A Dissertation Submitted in Partial Fulfillment of the Requirements for Award of
the Degree of Master of Science in Accounting and Finance (MSc-A&F) of
Mzumbe University
The study assessed the role of microfinance on entrepreneurial development. The study
was conducted in FINCA and PRIDE, Dar es Salaam. The objectives of the study were:
to identify barriers impede entrepreneurial development; to determine constrains facing
micro entrepreneurs and to find out challenges facing microfinance institutions in
providing services to micro entrepreneurs.
A sample of 120 respondents was taken from FINCA and PRIDE. Primary data were
collected by using questionnaires and in depth interview. Data were presented by using
tables and figures.
The study found that MFIs play significant role in enhancing micro entrepreneurs. MFIs
provide loan services, consultation, training and business monitoring services. The study
found that majority of the respondents (51.67%) identified that high interest rate is the
strong barrier in impede entrepreneur development. Also, the study found that majority
of the respondents (60%) identified high interest rate is a major constrains facing micro
entrepreneurs. Moreover, the study the study found that majority of the respondents
(58.3%) revealed that poor management is the strong challenge for microfinance
institutions in providing loans to micro entrepreneurs.
The study concludes that MFIs play significance role in enhance micro enterprises
operations. The study concludes that there are various barriers impede entrepreneurs’
development. The major challenges involve, lack of collateral, high loan interest rate and
lack of registration. The study recommended that Microfinance institutions in Tanzania
also need to review their policies on the maximum amount of loans to micro
entrepreneurs to reflect the market demands. At the moment, new micro entrepreneurs
should not have much hope of getting finance sufficient assistance from most of the
microfinance institutions.