region ought to improve their

22
efficiency through better allocation of input resources used and reduce the amount of wastage
since a large part of inefficiency was discovered to be technical in nature.

Yaron (2020), conducted an examination of rural microfinance challenges and best practices

in Tanzania. Specifically, the study wanted to ascertain the impacts of ICT utilization in the
development of microfinance organizations’ loan services. It was discovered that MFIs faced
certain challenges in providing loan services including poor accurate and timely processing
capability of large loan applications, inefficient loan portfolio outreach and tracking.

A study by Mwela (2014), on ICT utilization in the improvement of microfinance institutions

services in urban areas of Ilala municipality in Dar es Salaam, Tanzania set out to determine
the link between ICT and the development of MFIs. Employing a cross-sectional design, the
study involved 70 SACCOS personnel and customers from whom data was gathered via
questionnaires, interview guide, observation and documentary reviews. The study found that
MFIs faced challenges related to ICT usage such as inadequate ICT infrastructure, negative
perceptions of stakeholders, and the overall utilization of ICT in the microfinance business
was still low. The study advised that there was a need for better integration of ICT aspects in
order to boost the daily performance of MFIs in the country.

Similarly, Kumarasamy (2013), inquired upon the effects of information technology on the
growth of financial institutions. Also, through a cross-sectional design involving 50
respondents, the study portrayed information technology as a vital tool in mitigating the
practical problems in business and that it was a catalyst in the directly and indirectly success
in all businesses. The banking Industry and microfinance institutions were not exempted from
this as trends revealed that since the onset of ICT adoption, the two sets of organizations have
experienced growth rapidly, especially as the number of mobile phone users increases day by
day, particularly smartphone users. The study recommended that through the use of mobile
phones, particularly smartphones, the volume of banking transactions increased daily, direct
microfinance institutions expand to rural areas to fetch more customers.

2.5 Research Gap

The empirical reviews document the positive role played by ICT in the operations and service
delivery of microfinance institutions. However, this positive role has relied on various factors
such as the economic status of a country whereby ICT adoption has been deeper in developed
countries compared to in developing countries. Furthermore, developing countries are

23
characterized by huge gaps between rural and urban areas when it comes to ICT adoption. In
an effort to ensure greater adoption of ICT by microfinance institutions in developing
countries like Tanzania, this study first seeks to bridge the knowledge gap by investigating
how ICT can contribute to the performance of microfinance institutions.

2.6 Conceptual Framework

A conceptual framework is a figure that elaborates the research problem and explans the
correlation among factors that are crucial to a particular study. Maxwell (2011), defined it as
a model that provides a rational relationship among variables under investigation. It also
provides the researcher with the logical propositions that can be tested using appropriate
statistical procedures. The conceptual framework offers a basis in grasping the links that exist
between the variables under inquiry. The current study focuses on ICT and performance of
SACCOS in Tanzania. As shown in Figure 2.1 below, ICT innovation, ICT infrastructure,
ICT awareness are believed to influence the operational performance in microfinance
institutions.

Figure 2.1: conceptual framework

Independent variable dependent variable

ICT innovation

ICT infrastructure Operational performance

ICT awareness

2.7 Research Hypothesis

The conceptual model of this study consists of three hypotheses outlined below:

24
H01: There is no significant relationship between Innovations and the performance of
SACCOS.

H02: There is no relationship between ICT infrastructure and the performance of SACCOS.

H03: There is no significant relationship between ICT awareness and performance of

SACCOS.

25
 CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction
This chapter presents the methods, tools and procedures that were utilized in the collection
and analysis of data. Specifically, the chapter describes the research philosophy, study design,
population, sample and sampling procedures. In addition, the chapter also elaborates the data
collection and analysis methods.

3.2 Research Philosophy

Saunders (2016), defines research philosophy as the belief in the manner in which research
data will be gathered, analysed and decoded to attain deeper understanding of the study
objectives. This research used the positivist research philosophy. For Kothari (2014),
positivism comprehends gathering information and its measurement to being reliable and that
the result is limited to data collection and interpretation in an objective manner.

Therefore, to analyse the relationship between ICT innovation, ICT infrastructure, ICT
awareness and SACCOS performance, the researcher adopted positivism so as to ensure that
the data being collected was free from the researcher’s values and feelings, and that the study
findings are free from any form of biasness.

3.3 Research Design

Thomas (2010), refers to study design as a blueprint that guides the researcher in gathering,
analyzing, and decoding data in order to answer the research problem. Kothari (2014),
meanwhile describes research design as the organization of conditions for the collection of
data and its analysis, for the purpose of combining research purpose with economy in
procedures. It is the framework that entails the strategies that the researcher uses to generate
objective, accurate, and interpretive data in order to meet the research objectives.

A quantitative census survey research design was adopted whereby the study involved 7
licensed SACCOS in Dar es salaam city. This rationale for using this design is derived from
its utility in describing, explaining and exploring the existing relationship of two or more
variables at a given point in time (Mugenda, 1999). Surveys are also appropriate because it
focuses on a specific population and thus helps in obtaining quick and immediate
information.

