How to Lose a Loyal Client – ACCION Ambassadors Blog the World – August 2, 2011

> Posted by Center Staff
What happens when an MFI’s reach exceeds its technological grasp?
In a recent post on the ACCION International Ambassadors blog,  Jason Loughnane takes a hard look at the consequences for one microfinance institution in Tanzania.
Loughnane is among the team of Ambassadors currently circling the globe and reporting on the condition of the microfinance industry wherever they are, be it India, Paraguay, or beyond.
Previously, we pointed our readers to insights from Ambassadors Pamela Chang, David Firth Bard, Stephen Matthew Lee,  and Leah Vinton. If you like, you can subscribe directly to the Ambassadors’ blog.
Loughnane’s July 29 post, “How to Lose a Loyal Client,” begins:
Bryson took his first loan from Akiba while I was taking pre-algebra.
The year was 1997. Akiba Commercial Bank operated just a single branch in downtown Dar es Salaam. Along with his wife, Bryson ran a hardware supply store near city center. He took out a loan to help purchase more inventory for his small shop. The loan was for 500,000 Tanzanian Shillings (Tsh), or about $350.
Thirteen years and a number of loan cycles since, Bryson is a happy man. His hardware business has grown tremendously. He now operates two separate stores selling timber, carved wood, metals, chain-link fencing, and basic construction amenities such as glue, tools, and nails. He employs eleven people.
So why is the bank rightfully worried about losing him?

Over the last decade, as Dar es Salaam’s population and circumference increased, Bryson relocated his growing business to an outskirt district called Kimara some years ago. The new location afforded him cheap space to expand his operations, as well as proximity to the builders and engineers driving the growth of the city away from its downtown core.
His latest 12-month loan was for 8,000,000 Tsh, or about $5,000. He used the loan to purchase a table saw, on which his employees were hard at work cutting wooden boards when we arrived.
Our visit was a somber one, meant to remind Bryson that he was over a week late to pay his latest monthly installment of 800,000 Tsh (~$500). Rather than be embarrassed, Bryson simply explained to us that his wife was taking maternity leave from the business, so he had been running the store alone for the last two weeks.
Without his wife to look after the store and employees, Bryson hadn’t been able to make the 90-minute trip to the nearest Akiba branch, to deposit his installment at a teller window, in cash, as is required by the bank’s policy.

Read the rest of Loughnane’s post, and check out the other Ambassadors’ reports, by clicking here.
Image credit: bdesham
Have you read?
Tanzania and the Impact of Microfinance: Reflections on Kilimani Chini
Tanzania & Microfinance Power – ACCION Ambassadors Blog the World – June 8, 2011