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.