26
3.4 Description of the Study Area
The study will be conducted in Dar es salaam region where seven SACCOS institutions were
selected for study: USALAMA WA RAIA SACCOS, TANESCO SACCOS, ARU SACCOS,
NGOME SACCOS, NBAA SACCOS, DAWASCO SACCOS and UDSM SACCOS.

3.5 Target Population

Kothari (2014), defines a study population as the whole group of elements or people that are
considered to be suitable for investigation. Davidson (2004), refers to target population as the
sum of all the respondents that meet the selected criteria to be studied. It is the group from
which the researcher draws the conclusion of the study (Bricki, 2007).

According to Mugenda (1999), a census survey is whereby data is collected from each and
every unit belonging to the population whereby population refers to all the items in the field
of inquiry. The population of this study involves SACCOS firms in Dar es salaam region.
From the SACCOS organizations, the manager, employees, and staff in the ICT department
were respondents selected to provide data via questionnaires.

3.6 Sample and Sampling Procedures

Blessing and Chakrabarti (2009), state a sample to be a subset of the population under
investigation. It was also defined by Wilson (2013), as the smallest quantity of respondents
that is selected from the target population to be studied.

Probability and non-probability sampling techniques have been employed in the study. That
involve to select any member from the population where by each member had equal chance
of being selected and through the use of non-probability sampling respondents will be drawn
through the researcher’s own judgment on which member to include in the population
respectively. The research target sample will involve one selected SACCOS which was
sampled within the population of Microfinance institutions. Respondents to be included in the
study sample are the employees and staff. The sample size which will be drawn from
SACCOS comprised the employees and staff officers whereby the study intended to consider
a sample size of 30 as respondents.

3.7 Data Collection

The researcher employed self-administered questionnaires to obtain data. The questionnaire
comprised of open- and close-ended questions so as to give the respondents room provide
well-thought out information that acts as a basis of good judgment. For Mugenda (1999),
questionnaires are instruments for data collection that elicit written responses from subjects

27
under investigation. The advantage of using the questionnaire was that the data obtained
would be easy to process and analyze statistically.

Both primary and secondary sources of data were employed to gather data for the study.
Primary data was obtained through interview guide with open-ended questions for each
category of respondents (SACCOS officials and employees). The Questionnaires were used
to gather views from the target respondent in order to obtain an in-depth and comprehensive
data regarding the variables of the research study.

3.8 Data Analysis, Presentations and Findings

The researcher examined gathered data to conduct inferences via a series of operations which
involved editing to remove discrepancies, classification of data on the basis of similarity and
subsequent tabulation to relate variables. Consequently, the refined data was analyzed
through descriptive statistics that featured mean scores and percentages that determine
varying degrees of responses. Descriptive statistics was employed to describe data in a way
that reveals the overall response pattern. Moreover, regression analysis was used to determine
the correlation between the study’s quantifiable variables. Finally, findings were offered via
both graphical and tabular depictions (histogram, bars and pie charts).

Regression analysis was also applied to help forecast the correlation between variables.
Specifically, this study utilized a linear regression model to investigate the relation between
performance and its numerous determinants. Also, the study investigated the causal-effect
and the strength of the relationships. Performance in this study was measured by productivity
changes and time saved in operation. The determinants considered were infrastructure,
innovations and awareness. The model below was used to analyse this correlation:

Y= α + βi X1+ βi X2+ βi X3+ ε

Whereby Y = Performance as measured by productivity changes / profitability (income)
α= Constant term
βi = Beta Coefficient
X1= Infrastructure
X2=Technology innovation
X3= Awareness
ε= Error term

28
 CHAPTER FOUR

DATA INTREPRETATION AND ANALYSIS OF THE RESEARCH FINDNGS

4.1 Introduction
The research sought to investigate the effect of IT in the performance of SACCOS in
Tanzania. This chapter presents research findings, discussion and analysis of data collected
based on responded questionnaires. The findings of this research were based on the real
situation found during the field work and some ideas from the SACCOS. The number of
respondents that took part in this survey and completely filled the self-administered
questionnaires were thirty in total.

The first part in the presentation of the findings involved the profile of the respondents,
secondly was the perceived effect of ICT in the performance of SACCOS which specifically
looks at ICT factors such as innovation, infrastructure and awareness. All analyses were done
using the Statistical Package for Social Sciences (SPSS) version 20. For the purpose of easily
managing the data and its longevity, Ms.-Excel was employed as well in capturing
information which were entered and verified after rigorous coding. Then the data was
dissected in relation to the objectives of this study as shown in figure 4.1 below.

Figure 4.1: composition of saccos under study

SACCOS
DAWASCO
NGOME7SACCOS; 3
SACCOS;
MLIMANI
SACCOS; 10
URA SACCOS; 37
NBAA SACCOS; 7

ARDHI UNI-
VERSITY SAC-
COS; 7

TANESCO SACCOS; 30

Source: Field data (2022)

29
4.1.1 The Study Context
This study covers seven saccos which include USALAMA WA RAIA SACCOS, NBAA
SACCOS, TANESCO SACCOS, ARU SACCOS, NGOME SACCOS, MLIMANI SACCOS
and DAWASCO SACCO’S.

