Dissertation Submitted to Mzumbe University in Partial Fulfillment of the Requirements for Award of the Degree of Master of Business Management –Corporate Management (MBA-CM) of Mzumbe University
This study aimed to examine factors that determine the access of Microfinance services in rural Tanzania, using Mvomero district as a study case. The study addressed the following research questions: What are micro-financial service providers that operate in Mvomero District? What are the limitations to access to microfinance services in rural areas? How acceptable are the financing mechanisms employed by different providers? And what are the impacts of microfinance institutions in rural Tanzania? The study was largely qualitative supplemented in some aspects by the quantitative research methodology that based on descriptive design. This facilitates facts findings and generalization on wide population.
The methods used in the field were mainly the in-depth interviews (IDIs), semi-structured interviews and survey questionnaire. For secondary data reports, books and records were also used to supplement the primary data. The major findings show that there was inaccessible of MFI’s services in rural areas due to various factors such as poor infrastructure, negative perceptions toward microfinance institutions, high cost and risk of operating and acquiring services scattered low population in rural areas, low population that resulted in little profit and others like negative perception of community about microfinance services, as well as low collateral values.
On the basis of the findings of the study, the following were recommended: There should be emphasis on the preferred financing mechanism as the best arrangement for securing loans in the rural areas; linkage in microfinance arrangement should be introduced to enhance effectiveness in financing services; the government has to use Credit Cooperative Societies to channel their agricultural credit and members of these societies should contribute on mutual consent; the credit provided should be revolving in such a way that every member will benefit; and the government and other development partners should take a necessary measure to provide important infrastructural facilities in rural areas so as to make these places conducive for microfinance services