Financial Inclusion and Cluster-Based Industrialization

There are two related lines of arguments which forms twin objectives for this study. The first is to assess how financial inclusion may spur industrilization in Africa,  and the second is to assess how industrialization may prosper where there is clustering of SMEs/industrial activities in Africa. The study employs a quantitative approach where regression analysis is used employing secondary data from the World Bank Development Indicators for Seven African economies. The study found that clustering promotes industrial growth. It has also found lack of evidence for the role of financial inclusion in promoting industrial growth. It also did not find statistical evidence for joint effects of these factors on industrialization. It calls for policy dressing and specific researches in the areas of clustering properties and financial inclusion and their effects on industrial growth

Capital Structure Variability of Firms Listed on the Dar es Salaam Stock Exchange: Assessing the Role of Product Diversification

This study investigated the capital structure variability of firms listed on the Dar es Salaam Stock Exchange by assessing the role of product diversification. It was led by four objectives and tested ten hypotheses. The objectives were; to assess the levels of capital structure variability, product diversification variability, effect of conventional factors on capital structure variability and effects of product diversification on capital structure variability of firms listed in Tanzania. The study employed an unbalanced panel data of 11 listed campanies from 1997 to 2014, making a total of 128 firm years. It used both static and dynamic regression analyses. The results indicated that capital structures of companies in the sample varied over time and across companies. Product diversification in its various types indicated variability over time and across companies. Both total product diversification and unrelated product diversifications were significantly positively related to capital structure. Related product diversification was significantly negatively related to capital structure. Asset tangibility, growth opportunity and non-debt tax shield were positively and significantly related to capital structure. Company size, risk of bankruptcy and going concern were either positively or negatively related to capital structure depending on the group of analysis involved. Profitability was negatively related to capital structure. Firms in Tanzania need to take into accounts product diversification among other capital structure determinants when planning for capital structure of their firms. The type of product diversification undertaken by a firm matters in capital structure decisions. Thus, managers need to consider their potential effects in managing the firms’ capital structure

A Review of the Impact of Reforms on Financial Viability and Sustainability of Tanzania’s Power Sector

In Tanzania, reforms were mooted in the 1990s to solve two intertwined problems; the financing of investment and reducing the fiscal drain on the government to the sector. This study deploys the ARDL Model and paired-sample t-statistic tests, with profitability and liquidity data from 1989 to 2020 to examine the impact of the reforms on sectoral financial condition in Tanzania. The results suggest that both profitability and liquidity did not significantly improve after reforms. Apart from commercialization policy, other variables were not statistically significant with privatization and liberalization law exerting a negative pressure on liquidity. The findings, therefore, appear to contradict the theoretical view that the reforms improve the financial condition of both the sector and the governments. The outcome can be explained by unfinished reforms manifested by continued politicization of the sector hence underpricing and underinvestment. To ensure sectoral financial viability and sustainability we recommend that the reform policies such as commercialization, corporatization, and independent regulation should be prioritized. These findings will add value to policymakers in Tanzania and beyond which are reforming their power sectors by recognizing that efficient pricing and investment are key for a viable and sustainable financial condition of the sector

Tourism Growth and Financial Sector Development Nexus: Evidence from Selected African Economies

This article tests the tourism growth and financial sector development nexus. Data came from the World Bank and IMF for the years 1995-2020 from 43 selected African economies. We applied System GMM and dynamic CCEMG to estimate short–run effects and JKS Granger non-causality test for causality, FMOLS and FGLS to estimate long–run effects and sets of co-integration tests for co-movements. The findings support mutual reinforcing effects for both inbound tourism growth and financial sector development. Outbound tourism should be monitored and controlled for its negative effects; inbound tourism should be facilitated and promoted for its positive effects. Political stability and trade openness policies should be a priority for both sectors, while foreign direct investments should be monitored and controlled for their ambiguous impacts. In this work, we are able to show that increases in international tourism activities and developments in the financial sector mutually impact each other

Empirical analysis on the impact of market share and capital adequacy ratio on the bankruptcy rate of community banks in Tanzania: an application of Altman’s Z-Score model