4.2 Demographic Information

The study sought to establish the respondent’ background details. In this regard, as a result,
the respondent’s profile was analysed as follows; gender, age, education level, work
experience and professional qualifications

4.2.1 Response Rate

From a targeted sample size of 35 respondents, only 30 participants provided information
through the questionnaires, amounting to a response rate of about 85%, a very acceptable rate
to make general conclusions. Hence the response rates were considered admissible especially
given the assertions by Nzioka & Waithaka (2021), that a response rate of 50% is appropriate
for analysis and reporting, a rate of 60% being generally good, meanwhile a rate of 70% and
over to be excellent.

4.2.2 Gender of Respondents

Under this subcategory, findings found the gender to be fairly distributed with 53% of the
respondents being males and 47% being females. This signifies that the respondents
encompassed different genders that prompt a significant impact on the way of thinking, thus,
affecting the results of the study (Table 4.1).

Table 4.1: Gender of respondents

Gender Frequency Percent
Female 14 47
Male 16 53
Total 30 100

Source: Field data (2022)

4.2.3 Age of Respondents

Most of the SACCOS sector employees (33%) were aged 25-30 years, followed by those
aged of 31-35 years (27%), then employees in the age group of 36-40 years (23%), and so
forth, up until the least populated age group of above 51 years (3%). These findings infer that

30
respondents’ ages were spread out, an aspect that entails deeper variation in knowledge and
experiences.

Table 4.2: age of respondent

Age Group Frequency Percent

25-30 Years 10 33
31 - 35 Years 8 27
36 - 40 years 7 23
41 - 45 years 2 7
46 - 50 years 2 7
Above 51 years 1 3
Total 30 100
Source: Field data (2022)

4.2.4 Education Level of Respondents

Another measure of respondents’ demography was education level as depicted in table 4.3
below. The largest group was the bachelor degree holders at 63%, remotely followed by
master’s holders with 23%, and lastly, those with diploma education level at 10%. Education
highly influences a person’s attitudes, the manner in which they observe and understand any
particular social phenomena. The results suggest that the respondents possessed necessary
academic knowledge to contribute relevant feedback in the issue being investigated.

Table 4.3: Education level of respondents

Education Frequency Percent
Diploma Level 3 10

Degree Level 19 63

Masters Level 8 27

Total 30 100

Source: Field data (2022)

4.2.5 Work Experience of Respondents

Finding in table 4.4 below signal that most have for 6-10 years (50%), followed by those who
worked for 0-5years (30%), and only a mere 20% of the respondents had worked for more
than ten years in the field. Work experience not only informs personality but all one’s
command in a certain sector since it directly highlights their know-how and skills. The

31
implication of this subcategory is that it illustrates that majority of the respondents gained
valuable experience within the MFI field, making them remarkable respondents in providing
viable responses to the survey questions.

Table 4.4: work experience of respondents

Work Experience Frequency Percent
0 - 5 years 9 30
6 - 10 years 15 50
Above 10 years 6 20
Total 30 100

Source: Field data (2022)

4.3 Descriptive Statistics of Study Variables

Under this segment, descriptive analysis was performed with reference to each question
found in the questionnaire. Such analysis was aimed at providing frequency, percent, mean
and other measures of central tendency and variation. Also, five-point Likert scales were
utilized in order to measure qualitative responses quantitatively. Strongly disagree
represented the weakest point while strongly agree represented the strongest point. With each
statement formed under each variable, the average score for the findings was computed to
form values for that statement. The average ranging from 1 to 1.499 was considered to be
strongly disagree whereas the value ranging from 1.5 to 2.49, 2.5 to 3.49, 3.5 to 4.49 and 4.5
to 5 were regarded as disagree, neutral, agree and strongly agree respectively.

4.3.1 ICT Innovations the Performance of SACCOS in Tanzania

The study investigated the effect of Innovations to the performance of Saccos in Tanzania.
Respondents were presented with a general question on the extent their organization design
new products and services to the members where most of the respondents were strongly
disagree (72%).

To assess extent to which innovation affect the performance of saccos in Tanzania,

respondents were presented with list of four statements and asked to state the extent
technology affected saccos performance. Response were on five-point Likert scale with
answer ranging from 1- Strongly Disagree,2- Disagree, 3- Fairly disagree, 4- Agree and 5 –
Strong Agree. To enhance interpretation of results each statement was averaged by treating

32
the response as scores. An average close to 75% indicated the respondent were perceived the
factor affecting saccos performance to every large extent and value close to 25% indicated
the opposite.

Respondent were observed to agree with statements that “innovation has improved provision
of service, innovation has improved efficiency, innovation has improved time spent in
providing service and innovation has attracted many customers. This has shown on the table
4.5.
Table 4.5: ICT innovation

Mea Std.
Uses   SD D FA A SA n Dev.
F - - 1 6 23 4. 0.30
ICT innovation has improved service
% - - 3 20 77 90 5
ICT innovation has improved F - - - 9 21 4. 0.46
efficiency % - - - 30 70 70 6
ICT innovation has improved time F - - - 3 27 4. 0.52
spent in providing service % - - - 10 90 73 1
ICT innovation has attracted many F - - 3 8 19 4. 0.68
customers % - - 10 27 63 53 1
Source: Field data (2022)

To assess the extent of saccos ICT innovation of new service and process in Tanzania,
respondent was presented with a list of four service to state the extent where saccos
introduced the service and product to members. Response were on five Likert scale with
answer ranging from 1- Strongly Disagree,2- Disagree, 3- Fairly Agree, 4- Agree and 5 –
Strong Agree. To enhance interpretation of results each statement was averaged by treating
response as scores. The majority were strongly disagreed. This has been depicted in table 5.6.

