The Performance of Microfinance Institutions on Poverty Reduction: A Case of Pride Tanzania in the City of Mwanza

Mang’era, Alfred Huruma (2013) The Performance of Microfinance Institutions on Poverty Reduction: A Case of Pride Tanzania in the City of Mwanza. Masters thesis, The Open University of Tanzania.

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Abstract

Microfinance is one area which has to be considered by all development partners for the purpose of improving the income and livelihood of rural and urban poor people. This study intended to examine the performance of microfinance institutions on poverty reduction in terms of accessibility to microfinance services, employment creation, income growth and livelihood improvement as well as sustainability of MFIs as an outcome of government efforts towards the strategy of fighting against poverty among the poor communities especially in rural and urban areas. The study employed a case study design within a framework of mixed methodology whereby purposive and random sampling procedures were used to select a sample of 231 respondents which involved 200 PRIDE clients, 23 PRIDE staffs and 21 WEOs. Data were collected through the use of questionnaires, interviews, focused group discussions and documentary reviews. The qualitative data were analysed following the Miles & Huberman Model of Qualitative Data Analysis while the quantitative data were coded and analysed statistically by the use of computer software (SPSS version 15) giving frequencies and percentages. The findings of the study revealed that, microfinance is very essential for economic development as it plays a significant role towards poverty reduction. However, it was found that MFIs are not much effective in performing their role of reducing poverty in Tanzania. In particular, it was revealed that the accessibility to microfinance services among the poor people is still very low. On the other hand, the findings revealed that, there is little emphasis on the provision of business education to the clients before and after receiving loans such that majority of the entrepreneurs conduct their business through experience. Based on the research findings, the study recommended that both the government and microfinance institutions should strive to improve the financial infrastructure in order to expand accessibility to more people. This could be done by lowering the interest rates and increasing grace period. On the other hand, microfinance institutions should provide enterprising education to their clients in order to make them more effective.

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