This paper examines the impact of market share and capital adequacy on the bankruptcy rate of community banks in Tanzania, for the period spanned for 16 years from 2006 to 2021. For instance, recently in Tanzania, seven community banks were closed by the Regulator while others were being merged to increase their going concern and operational efficiency. This study has employed a quantitative approach based on secondary data collected from the Bank of Tanzania as a Regulator and some of them were gathered from community banks. The sample size is 11 community banks, with a total of 176 observations. The panel data analysis has been conducted using statistical software, namely, STATA version 17 with the random effect model being used to generate regression results ready for interpretation. The research findings depicted significant positive correlations between bankruptcy rates as computed using Altman’s Z-score model and the independent variables, namely, market share and capital adequacy ratio. In that regard, the study recommends adequate capital levels and market share to reduce the bankruptcy rates of community banks in Tanzania

Financial service access and agriculture commercialization of smallholder rice growers in Kilombero District: The moderating role of institutional cultural cognitive

The study was conducted in Tanzania to assess the effect of financial service access on the agricultural commercialization of smallholder rice growers in Kilombero under the moderating effect of institutional cultural cognition. Primary data were collected from 397 smallholder farmers, and after data cleaning, we remained with 358 responses subjected to regression analysis. Data were analyzed using hierarchical multiple regression analysis with the help of IBM SPSS software. The findings revealed that financial service access significantly positively affected commercialization. Also, the results confirm that institutional cultural cognition has a significant negative moderation effect on the relationship between financial inclusion and agriculture commercialization. The results suggest that reducing cultural cognition can increase financial service access. So, if the wrong perception and beliefs of the poor and marginalized society toward formal financial services can be reduced, then access to formal financial services will be increased, thus improving the level of agriculture commercialization. Also, we recommend that policymakers and the government set policies to reduce the cost of accessing financial services and enhance financial services availability

Financial service access and agriculture commercialization of smallholder rice growers in Kilombero District: The moderating role of institutional cultural cognitive

The study was conducted in Tanzania to assess the effect of financial service access on the agricultural commercialization of smallholder rice growers in Kilombero under the moderating effect of institutional cultural cognition. Primary data were collected from 397 smallholder farmers, and after data cleaning, we remained with 358 responses subjected to regression analysis. Data were analyzed using hierarchical multiple regression analysis with the help of IBM SPSS software. The findings revealed that financial service access significantly positively affected commercialization. Also, the results confirm that institutional cultural cognition has a significant negative moderation effect on the relationship between financial inclusion and agriculture commercialization. The results suggest that reducing cultural cognition can increase financial service access. So, if the wrong perception and beliefs of the poor and marginalized society toward formal financial services can be reduced, then access to formal financial services will be increased, thus improving the level of agriculture commercialization. Also, we recommend that policymakers and the government set policies to reduce the cost of accessing financial services and enhance financial services availability

Effect of Products and Services Alliances on the Performance of Microfinance Institutions in Rwanda.

In today’s world of cutthroat competition, considerable attention has been devoted to the formation of strategic alliances. Different organizations form alliance with other partners with different motivation. Some of the cited motivations for alliances include pooling resources, increasing capabilities; improve product development and service delivery, among others. Due to these varying alliances, there are various forms of alliances that organizations can engage in. However, research has shown that not all alliances end up with gaining the intended benefits. This research investigated the effect of product and service alliance on firm performance in microfinance institutions. Primary data was obtained using structured questionnaire distributed to a sample of 220 managers/CEO selected from a total of 419 MFIs. Data was analyzed using STATA 16.1 and Structural Equation Modeling (SEM) used to test the research hypothesis. The results showed that the model was significant at 10% (߯ଶ = 21.576, p<0.1). It also revealed that product and service alliance is positively and significantly related to firm performance with a coefficient of 0.072 (p<0.05). This being the first study of the kind, here in Rwanda, among the MFIs, it is recommended that MFIs should embrace alliance as way of improving their resource base and their product innovation and service delivery as well as their financial performance. Keywords: MFI, strategic alliance, product and service alliance, firm performance, Rwand