The overall average stood 62% indicating majority were strongly disagree with most
statements. However, respondent was observed to agree with statements that “is there new
process introduced which save time in, loan application, membership registration and online
desk help” where majority were strongly agree by 93% which is supported by Hine and
Kapeleris (2006) that process innovation refers to the adaption of new or significantly
improved production methods – methods that may involve changes in equipment or

33
production organization or both. According to OECD (2010), in times of crisis there must be
a focus on the contribution of ICT to innovation and growth and performance

Table 5.6: ICT innovation

 Field   SD D FA A SA Mean Std. Dev.
Mobile bank for credit and F 23 5 2 - -
1.30 0.596
savings % 77 17 7 - -

F 17 10 3 - -
Digital field automation (DFA) 1.53 0.681
% 57 33 10 - -

F 18 12 - - -
Card service and ATMs 1.40 0.498
% 60 40 - - -

F 16 11 3 - -
Branch office franchise 1.57 0.679
% 53 37 10 - -

F - - 1 3 26
Online help desk 4.83 0.461
% - - 3 10 87

F - - - 1 29
Online Loan application 4.97 0.183
% - - - 3 97

F - - - 3 10
Online membership registration 4.90 0.305
% - - - 27 90

F - - - 1 3
Online help desk 4.97 0.183
% - - - 29 97

Source: Field data (2022)

4.3.2 ICT Infrastructure in the Performance of SACCOS in Tanzania

The study also sought to find out the effect of the Infrastructure on performance of Saccos.
Respondents were asked a general question on whether their Sacco had infrastructure of
computer systems to support day to day activities of the Sacco while majority (90%) where
positive.

Respondents were presented with four statements on the ICT Infrastructure on performance
of Saccos and asked to state the extent ICT infrastructure affected Sacco performance.
Responses were on a five-point Likert scale with answers ranging from 1- strongly disagree
2- disagree 3- Fairy agree to 5- strongly agree. To enhance interpretation of the results, each
statement was averaged by treating the responses as scores. An average close 90% indicated
that the respondents were perceived the factor to affect to affect Saccos performance to a very
large extent and a value close to 10% indicated the opposite. This has shown on table 4.7

34
From the results the overall average worked out to 90% indicating that most respondents
were positive with most statements. Respondents were observed to unanimously agree with
the statements that “The existing infrastructure helped to cultivate new markets/competitive
edge-90%” and “The existing infrastructure made communication easy-90%”, According to
Francois and Machim (2007) they consider the use of mobile telephone as a determinant of
infrastructure development and that communication costs are an important part of trade costs,
these studies conclude that improvement of the related infrastructures have a positive effect
on bilateral trade. On the other hand, respondents refuted with the statements that “How is
system interface? Is it easy to use -90%” and “The existing ICT infrastructure support online
enquires 90%”?

Table 4.7: ICT infrastructure

Mean Std.
Response   SD D FA A SA Deviation

Basing on your experience, is there back F

- -
3 - 27
4.80 .610
office management information system %
- -
10 - 90

F 3 27
The existing infrastructure made - - -
4.90 .305
communication % 10.0 90
- - -

Basing on your experience, are there enough F 2 1 27

- -
hardware components such as computer, 4.83 .531
laptop and tablets to perform your daily task % 7 3 90
- -
1 1 28 4.90 .403
F - -
3 3 93
Membership registration % - -
5 5 20 4.50 .777
F - -
17 17 67
Membership card requesting % - -
1 1 28 4.90 .403
F - -
3 3 93
Loan application % - -
1 1 28 4.90 .403
F - -
3 3 93
Online help desk % - -
Source: Field data (2022)

4.3.3 ICT Awareness in the Performance Of SACCOS in Tanzania

Level of awareness on the performance of Saccos in Tanzania was also evaluated.
Respondents were asked to state to what extent their organization used ICT to create
awareness to the members and public about their products and services. Majority of the
respondents (100%) reported to a great extent (To a very large extent to a large extent).

35
To assess extent to which level of awareness affected performance of Sacco’s in Tanzania,
respondents were presented with a list of four statements and asked to state the extent the
factors affected Sacco performance. Responses were on a five-point Likert scale with
answers ranging from 1-strongly disagree through 3fairly agree to 5- strongly agree. This has
shown on the table 4.8.

To enhance interpretation of the results, each statement was averaged by treating the
responses as scores. An average close 100% indicated that the respondents were perceived
the factor to affect to affect Sacco performance to a very large extent.

However, respondents unanimously supported the statements that; “My organizations inform
members of new products and services -84%”. also, officer was asked their computer literacy
level where 73% were very good, 23% were excellent and 3% were good. This indicate staff
was well equipped with computer skills to perform their operations.

