The effectiveness of informal lending to women entrepreneurs: the Case of Ilala District In Dar es Salaam City

The overall objective of this study was to investigate the effectiveness of informal lending on women entrepreneurs, with specific reference to the informal lending on women entrepreneurs in Ilala district as well as underlying the perception of the society on this system of lending, identifying the complexities encountered when conducting informal lending, problems facing lenders and the benefits of using this system of lending compared to the formal lending. The sample size involved 90 women entrepreneurs from Ilala district. Data from questionnaires were inserted to a data entry screen using Epi-Info, then transferred to SPSS descriptive methods for analysis into frequencies, percentages, also I used the Pearson Chi-square tests and Linear regression model. The results observed that informal lending was conducted mainly in urban areas of which 80.3% of the women entrepreneurs perceived positively on this system of lending and ascribed it as helpful and very helpful mode of lending. 44.4% of the respondents indicated that they favored this lending arrangement of quickness in obtaining the loan compared to commercial banks and enjoyed since the system make them expand their business, able to pay their children’s fees as well as getting food for their family. From the study, recommendations made are to improve documentation and verification of the loan, Planning and improving communication between practitioners. Lastly, the Government of Tanzania through its bodies should establish an informal credit reference bureau to set standards and guideline.