A Dissertation Submitted to IDS Mzumbe University is Partial Fulfillment for the Award of Master of Science Degree in Development Policy(MSc.Dp) of Mzumbe UniversityThe study assessed the performance evaluation of microfinance institutions on poverty reduction of Rombo district in Kilimanjaro region. This study was guided by the following research objectives which were; to identify the lending system used by different MFIs to their members in the study area; assess the performance of MFIs, identify constraints facing microfinance institutions in the study area and recommend strategies to improve the performance, and to assess whether the customers reached by these schemes have improved their general performance in terms of economic growth, creation of employment and generation of income. Purposive sampling was used to select 60 active members as the sample who was seriously involved in SACCOS activities. Data collection for this study employed different methods which were used to collect data such as structured questionnaire, interview and focus group discussion. The findings revealed that SACCOS were performing according to the intended goals of serving poor rural community. Active poor rural community has been using these SACCOS as a source of credit to finance their business. However SACCOS are facing some problems including lack of entrepreneurial education to its members, financial institutions to offer loans to SACCOS, inadequate qualified staff to run the institutions, low participation of members to access loans from their SACCOS due to low knowledge of using the opportunities available and low women participation. Moreover SACCOS are facing other constraints like poor infrastructure, low capacity of SACCOS to serve its members, lack of MFIS in rural areas and inadequate entrepreneurial skills among the members and poor record and book-keeping skill. The recommendations made by this study were that other microfinance institutions be motivated to invest in the Rombo district to increase micro-loans disbursement to cooperative based MFIs (SACCOS) and that microfinance institutions through well established SACCOS should train leaders and non leader members on proper record keeping and financial management: