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Microfinance can be a critical element of an effective poverty reduction strategy especially for developing countries. The services provided by microfinance institutions can enable the poor to smoothen their consumption, build their assets gradually, develop their micro enterprises, enhance their income earning capacity, and enjoy an improved quality of life.
A study to assess the performance of micro-finance banks in poverty reduction in Tanzania was conducted in Arusha using NMB bank, Ngarenaro branch as a case study. The study was guided by the following research questions: Do the NMB direct their services to the poor population and micro and small businesses? Do the condition and procedures for credit set by NMB bank favors the poor and low income earners clients? To what extent do NMB services contribute to poverty alleviation? And, do the poor and low income earners receive adequate NMB services? The report examined the extent at which the microfinance contributes to poverty alleviation. It also assessed whether the NMB bank directs their services to the poor population and micro and small businesses and whether conditions and procedures for credit favor these target groups.
The study included a sample of 60 customers and 20 staff, who were interviewed to know the contribution of NMB services to poverty alleviation. Simple random and purposive sampling techniques were used to get the number of respondents during the study. Data were collected through questionnaires, structured interviews, observations and documentary reviews. Data analysis was based on descriptive statistics and presented in tables and percentages
Following the information collected from NMB and their clients it was revealed that microfinance has changed the life of poor people in a positive way. Microfinance clients have increased their incomes, capital invested and therefore expansion of their businesses. Despite these achievements it was further observed that, some conditions like grace period for loan repayment, collateral and microfinance coverage have been limiting factors for poor people to access the microfinance services. |
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