Studies on multiple borrowing and its effect on loan repayment among clients and sustainability
of microfinance providers (MFIs) show contradicting results. Some studies indicate that multiple
borrowing has a positive effect on loan repayment and sustainability of MFIs while others show that it
leads to over indebtedness and consequently default on loan. Therefore, this study analysed the
incidences of multiple borrowing, reasons for multiple borrowing, and effects of multiple borrowing on
loan repayment at Iringa municipality in Tanzania. Results showed that prevalence of multiple borrowing
at Iringa in Tanzania was very high. Over 70% of the 250 microfinance clients had at least two loans from
different MFIs at the same time. In addition, about 16% had also borrowed from individual lenders. Major
reasons for multiple borrowing were insufficient loans from MFIs, loan recycling,and family obligations.
Over 70% of the respondents had problems in loan repayment because of multiple pending loans. We
found that education level and number of dependants of the respondent significantly influenced the
number of loan contracts. Recommendations are also provided.