The Impact of Group Lending Programs on Payment of Micro-Loans in Tanzania: A Case of Malaika Financial Program in CRDB-Microfinance and Women Entrepreneurs Financial Program in NMB-Microfinance.

The study focused on the women financial programs offered by CRDB-microfinance and NMB-microfinance. Specifically, the study analysed effects of group lending to non-performing loans, investigated benefits and challenges of using group lending, identified factors influencing microloans repayment in group lending programs and examined how microfinance institutions monitor and control group borrowers. The study used descriptive study design and it was both quantitative and qualitative in nature. Data was collected from the nine and 13 branches of CRDB and NMB respectively. The study founded that Group Lending Program (GLP) had low risk of non-performing loan. 90% of all group-borrowers could repay their loan successfully unlike in Individual Lending Program (ILP) where about 50% of the borrowers could default. The benefits of GLP were low cost of recover unpaid loan, low cost of provide financial training to the borrowers, low cost of monitor repayment and low default risk. The challenges of GLP were high cost of loan processing and obtaining clients. Factors that significantly predict repayment of the microloans in GLP were loan amount given and grace period. Too little and too much loan amount was very risky in repayment ability of the borrowers. The microfinance institutions could ensure proper repayment of group loans through use of debt collectors, deduction of money from groups’ saving accounts, accuse delinquent group members to the law court and provision of financial trainings to the group members. The study concluded that it was hard for the group loans to face serious problem of loan default because each member in the group become the guarantor of other group members. Hence, group lending program was effective in ensure smooth repayment of the loans from the low-income earners. Keywords: Women financial programs, CRDB-microfinance and NMB-microfinanc