“200”, Aptitude Test Questions and Answers for Finance Management Officer II – Small Industries Development Organization (SIDO).
ABSTRACT
This set of 200 multiple-choice questions
is designed to prepare candidates for the Finance Management Officer Grade II
online aptitude test at SIDO, Tanzania. Questions cover credit management, loan
assessment, microfinance operations, and financial analysis, with closely
related answer choices to challenge comprehension and decision-making. Each
answer includes a rationale to reinforce understanding of key concepts such as
cash flow, risk assessment, repayment monitoring, and ethical lending practices.
This resource provides a comprehensive tool for candidates to strengthen
knowledge and succeed in the examination.
Prepared by:
Finance Management Officer II
Compiled by Johnson Yesaya Mgelwa.
A lawyer stationed in Dar-es-salaam.
0628729934.
Date: October 11, 2025
Dear applicants,
This collection of questions and answers
has been carefully prepared to help all of you to understand the key areas
tested during the interview. The goal is to provide a useful, and practical
study guide so you can all perform confidently and fairly in the selection
process. I wish you the best of luck, and may this resource support you in
achieving success!
Warm regards,
Johnson Yesaya Mgelwa
For Personal Use by Applicants Preparing
for Finance Management Officer II – Small Industries Development Organization
(SIDO) interview.
ALL
QUESTIONS TOGETHER.
1. Which factor is MOST important when
assessing a micro-enterprise loan application under SIDO’s methodology?
A. The applicant’s level of formal
education B. The applicant’s repayment capacity C. The number of employees in
the business D. The applicant’s marital status
Answer: B
Rationale: Repayment capacity is the primary
determinant in microfinance risk assessment because it reflects the business’s
ability to generate cash flow sufficient to meet instalments. Education level,
marital status, and number of employees may influence entrepreneurial behavior
but are secondary and cannot replace cash-flow-based repayment analysis
required under Tanzanian microfinance best practices.
2. A client receives a TZS 3,600,000 loan
to be repaid in 12 equal monthly instalments at 12% per year on a straight-line
interest basis. What is the MONTHLY interest amount?
A. TZS 48,000 B. TZS 30,000 C. TZS
36,000 D. TZS 24,000
Answer: C
Rationale: Straight-line interest applies the
annual interest rate on the principal only. Annual interest = 3,600,000 × 12% =
432,000. Monthly interest = 432,000 ÷ 12 = 36,000. The other values represent
common calculation mistakes such as dividing principal incorrectly or using
reducing balances, which do not apply here.
3. Which document is MOST critical when
verifying the legitimacy of a business applying for a SIDO micro-loan?
A. Tax clearance certificate B. Business
license C. Bank statement D. NIDA ID
Answer: B
Rationale: A valid business license is essential
proof that the enterprise is legally registered and permitted to operate within
its district or municipal authority. While bank statements help assess cash
flow and NIDA IDs confirm identity, the business license confirms the legality
of the enterprise—critical for SIDO loan compliance.
4. Which ratio best indicates whether a
borrower can meet short-term obligations, including loan instalments?
A. Debt-to-equity ratio B. Current ratio C.
Asset turnover ratio D. Gross margin ratio
Answer: B
Rationale: The current ratio (current assets ÷
current liabilities) measures liquidity and ability to meet short-term
obligations. Debt-to-equity and gross margin provide profitability or leverage
information, while asset turnover shows efficiency—not immediate repayment
ability, which is central to credit risk assessment in microfinance.
5. When conducting credit follow-up, what
is the FIRST step when a client misses an instalment?
A. Issue a legal notice immediately B.
Visit the client’s business premises C. Report the case to the Regional
Manager D. Conduct a telephone
follow-up
Answer: D
Rationale:
Best practice in Tanzanian microfinance, including SIDO, is to first contact
the client by phone to understand the reason for missed payments. If the
issue remains unresolved or the client is unresponsive, a field visit is then
conducted to verify operations and provide support. Immediate legal action or
reporting to management is only warranted after attempts at direct client
engagement. This sequence balances efficiency, cost, and relationship
management.
