Promoting sustainability in microfinance through the moderating role of relationship quality between non-financial services and client loyalty

Abstract This research investigates the role of non-financial services in enhancing customer loyalty within microfinance institutions (MFIs) in Tanzania, focusing on business skill development and business support, and the moderating effect of relationship quality. Guided by social exchange theory, a cross-sectional survey of 387 entrepreneurial clients was analyzed using PLS-SEM. Findings reveal that business support services significantly improve customer loyalty, while business skill development trainings do not. Relationship quality positively influences loyalty but does not moderate the link between non-financial services and client loyalty. This highlights that MFIs should prioritize practical business support such as mentorship and market linkages over training programs, as these yield stronger loyalty outcomes. Policymakers are advised to provide incentives, including subsidies or performance-based grants, to enable MFIs to strengthen non-financial service delivery. The study emphasizes the strategic importance of customer loyalty for the sustainability and poverty reduction role of MFIs in competitive markets.