Table 4.8: ICT awareness

S F Std.
    D D A A SA Mean Deviation

Basing on your experience does the F - 30

- - -
Sacco’s have awareness campaign to 5 0
staff member. % - 100
- - -
                 
V Std.
    P G VG E Mean
P Deviation

F 1 22 7
How do you rate your computer - -
4.2 0.484
literacy / knowledge
% 3 73 23
- -
My organizations inform members F - - - 5 25 4.1 0.463
of new products and services
% - - - 16 84

Source: Field data (2022)

36
4.4 Regression Analysis on Variables

4.4.1 Relationship Between ICT Innovation and Performance Of SACCOS

As shown in Table 4.9, the correlation coefficient of the relationship between ICT innovation
and operational performance is R = 0.702. This means that innovation has a 70.2% impact on
business performance. The model showed R squared equal to 0.493; This means that
innovation explains about 49.3% of the variance in sacco's performance. The differences
identified show that innovation is one of the drivers of Saccos's performance.
In addition, the P-value in the model summary in Table 4.9 was used to test the relationship
between innovation and operational performance. This test was used to determine whether
regression analysis is the best way to represent the relationship between innovation and
performance. The significance level was set at 5%. Table 4.9 I is significant in the model p <
0.000, which means that the model is good, and regression analysis is the best way to
represent the relationship between innovation and saccos performance.
Regression analysis is designed to analyze the relationship between ICT innovation and
SACO performance. The operational performance predictive coefficient showed that
innovation significantly predicted Sarco's performance at the 5% significance level (t =
19.691, p = 0.000). Also, as shown in Table 4.9, the measured beta coefficient is 0.555,
which indicates a significant positive correlation between ICT innovation and operational
performance. Therefore, an increase in ICT innovation increases saccos performance by
0.555. This relationship can be expressed as follows:
Saccos operational performance = 1.249 + 0.555* ICT innovation

Table 4.9: Relationship between ICT innovation and performance of SACCOS

p value R R^2
unstandardized standardized
mod
coefficients coefficients T sig
el

0 0.702 0.493 B std error Beta

constant 1.249 0.075   16.695 0

 
1
ICT
0.555 0.028 0.702 19.691 0
innovation
 
a. Dependent variable: SACCOS performance

Source: Field data (2022)

37
4.4.2 Relationship Between ICT Infrastructure and Performance Of SACCOS
As shown in Table 4.10, the correlation coefficient representing the relationship between ICT
infrastructure and operational performance is R = 0.522. This means that ICT infrastructure
has a 52.2% impact on sacco's performance. The model shows an R squared of 0.272; This
means that ICT infrastructure accounts for 27.2% of the variance in sacco's performance. The
discrepancy that was revealed shows that infrastructure is one of the factors affecting the
operational performance of SACO. In addition, the P values presented in the model summary
in Table 4.10 were used to test whether there is a relationship between ICT infrastructure and
operational performance. This test was used to determine whether regression analysis is the
best way to represent the relationship between ICT infrastructure and SACO performance.
The significance level was set at 5%. Table 4.10 shows that the model is significant and
P<0.000 indicates that the model is good and regression analysis is the best way to represent
the relationship between ICT infrastructure and operational performance.

Regression analysis is designed to analyze the relationship between ICT infrastructure and
SACCO performance. The saccos performance estimation coefficients in Table 4.10 show
that ICT infrastructure significantly predicts saccos performance at the 5% significance level
(t = 12,205, p = 0.000). Also, as shown in Table 4.10, the measured beta coefficient is 0.670,
which indicates a significant positive relationship between ICT infrastructure performance
and saccos. Therefore, the increase in ICT infrastructure is explained by the increased
performance of saccos by 1270. This relationship between ICT infrastructure and saccos
performance can be expressed as follows:

Operational performance of saccos = 1.449 + 0.670 * ICT infrastructure

Table 4.10:ICT infrastructure

p value
Relationship R infrastructure
between ICT R^2 and performance of saccos
unstandardized standardized
mod
coefficients coefficients T sig
el

0.00 0.522 0.272 B std error Beta

constant 1.449 0.456   10.720 0

 
1
ICT
0.670 0.104 0.522 12.691 0
infrastructure
 

38
Dependent variable: Saccos performance
Source: Field data (2022)

4.4.3 Relationship Between ICT Awareness and Performance Of SACCOS

As shown in Table 4.11, Shows understanding of ICT and sake performance R = 0.580. This
means that ICT perception has a 58% impact on Sacco's performance. The model shows R
squared equal to 0.336; This means that the ICT perception explains 33.6% of the variance in
Saccos's operational performance. The differences described show that ICT visualization is
one of the drivers of sacco's performance. In addition, the P-values presented in the model
summary in Table 4.11 were used to investigate a relationship between ICT knowledge and
operational performance. This test was used to determine whether regression analysis is the
best way to represent the relationship between ICT perceptions and SACCOS operational
performance.

The significance level was set at 5%. Table 4.11 shows that the model is good and significant
at P<0.000 which indicates that regression analysis is the best way to express the relationship
between ICT perception and operational performance of saccos.

