Mobile Phone: A Loan Monitoring Tool for Micro Businesses

Mobile Phone: A Loan Monitoring Tool for Micro Businesses

William Clifford Gomera (College of Business Education (CBE), Dar es Salaam, Tanzania & School of Computing, University of Eastern Finland (UEF), Joensuu, Finland) and George S. Oreku (Department of Information and Communication Technologies, The Open University of Tanzania (OUT), Dar es Salaam, Tanzania; North West University, Vanderbijlpark, South Africa; & School of Computing, University of Eastern Finland (UEF), Joensuu, Finland)
DOI: 10.4018/IJICTRAME.2018070104
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This article describes how loan monitoring tools are integrated applications designed to help Micro Finance Institutions (MFIs) to improve efficiency and effectiveness in loan collection. The task of loan monitoring is monumental to loan officers, forcing them to travel long distances to serve a large number of customers leading to ineffective use of time and money. For that reason, it is of great advantage to have an integrated system that can manage their business with the click of the mobile phone button, allowing MFI and MB to concentrate on their day to day business operations. The application is expected to provide an easy way to track loans and collections from micro businesses owners as well as improving transparency through provision of customers' report. The study conducted through in-depth literature review, interviews, focus group discussion and questionnaire. All this allowed end user participatory approach for good insight to the solution. The data was analyzed through the coding approach (qualitative approach). The test performance through a white and black box was designed and conducted MFI premises.
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1. Introduction

Micro Finance Institutions (MFIs) provide credit, savings and insurance services to poor people; hence, it is a poverty reducing mechanism (Sarker, 2013; Inderst, 2009). On the other hand, Micro Businesses (MBs) are the smallest enterprises that form large number of practitioners and are greatly diversified with several resource restrictions (Scott, 2006; Tronnberg & Hemlin, 2014; Siwale, 2006). The interaction between MBs and MFIs involves; loan services, training services, micro savings and insurance services that are provided through loan officers (Inderst, 2009).

Loan officers play multiple roles that occur during field visits despite the pressure they face (Sarker, 2013; Inderst, 2009). They play part facilitator and part mediator to ensure that the money lent is repaid on time. Due to the pressure to meet set targets, loan officers are observed to work long hours including weekends and holidays, leading to stressful fragmented activities which are characterised by practical difficulties (Scott, 2006; Tronnberg & Hemlin, 2014; Siwale, 2006).

In order to strengthen the relationship with MBs, loan officers, performed long term tracking of practices which requires close supervision to establish relationship in lending for receiving soft information that is very important for this relationship (Uchida, Udell, & Yamori, 2006). Therefore, usage of mobile phones can help to receive soft information from MBs for better loan decisions (Uchida, Udell, & Yamori, 2006; Tchouassi, 2012).

Mobile phones present a great opportunity for financial services, hence technological, economic and policy innovations are needed to make these services a reality (Tchouassi, 2012; Mushi, Jafari, & Ennis, 2018). Integration of emerging mobile technology is now inevitable in every sphere of life. It has proved helpful in accessing services ubiquitously, on the move (business mobility), which is the backbone of different activities done in business and non-business perspective (Ferdousi & Bari, 2015; Liang, Huang, & Yeh, 2007; Harris & Patten, 2014). ICT, mobile phones in particular, plays a key role in economic development and enhancement of business activities among informal businesses (Deen-Swarray, Moyo, & Stork, 2013).

Numerous research has been done on the area of mobile phone usage by informal sectors, MBs being part of it (Mramba, Sutinen, Haule, & Msami, 2014) (Kabanda, 2011) (Aker & Mbiti, 2010).Moreover, the inclusion of innovation and participatory design need an ownership of the local technological project (Gomera W. C., Oreku, Apiola, & Suhonen, 2017).Therefore, our study has come up with a local solution on loan monitoring using mobile phones at the perspective of MFIs and MBs interaction in Tanzania that used Design Science Research (DSR) approach. This supported by availability of mobile technology that makes mobile services possible (Tchouassi, 2012). This will reduced challenges and stressful workload, at the same time increase effectiveness and efficiency of MFIs in practising relationship lending (Uchida, Udell, & Yamori, 2006).

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