Drop-outs Among Selected Zambian Microfinance Institutions: Causes and Potential Impact on Product Design

One of the biggest challenges in the provision of financial services to micro and small entrepreneurs is to design appropriate products reflecting an understanding of the reality of this market. This is not a challenge that has been met by most micro finance institutions (MFIs). The result is that clients are forced to accept products that in most instances do not answer to their needs, but on the other hand is the only product available. One of the results of this situation is the tendency of clients to exit programmes or services of MFIs after the initial engagement. The purpose of this study is to improve knowledge and understanding of why MFIs in Zambia suffer high levels of dropout (or turn-over) among their clients, and thus to facilitate MFIs’ efforts to address this problem.