Regression analysis was used to analyze the relationship between ICT perception and saccos
performance. The portfolio performance prediction coefficients in Table 4.11 show that ICT
perception significantly predicts portfolio performance at the 5% significance level (t =
14.192, p = 0.000). Also, as shown in Table 4.10, the standard beta coefficient is 0.548,
which indicates a significant positive relationship between ICT knowledge and Sacco
performance. Therefore, an increase in ICT knowledge improves the performance of saccos
by 0.548. The relationship between ICT knowledge and SACO performance can be expressed
as:

Saccos performance = 0.871 + 0.548 * ICT awareness

Table 4.11: Relationship between ICT awareness performance of saccos

p value R R^2
unstandardized standardized
mod si
coefficients coefficients T
el g
0.58 0.33
0.00 0 6 B std error Beta

39
constant 0.871 0.125   6.985 0
 
1
ICT 14.19
Dependent variable: Saccos performance
Source: Field data (2022)

4.4.4 Relationship Between ICT Innovation, Infrastructure and Awareness in

Operational Performance of SACCOS

As shown in Table 4.12, the correlation coefficient representing the relationship between
innovation, infrastructure, knowledge and performance is R = 0.749. This means that
innovation, infrastructure and awareness have a 74.9% impact on sacco's performance. The
pattern shows R-square 0.561; This means that innovation, infrastructure, and knowledge
account for about 56.1% of the variance in Sacco's performance. The scenarios described
show that innovation, infrastructure, and awareness are key factors driving of saccos
performance. Also, the P-values presented in the model summary in Table 4.12 were used to
examine the relationship between ICT innovation, ICT infrastructure and ICT awareness. The
significance level was set at 5%. Table 4.12. The model is significant at P<0.000, which
means that the model is good and regression analysis is the best way to represent the
relationship between ICT innovation, ICT infrastructure, ICT awareness, and saccos
performance. The regression analysis aims to analyze the relationship between ICT
innovation, ICT infrastructure, ICT awareness and operational performance of SACCOS and
is shown in Table 4.12. during

The results presented in Table 4.12 show that ICT innovation significantly predicts
operational performance at the 5% significance level (t = 9.212, p = 0.000). A prediction
coefficient of 0.347 means that for each additional unit of innovation, Sacco's performance
improves by 0.347. ICT innovation significantly predicted team performance at the 5%

40
significance level (t = 5.453, p = 0.000). The expected factor of 0.522 means that the
performance of saccos has increased by 0.522 due to the increase in the ICT infrastructure.
Sacco's performance was also significantly predicted at the 5% significance level (t = 5.743,
p = 0.000).

A prediction coefficient of 0.230 means that an increase in ICT knowledge leads to an

improvement in Sacco's performance by 0.230.

This relationship between ICT innovation, ICT infrastructure and ICT awareness can be
expressed as follows:
Saccos performance = 3.351+0.347*X1+0. 522*X2+ 0.23*X3
Whereby: X1 – ICT innovation, X2 – ICT infrastructure, X3 – ICT awareness
This model shows that ICT innovation, ICT infrastructure and ICT awareness have a positive
relationship with saccos performance but each with different magnitudes, where ICT
infrastructure have highest positive relationship followed with ICT innovation and awareness
of the respondent.

p value R R^2
standardize
unstandardized
d
coefficients T sig
coefficients

0 0.749 0.561 B std error Beta

Constant 3.351 0.468   7.161 0

 

ICT innovation 0.347 0.038 0.439 9.212 0

 

ICT infrastructure 0.522 0.096 0.215 5.453 0

 

ICT awareness 0.23 0.04 0.244 5.743 0

 
Table 4.12: Relationship between ICT innovation, ICT infrastructure and ICT
awareness and operational performance of SACCOS

Dependent variable: Saccos performance

Source: Field data (2022)

41
CHAPTER FIVE

SUMMARY, CONLUSION AND RECOMMANDATIONS

5.1 Introduction
This chapter offers the summary of the results, the conclusion as per the objectives, reviewed
literature, the collected, analyzed and discussed data. It also presents the recommendations as
well as areas for further studies.

5.2 Summary
This research study evaluated the perceived impacts of ICT in the operation and performance
of SACCOS in Tanzania. Specifically, the study assessed: the impact of ICT infrastructure,
ICT innovations, and ICT awareness on performance of Tanzanian SACCOS firms.

The discussions above provided an understanding of the effects of investment in ICT to the
performance of SACCOS institutions, as well as the function of strategic ICT alignment. It
was realized that in order to increase SACCOS performance, there was need of combining
‘hard’ ICT investments (i.e. acquisition of new software, hardware, and networks), with
appropriate ‘soft actions’, so as to attain higher degrees of benefits and positive effects in
business performance. One of these necessary ‘soft actions’ was aligning ICT investment
with the business strategy. This initiative is believed to lead to the choosing of the most
suitable ICT investments that support one’s business to the highest possible extent which
leads not only to business growth but also sustainability.

Firms that perceive the application of ICT as beneficial, non-complex, compatible and of low
risk to use are highly likely to embrace ICT in their day-to-day operations. These findings go
hand-in-hand with past studies which illustrate that the main hinders to ICT adoption are
merely the worry that ICT would not amount to more efficiency, low costs or greater
revenues. Consistent with previous literature, this study also exposed that prior ICT skills and
knowledge help in significantly intensifying its adoption.