6. Which principle of microfinance is
MOST aligned with SIDO’s mandate to support SME growth?
A. Lending based on collateral only B.
Lending based on fixed asset size C. Lending only to registered limited
companies D. Lending based on cash-flow
viability
Answer: D
Rationale: SIDO emphasizes the viability and
sustainability of micro and small enterprises rather than collateral or
asset-based lending. Cash-flow lending ensures inclusivity for informal or
semi-formal enterprises typical in Tanzania, facilitating development aligned
with SIDO’s mission.
7. A borrower has TZS 1,500,000 in
monthly sales, expenses of TZS 1,050,000, and wishes to take a loan with a
monthly instalment of TZS 350,000. What is the borrower’s debt-service ratio
according to SIDO’s gross-income method?
A. 25% B. 27% C. 30% D. 33%
Answer: A
Rationale:
SIDO and many Tanzanian microfinance institutions calculate the debt-service
ratio using loan instalment ÷ gross monthly income. Here: 350,000 ÷
1,500,000 = 0.233 ≈ 25%. While net income could yield a higher ratio (78%), the
institution’s standard is gross-income-based calculation to ensure consistent
risk assessment and comparability across clients. Using gross income also avoids
penalizing businesses with higher operating costs but strong revenue.
8. Which of the following is MOST
important when preparing a loan repayment schedule?
A. Client’s business location B.
Current inflation rate C. Number of employees
D. Date of loan disbursement
Answer: D
Rationale: The repayment schedule begins counting
from the date funds are disbursed, affecting due dates, interest charges, and
instalment timing. Inflation and employment numbers may influence overall risk
but do not determine schedule structure. Location only affects follow-up
logistics, not repayment timelines.
9. Under BOT microfinance regulations,
which element must ALWAYS be included in a loan contract?
A. Statement of client’s past loan
history B. Interest rate and total cost of credit C. List of the client’s
household assets D. Details of all employees of the business
Answer: B
Rationale: BOT’s Consumer Protection Regulations
require disclosure of total cost of credit, including interest rate, charges,
and penalties. Asset lists and loan histories are optional depending on
institution’s policy, while household asset lists are mainly for collateral but
not mandated in all loans.
10. What is the primary purpose of impact
monitoring in SIDO microfinance operations?
A. Measuring repayment discipline B.
Assessing loan recovery staff performance C. Identifying business growth
resulting from loans D. Ensuring compliance with BOT capital requirements
Answer: C
Rationale: Impact monitoring evaluates how
financial services improve clients’ livelihoods and business performance. It
measures outcomes such as increased sales, profit, employment, and asset
growth. Repayment and compliance are separate processes, while staff performance
is not the core objective of impact assessment.
11. Which financial statement is MOST
useful when verifying profitability of a small business client?
A. Statement of cash flows B. Statement
of financial position C. Income statement D. Owner’s equity statement
Answer: C
Rationale: The income statement shows revenues,
expenses, and resulting profit or loss—an essential tool for determining
whether the business generates enough income to support loan repayments. Cash
flow statements focus on liquidity, while statements of financial position and
equity reflect assets and ownership but not core profitability.
12. When evaluating group loans, which
factor MOST reduces default risk?
A. Members having similar businesses B.
Members living in the same community C. Members having different education
levels D. Members with strong social cohesion
Answer: D
Rationale: Social cohesion ensures peer pressure,
mutual support, and collective responsibility—key mechanisms for repayment in
solidarity group lending. Proximity and business type help coordination but do
not guarantee cooperation, while education differences are unrelated to
repayment discipline.
13. A SIDO officer notices a client
overstating sales during assessment. What is the MOST appropriate action?
A. Reject the application immediately B.
Reassess sales using business observation and triangulation C. Reduce the loan
amount and approve D. Ask the client to adjust figures downward
Answer: B
Rationale: SIDO methodology emphasizes verification
through observation, supplier interviews, and other triangulation techniques.
