Impact of microfinance on smallholder farm productivity in Tanzania: the case of Iramba District

Over the past two decades there have been varied efforts from stakeholders towards developing a vibrant microfinance industry. This in turn, has increased the number of microfinance institutions across the country. For example, in 1990s there were about 825 microfinance institutions which increased to 1,875 in the year 2005. The promise of these institutions lies in their ability to empower people to work on their own to eradicate poverty. This has raised interest in understanding the nature of the clients and how this microfinance is impacting the recipients’ wellbeing. The main objective of this study was to investigate the impact of microfinance on agricultural productivity by smallholder farmers in Tanzania with the case study of Iramba district, Singida region. Both qualitative and quantitative data were collected from the sample villages of Wemberi, Nselebwe and Kizonzo. Respondents were categorized into credit beneficiaries and non credit beneficiaries. A total of 5% respondents were sampled randomly from each category making a total of 98 respondents. The collected data were analyzed through descriptive statistics, t-test analysis, and multiple regression analysis. The findings reveals that, the credit beneficiaries had relatively high agricultural productivity than non beneficiaries. Results also suggest that, credit beneficiaries were relative accesible to market and enhance inputs and technology applications. The major factors that hinder smallholder farmers to access credit were mentioned to be lack of information and risk adverse. It is recommended that, smallholder farmers should be facilitated to access credits from microfinance institutions. For sustainability of microfinance the government and other stakeholders should help to enforce laws for defaulters and help to build capacity on smallholder farmers for the best use of the credits.