Influence of Group Based Micro-financing on Business Performance of Rural Based Micro, Small and Medium sized Enterprises (MSMEs) in Kagera region Tanzania.

Kaserwa, Gosbert Bigirwa (2022) Influence of Group Based Micro-financing on Business Performance of Rural Based Micro, Small and Medium sized Enterprises (MSMEs) in Kagera region Tanzania. Doctoral thesis, The Open University of Tanzania.

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Abstract

The objective of the study was to determine influence of group based borrower qualities on business performance of Rural Based Micro, Small and Medium Enterprises (MSMEs) in Kagera region Tanzania. The Study was guided by the theory of Group Based Micro-financing (GBM) model. Data were collected using a structured questionnaire from 279 group based borrowers of two commercial banks and two microfinance institutions (MFIs). Multiple Linear Regression Analysis (MLRA) was conducted to estimate the influence of group based micro-financing model on business performance of rural based MSMEs. The study found out that group based micro-financial services and borrower qualities had significant positive influences on business performance of rural based MSMEs in Kagera region. On the other hand nonfinancial services had insignificant positive influence on business performance of rural based MSMEs. Mandatory loan servicing costs and transaction costs had significant negative influences on business performance of rural based MSMEs. Furthermore, the study findings confirmed that group based micro-financing (GBM) model in general had significant positive influenced on business performance of rural based MSMEs in Kagera region. Conclusively, these findings imply that the Model was essential and a panacea for the rural poor. It is therefore recommended that the model should be promoted among the rural poor as the impoverished with no loan securities can easily access collateral free loans and engage in businesses and thus improve their livelihoods.

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