The contribution of microfinance institutions On poverty reduction: A case study of Kinondoni municipal
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Mzumbe University
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A Dissertation Submitted in Partial Fulfillment of the Requirements for Award
of the Masters Degree of Business in Administration in Corporate Management
(MBA – CM)of Mzumbe University
This study aimed at assessing the contribution of microfinance institutions to poverty reduction in Tanzania. Specifically, the study had the aim of assessing the contribution of microfinance institutions to the social development of entrepreneurs, to determine the impact of microfinance institutions to poverty reduction and also finding out challenges facing entrepreneurs in the credit acquisition from microfinance institutions. The study was carried out in Kinondoni Municipal, Dar es Salaam. The study employed descriptive statistical approach to describe the findings from selected case studies, with the aim on describe the data and characteristics about what is being studied. The target population was the Entrepreneurs who acquire loans and other financial services from various financial institutions such as SACCOS, PRIDE and FINCA. These were interviewed by asking them to answer both closed and open ended questions. The sample comprised a total of 120 entrepreneurs. Convenience sampling technique was employed to select respondents, questionnaire was used for data collection. The statistical Package for Social Sciences (SPSS) was used for data analysis. The study findings revealed that there is positive contribution of microfinance institutions to the social development, in which there is better access to health, education and basic services and greater social respect. The contribution of education level and entrepreneurial skills has positive impact to poverty reduction. From the finding obtained it has been found that microfinance institutions has a positive impact to poverty reduction in which there is increase in income, better living conditions and better access to basic needs. Lastly study found that challenges facing entrepreneurs are short time for loan repayment, low amount offered by MFIs, expensive collaterals and high interest rates. It is therefore recommended that government and other stakeholders should work together to make sure that, time given to repay loans is increased, to increase the amount which is borrowed, the collateral for loans should be that which most Entrepreneurs can afford and thirdly the interest rates should be lowered.
This study aimed at assessing the contribution of microfinance institutions to poverty reduction in Tanzania. Specifically, the study had the aim of assessing the contribution of microfinance institutions to the social development of entrepreneurs, to determine the impact of microfinance institutions to poverty reduction and also finding out challenges facing entrepreneurs in the credit acquisition from microfinance institutions. The study was carried out in Kinondoni Municipal, Dar es Salaam. The study employed descriptive statistical approach to describe the findings from selected case studies, with the aim on describe the data and characteristics about what is being studied. The target population was the Entrepreneurs who acquire loans and other financial services from various financial institutions such as SACCOS, PRIDE and FINCA. These were interviewed by asking them to answer both closed and open ended questions. The sample comprised a total of 120 entrepreneurs. Convenience sampling technique was employed to select respondents, questionnaire was used for data collection. The statistical Package for Social Sciences (SPSS) was used for data analysis. The study findings revealed that there is positive contribution of microfinance institutions to the social development, in which there is better access to health, education and basic services and greater social respect. The contribution of education level and entrepreneurial skills has positive impact to poverty reduction. From the finding obtained it has been found that microfinance institutions has a positive impact to poverty reduction in which there is increase in income, better living conditions and better access to basic needs. Lastly study found that challenges facing entrepreneurs are short time for loan repayment, low amount offered by MFIs, expensive collaterals and high interest rates. It is therefore recommended that government and other stakeholders should work together to make sure that, time given to repay loans is increased, to increase the amount which is borrowed, the collateral for loans should be that which most Entrepreneurs can afford and thirdly the interest rates should be lowered.
Keywords
Poverty reduction