A Dissertation Submitted to Mzumbe University, Dar es Salaam Campus College in Partial Fulfillment of the Requirements for the Award of the Degree of Master of Science in Accounting and Finance (MSc-A&F) of Mzumbe University.This dissertation is about the impact of micro finance on poverty reduction in Tanzania rural areas Kibaha area being the case study. The findings revealed that most of microfinance loan facilities has contributed on a positive changes to the life of borrowers. The study revealed that some of factors that some of factors that contributed to borrower empowerment is; Increase in Income, ability to save and accumulate saving and contribution towards their children education, ability to purchase household asset and improving their home diet, this make improvement of social status and confidence. The study revealed that majority of clients paid their loan on time and they have willingness to do so. Additionally findings confirm that low income clients are ready to save if the structure and facilities are in place to securely maintain their saving. The findings correct earlier views by formal financial institution that the poor cannot use credit facilities in effective manner, do not have the capacity to repay loan, cannot afford to pay high interest rate and do not generate enough income to enable them to save. Upon mobilization of saving low income clients can benefit having a safer place to keep their money. There are several factors which have to be addressed and incorporated into giving credit to make program more effective, some of the factors include; Lending methodology, Interest rates, working environment ,gender inequalities, Government policies and financial structure.