5.3 Conclusion

When MFIs have in place well-defined strategies on how to utilize ICT, ICT becomes very
significant in the functioning of microfinance institutions as evidenced by how its role has
expanded in financial systems, outreach programs, credit system management, and loan
recovery management. As a result, because ICT is a constantly-evolving technology,
particularly in developing countries, experts in such countries need to be continuous willing

42
to upgrade their knowledge and skills so as to be more responsive to changing market
demand.

Also, once the new technologies are introduced to specific Microfinance, management must
consider how best to propagate this new knowledge to the clients in order for all clients to be
conversant with it. Microfinance should also be able to to discover a new technology that is
customer-friendly This is because there is evidence from TANESCO SACCOS and
USALAMA WA RAIA SACCOS that when a client wants to acquire a loan repayment via
mobile money applications, the pin is sent to the customer’s phone in the form of a text
message and if not used, it expires in less than a minute. The company spent a lot of money
on this technology, but no client was able to use it.

5.4 Recommendation
This research recommends SACCOS to:

i. Conduct a thorough strategic planS that will make SACCOS organizations more
responsive to market demands.
ii. Align ICT plans with business plans by reengineering studies and developing
strategic ICT plans to align key ICT needs to the needs of the business.
iii. Get to train top management to support ICT adoption.
iv. Change management style by setting realistic user expectations such as the initial
productivity tips.

5.5 Suggestions for Further Studies

This study recommends that the further research may be carried out to cover the adoption of
ICT in other types of microfinance institutions in other areas or even new organizations.

43
 REFERENCE

Bersudskaya, V., Chassin, L., Dian, D., Musat, I. & Dagneux, A. (2018). Digital
Transformation of Microfinance and Digitalization of Microfinance Services to
Deepen Financial Inclusion in Africa. Kuala Lumpur: Alliance for Financial Inclusion
(AFI).

Blessing, L. T. (2009). a Design Research Methodology. . DRM, (Vol. 1).

https://doi.org/10.1007/978-1-84882-587-1.

Bricki, N. &. (2007). A Guide to Using Qualitative Research Methodology. Medecins Sans
Frontieres, 11–13.

Davidson, R. M. (2004). Research Methodology. City University of Hong Kong, , 1–20.

Diniz E. H, J. M. (2008). The Role of ICT in the Microfinance Model of Brazilian Banks and
the Use of Banking Correspondents .

Djazair, M. (2011). Measuring the Level of ICT on the Efficiency -Decision Making Units.
European Journal of Operational Research, 429-444.

Frankiewicz C. (2003). Information technology as a strategic tool for microfinance in Africa.

Gurbaxani, M. (2018). Information Technology and Organizational Performance an

Integrative Model of IT business value. MIS Quarterly, 28(22), 283-322.

Haji, E. (2013). Measuring the Level of ICT on the Efficiency -Decision Making Units.
European Journal of Operational Research,, 429-444.

Hishgsuren, N. (2006, march 2021 sunday 12th). nformation and communication Technology
and Microfinance options for Mongolia. [www.abi.org].

Ivatury, A. (2005). Organizational performance and information technology intensity in

Insurance industry Organizational science,. Vol 2 No 3, 263-285.

Jansson et al. (2020). Contribution of ICTs on inter-organizational coordination Guidelines

from theory. Journal of Informing Science Special Series on Information Exchange in
Electronic Markets.

44
Kipesha F, E. (2013). Impact of ICT Utilization on Efficiency and Financial Sustainability of
Microfinance Institutions in Tanzania.

Kipesha, E. (2018). Efficiency of Microfinance institutions in East Africa Data Envelopment

Analysis. . European Journal of Business and Management, 4(17), 77-88.

Kothari, C. K. (2014). Research Methodology. New Age International. .

https://doi.org/http://196.29.172.66:8080/jspui/bitstream/123456789/2574/1/Research
%20.

Kothari, C. R. (2012). Research Methodology: An introduction. Research Methodology: IX,

418. https://doi.org/Goddard, W. & Melville, S.

Kumarasamy. (2013). IT and Mobile Phones - A Rich Way for Banking Business.

Mathias, B. (2019). Assessment of the ICT Utilization on Microfinance Institutions

Performance in Tanzania: a case study of opportunity microfinance Tanzania limited.

Maxwell, J. A. (2011). Conceptual Framework. Qualitative Research Desig. An Interactive

Approach, https://doi.org/10.4324/9780203431917 .

Mugenda, O. M. (1999). Research Methods: Quantitative and Qualitative Approaches.

Nairobi: Acts Press.

Mwela, T. R. (2014). Information and communication technolody usage in development of

microfinance institutions service in peri-urban Areas Tanzania: A case of ilala
municipality in Dar es salaam city. The open university of Tanzania.

OECD. (2010). OECD Information Technology Outlook .Organisation for Economic

Cooperation and Development,. Paris.

Rajib, S. U., & Hoque, M. (2017). "Application of ICT in public sector accounting in
Bnagladesh." Dhaka University Journal of Business Studies, Special International
Edition, 1(1): 1-16.

Rhyne, E. a. ( November, 2006.). Microfinance through the Next Decade: Visioning the Who,
What, Where, When and How. A Paper Commissioned by the Global Microcredit
Summit 2006.

