The role of microfinance institutions in the development of rural MSEe’s in Tanzania: a case study of FINCA Tanzania limited

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University of Dar es Salaam
This study examined the impact of microfinance service on the growth of rural MSEs in Tanzania. This study was guided by the following objectives; to evaluate the effects of MFI’s loan management to the growth of economic activities of rural MSEs, to examine the extent to which MFI’s lending conditions relate to rural MSE’s growth and to examine the extent to which MFI’s lending procedures relate to rural MSE’s growth. The questionnaires were distributed to 150 respondents who are staff and customers of FINCA Tanzania Limited in Morogoro and 109 questionnaires were successfully filled making a response rate of 72.7%. Data were analyzed through the comparison between households using microfinance services for various activities including agribusiness, trading and artisan. Quantitative data were generated and analyzed. Correlation coefficient was used to test some of the attestation raised in this study. The study found that various businesses run by SME’s benefiting from FINCA loan services have been experiencing satisfactory level of service. The study found out that SMEs with higher financial risk and lower level of productivity are the ones mostly likely to seek microfinance services. The study further found out that lending procedures and lending criteria by FINCA have been encouraging more borrowers from SME’s operating various businesses in Morogoro rural areas. This has led to further improvement of the SME’s livelihood due to expansion in their businesses. From the findings of the study, it is now recommended that more MFI’s have to expand their services to rural areas so as to reach the remote but innovative SME’s in those areas. Also, the study recommends that FINCA should expand their loan portfolio so as to reach more remotely located SME’s. The government through the Bank of Tanzania has to find the means of introducing village banks whereby major stakeholders should be villagers so as to enable them expand their business through easy accessibility of capital by borrowing.
Available in print form, East Africana Collection, Chagula Library, Class mark Dr. Wilbert (EAF HG178.33.T34 M87)
Microfinance, FINCA Tanzania limited, Tanzania
Mutashubilwa, S.M. (2014) The role of microfinance institutions in the development of rural MSEe’s in Tanzania: a case study of FINCA Tanzania limited, Master dissertation, University of Dar es Salaam, Dar es Salaam