Immediate rejection may be harsh without verification; adjusting figures
without assessment encourages dishonesty. Approval with reduction requires
accurate data first.
14. Which cost is considered INDIRECT
when analyzing a micro-enterprise for financing?
A. Wages of production workers B. Raw
material purchases C. Electricity used by administration D. Transportation
for goods delivery
Answer: C
Rationale: Indirect costs support operations but
are not directly tied to production output. Administrative electricity fits
this category. Wages of production workers and raw materials are direct costs,
while delivery transport is directly related to distribution of goods.
15. Which of the following BEST explains
why SIDO conducts business site visits before loan approval?
A. To confirm the borrower’s collateral B.
To verify actual business operations C. To collect tax information D. To
ensure the business owner is present daily
Answer: B
Rationale: Site visits allow officers to physically
confirm the legitimacy, scale, activity level, and stability of the enterprise.
Collateral inspection is only a component; taxation is the responsibility of
TRA, and daily presence is not a requirement for approval.
16. A borrower takes a TZS 2,400,000 loan
for 6 months at 10% flat interest. What is the TOTAL interest payable?
A. TZS 240,000 B. TZS 120,000 C. TZS
200,000 D. TZS 140,000
Answer: B
Rationale: Flat-rate interest uses principal × rate
× time. Interest = 2,400,000 × 10% × 0.5 = 120,000. The other options represent
errors such as applying the 10% on a yearly basis incorrectly or failing to
convert months into years.
17. Which action is MOST appropriate when
a borrower consistently delays payments but remains cooperative?
A. Initiate legal recovery measures B.
Add penalties without discussion C. Review repayment schedule and restructure
if justified D. Terminate the credit relationship
Answer: C
Rationale: Cooperative clients experiencing
temporary challenges may qualify for restructuring under prudent microfinance
practice. Legal action and termination are last resorts. Penalties alone do not
address underlying repayment issues and violate responsible lending principles
if applied without understanding the borrower’s situation.
18. Which element is a KEY requirement
when presenting credit reports in regional management meetings?
A. Client recruitment strategies B.
Personal views on business trends C. Staff salary comparisons D. Loan default explanations
Answer: D
Rationale: Management meetings focus on portfolio
performance, particularly arrears, PAR, and reasons behind defaults.
Recruitment strategies contribute but are secondary. Personal opinions and
salary issues are unrelated to credit portfolio management.
19. Under Tanzanian microfinance
practice, which indicator BEST measures the health of a loan portfolio?
A. Total number of active clients B.
Portfolio at Risk (PAR) > 30 days C. Payroll-to-portfolio ratio D. Total
value of group loans
Answer: B
Rationale: PAR > 30 days shows the percentage of
the loan portfolio with overdue instalments beyond 30 days—a key international
and Tanzanian microfinance quality indicator. Number of clients and loan values
show scale but not risk. Payroll ratio relates to efficiency, not portfolio
quality.
20. Which scenario BEST requires
immediate loan follow-up?
A. Borrower changing business location
but informing the officer early B. Borrower requesting an additional loan
while in good standing C. Borrower missing a repayment without prior
communication D. Borrower reporting declining sales but paying on time
Answer: C
Rationale: Unexplained missed payments are direct
indicators of rising credit risk and require immediate follow-up. Informed
relocations or requests for additional loans do not constitute default risk,
while declining sales with regular payments is not an urgent threat.
21. When conducting a financial
assessment, which of the following is MOST important in determining working
capital needs?
A. Total fixed assets B. Inventory
turnover rate C. Owner’s equity D. Depreciation expenses
Answer: B
Rationale: Inventory turnover indicates how fast a
business converts stock into sales, directly determining working capital
cycles. Fixed assets and equity show long-term investment, not short-term
liquidity needs, while depreciation is an accounting adjustment, not an actual
cash-flow factor.
22. Which approach BEST aligns with
ethical conduct for SIDO credit officers?
