The role of microfinance on poverty alleviation: a case study in rural Tanzania

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University of Dar es Salaam
This study examines the impact of micro finance on rural households ‘poverty through comparison of MFIs member and non member households. Based on data collected through a household survey by Prime Minister's Office (PMO) under its Rural Financial Services Program (RFSP) in collaboration with Economic Research Bureau (ERB) of University of Dar es Salaam, Head Count Index, Poverty Gap and Poverty Severity measures of poverty have been used to determine poverty status of MFIs member’s households and non member’s households. Logic and Probity models were also used to estimate how effective micro finance can reduce household poverty. The results of both techniques demonstrate that poverty of non members is higher than that of MFIs members' households. The results shows that MFIs members' households have more entitlement on basic needs and better living standards compared to non members. Our results indicate that risk of poverty of the MFIs members' households is 9 percent lower than that of non members. An important policy implication drawn from this study is that microfinance services should be improved and extended to the village level to be easily accessed by poor. It also requires capacity building of MFIs management and members with key skills needed for effective running of MFIs to ensure sustainable provision of microfinance.
Available in print form, East Africana Collection, Dr. Wilbert Chagula Library, Class mark (THS EAF HC79.T34Y9)
Microfinance, Poverty alleviation, Tanzaina
Yobu, N. (2007) The role of microfinance on poverty alleviation: a case study in rural Tanzania, Master dissertation, University of Dar es Salaam. Dar es Salaam.