Robinson, M. S. (2001). The Paradigm Shift From credit Delivery to Sustainable Financial
Intermediation. Ashgate Publishing:.

45
Saunders, M. L. (2016). Research Methods for Business Students. Pearson Education
Limited.

Suryadi, A. (2020). .Microfinance Leveraging Information, communication & Technologies”.

India microfinance business news, 6-8.

Thomas, P. (2010). Research Methodology and Design. Research Methodology and Design.
https://doi.org/10.1515/9783110215519.82 .

Thomas, P. .. (2010). Research Methodology and Design. Research Methodology and

Design. https://doi.org/10.1515/9783110215519.82.

Wilson, V. (2013). Research methods: Mixed methods research. Evidence Based Library and
Information Practic. https://doi.org/10.18438/B8801M.

Yaron, J. (2020). Rural microfinance: the challenges and the best practices in Tanzania:.
Journal of Business and Management,, 4(2) 40-71.

46
 APPENDICES
Appendix 1
QUESTIONNAIRE FOR SACCOS OFFICERS
My name is colman miraji sepocho finalist at Ardhi University. In order to complete my
bachelor degree, I am carrying out a research on the effect of ICT on the operational
performance of savings and credit co-operative societies in TANZANIA you have been
selected to participate in this study.
This questionnaire is designed to gather information on the perceived effect of ICT on the
performance of Saccos in Tanzania. Please don’t put your name anywhere on the
questionnaire. Indicate response by ticking (√) appropriately in the box.
Section A: Demographic Information
1. What is your age bracket? Tick (√) in the space provided.
25 – 30 years [] 31 – 35 years [ ] 36 – 40 years [ ] 41 – 45 years [ ] 46 – 50 years [ ]
51 years and above [ ]

2. What is your gender?

Male [ ] Female [ ]

3. How long have you been a client of this SACCOS?

0 – 5 years [ ] 6 – 10 years [ ] 11 – 15 years [ ] 16 – 20 years [ ] 24 years and above
[ ]

4. State your profession?............................................................

5. What is your academic and professional qualification?

Certificate [ ] Diploma [ ] Degree [ ] Masters [ ] Any other (specify)
Any other (specify) ………………………………………..
Section B
QUESTIONS ON ICT INNOVATIONS 
6. For the following statements, indicate your opinion on ICT Innovation and the operational
performance of savings and credit co-operative societies in TANZANIA. depending on
whether you  5.strongly agree, 4.agree; 3.fairly agree; 2.disagree; or 1.strongly disagree.
5 4 3 2 1
ICT Innovation has improved provision of service
ICT innovation has improved efficiency
ICT innovation has improved time spent in providing
service
ICT Innovation has attracted many customers

47
7. Based on your experience, is there any new service emerged after technology adoption
such as depending on whether you 5. strongly agree, 4. agree; 3. fairly agree; 2.disagree; or
1.strongly disagree.
5 4 3 2 1
Mobile bank for credit and savings
Digital field Automation (DFA)
Card service and ATMs
Branch office franchise
Online help desk

8. Based on your experience, there's any new process introduced which save time in
following depending on whether you   5. strongly agree, 4. agree; 3.fairly agree; 2.disagree;
or 1.strongly disagree
5 4 3 2 1
Online Loan application
Online membership registration
Online help desk

9. Is there improvement in credit and saving service delivery at your saccos after using
technology ?
 YES [ ]
 NO [ ]

Section C
QUESTIONS ON ICT INFRASTRUCTURE 
10.For the following statements, indicate your opinion on ICT infrastructure and the
operational performance of savings and credit co-operative societies in
TANZANIA. depending on whether you 5.strongly agree, 4.agree; 3.fairly agree; 2.disagree;
or 1.strongly disagree.
5 4 3 2 1
 is system interface easy to use
Basing on Your experience, are there enough hardware
components such as computer, laptop and tablets to
perform your daily task
Basing on Your experience, is there back office
management information system

11.Based on your experience, are the following service available in saccos website.

depending on whether you choose 5.strongly agree, 4.agree; 3.fairly agree; 2.disagree; or
1.strongly disagree.

5 4 3 2 1

48
 Membership registration
Membership card requesting
Loan application
Online help desk

SECTION D
QUESTION ON ICT AWARENESS 
For the following statements, indicate your opinion on ICT awareness on operational
performance.
12.  Basing on your experience does the Sacco’s have awareness campaign to staff member
i.e. workshop training, conference and public lectures on technology. depending on whether
you choose 5. strongly agree, 4. agree; 3.fairly agree; 2.disagree; or 1.strongly disagree.
5 4 3 2 1

13. In your views what should be done to improve user information technology awareness
…………………………………………………………………………………………………
…………………………………………………………………………………………………
…………………………………………………………………………………………………
…………………………………………………………………………………………………
…………………………………………………………………………..
14. How do you rate your computer literacy / knowledge
1.very poor, 2. poor, 3.good, 4.very good, 5. excellent 
5 4 3 2 1

Did you have information technology personnel to train the user’s?

depending on whether you choose   2.YES;  1.NO
1. [ ]
2. [ ]

49