A. Giving clients advice that encourages
quick loan approvals B. Recommending specific suppliers to clients C.
Assisting clients to modify financial records
D. Maintaining strict confidentiality of client financial data
Answer: D
Rationale: Confidentiality is a core ethical
principle in financial services and required by Tanzanian consumer protection
regulations. Recommending suppliers and modifying records compromise
impartiality, while advising for quick approvals risks mis-selling, violating
responsible finance principles.
23. What is the MAIN advantage of group
guarantee mechanisms in microfinance?
A. They eliminate the need for loan
officers B. They reduce administrative paperwork C. They allow larger loan
sizes automatically D. They promote
peer monitoring and joint responsibility
Answer: D
Rationale: Group guarantees rely on social pressure
and mutual accountability, improving repayment rates. They do not eliminate
officers, and paperwork may even increase. Loan sizes depend on capacity, not
group membership.
24. When designing staff credit training
programs at SIDO, which aspect should be prioritized?
A. Differences in regional cultural
practices B. Techniques for client identification C. Risk assessment and
portfolio quality management D. The historical background of microfinance
Answer: C
Rationale: Effective credit training must emphasize
core competencies in risk management, appraisal methods, and portfolio
monitoring, which directly impact loan performance. Cultural differences and
client identification are supportive but secondary, while historical background
has minimal operational value.
25. A client with good repayment history
requests a top-up loan while holding an existing loan. What is the MOST
appropriate action?
A. Reject the request immediately B.
Approve the top-up without assessment C. Conduct a fresh appraisal of cash
flow and repayment capacity D. Replace the old loan with the new loan
automatically
Answer: C
Rationale: Even well-performing clients require
fresh appraisal to avoid over-indebtedness, ensuring compliance with
responsible lending practices. Automatic approval or replacement without
assessment violates risk management procedures, and rejection without evaluation
is unnecessary and unfair.
26. Which tool is MOST useful for a SIDO
credit officer when forecasting future loan demand in a region?
A. Historical disbursement trends B.
National inflation rate C. Staff attendance records D. Receipt book summaries
Answer: A
Rationale: Historical disbursement trends provide
the strongest indicator of seasonal loan demand patterns, client borrowing
behavior, and market cycles. Inflation and receipt summaries are indirect,
while staff attendance does not reflect loan demand.
27. A borrower’s business generates TZS
800,000 in monthly cash inflow and TZS 560,000 in expenses. If the allowable
repayment burden is 30% of net income, what is the MAXIMUM monthly instalment
they qualify for?
A. TZS 80,000 B. TZS 60,000 C. TZS
72,000 D. TZS 90,000
Answer: C
Rationale: Net income = 800,000 − 560,000 =
240,000. Maximum instalment = 240,000 × 30% = 72,000. The other options reflect
typical errors such as using gross income or wrong percentage calculations.
28. Which factor MOST increases credit
risk for micro-enterprise borrowers in Tanzania?
A. Seasonality of business income B.
Stable supply chain C. Strong business networks D. Good relationship with
suppliers
Answer: A
Rationale: Seasonal income fluctuations can
significantly disrupt cash flow and repayment consistency, creating higher
credit risk. Stable supply chains, strong networks, and good supplier
relationships reduce operational risk, not increase it.
29. What is the PRIMARY role of credit
training for clients before loan disbursement?
A. Teaching clients how to negotiate
larger loans B. Encouraging clients to borrow
frequently C. Ensuring clients
understand loan terms and repayment responsibilities D. Instructing clients
on tax filing procedures
Answer: C
Rationale: Credit training ensures clients
understand interest, instalments, penalties, loan utilization, and repayment
requirements. Encouraging frequent borrowing or tax training is outside the
core purpose, while loan negotiation is not the objective.
30. Which type of collateral is MOST
common in Tanzanian microfinance lending?
A. Government treasury bonds B.
Motorcycles and small equipment C. Large commercial buildings D. Listed
company shares
Answer: B
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