Investment Strategies and Institutional Sustainability of Microfinance Institutions in Tanzania: Evidence from Ubungo Municipality

Abstract

Microfinance institutions (MFIs) play a vital role in promoting financial inclusion and socio-economic development; however, their long-term sustainability remains a significant challenge. This study examines the influence of selected investment strategies on the institutional sustainability of MFIs in Tanzania, focusing on Ubungo Municipality in Dar es Salaam. Guided by the Resource-Based View and Institutional Theory, the study considers technology investment, human capital investment, and risk management investment as key independent variables. A descriptive and correlational research design was employed, involving 86 respondents drawn from management and operational staff across six MFIs using stratified and simple random sampling techniques. Data were collected through structured questionnaires and analysed using descriptive statistics, Pearson correlation, and multiple linear regression. The findings indicate that although MFIs actively invest in technology, staff development, and risk control systems, these strategies exhibit a statistically insignificant positive effect on sustainability (B = -0.112, p = 0.453). This suggests that sustainability challenges arise not from insufficient investment but from misalignment between investment decisions and long-term institutional resilience, governance, and efficiency. The study highlights the need for sustainability-oriented investment appraisal models that balance growth objectives with capacity building and long-term financial stability.

Issue Section: Finance and Accounting