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This study was intended to investigate the contribution of microfinance banks in poverty alleviation in Tanzania by linking the finance and business sectors. Finance and business sectors together are key elements in poverty alleviation. The link creates proportionality between finance and business, this link necessitated the study also to investigate how loan amount influence sustainability of businesses, how livelihood is influenced by loans from microfinance banks, the effects of high interest rates on business growth and finally investigate how conditions and procedures influence accessibility of loans from microfinance banks.
Literature review in this study divided in two parts. The first is theoretical which reveals various theories and definitions of various terms concerning the study. Also theoretical literature reveals the current situation of the problem. Empirical part gives highlight of what has been done so far at the international and local level by various researchers concerning the problem.
This study is done in seven Access bank branches situated in Dar es Salaam. The sample comprised of 33 Access bank clients from all said branches. Primary data was collected directly from the field. Secondary data was collected from previous literatures. The collected data were analyzed quantitatively and qualitatively and presented in tabular forms of percentages and normal numbers.
The study found using hypothesis test that, there is direct relationship between loan amount and business growth, there is high influence of loans on livelihood, there is inverse relationship between interest rate and business growth and there is high influence of procedures and conditions on availability of loans.
Since microfinance has picked up momentum in the drastic reduction of poverty the research calls for the concerned to put in place all necessary conditions, systems and facilities that will enhance establishment of more microfinance banks in all of the communities in Tanzania.
Furthermore it recommends that, interest rate must be lowered to a reasonable level, microfinance banks should provide grace period to its customers, microfinance should restructure their services to include training contents to improve business skills to their customers, microfinance banks should provide loans for other than business purpose and provide loans to start up business. Lastly, the government should consider initiating customer base center under bank of Tanzania (BOT) to control loan clients. |
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