Assessment of the role of microfinance institutions loans in creating employment opportunities in micro and small enterprises in Tanzania

The main objective of this study was to make assessment of the role of the Microfinance institutions loans in promoting the micro and small enterprises in Tanzania. MSEs Sector is argued to have significant contribution on employment creation and income generation. MFIs' loans were therefore expected to have positive impact on establishment of MSEs, creation of employment opportunities and to the employees of the MSEs in terms of salaries and other fringe benefits. Analysis of the data and testing of hypotheses led to a number of conclusions first, it was concluded that there is no significant statistical relationship between 1v1Fls loans and the number of MSEs established. Second, it was concluded that the amount of loans offered by MFIs have no significant statistical effect to the number of employees in the MSEs. It was further revealed that the loans have no significant impact on salaries and other fringe benefits to the employees of the MSEs. This study further shows that MSEs sector is still facing a number of constraints. High interest rates, multiple taxes, delay in loans processing, unfriendly loans delivery model, lack of enough capital, lack of enough knowledge on how to run business, high rent for business premises and poor infrastructures are some of the problems that MSEs owners are facing. This study implies that there are many things that need be done by the stakeholders before the: MFIs' loans can lead to significant positive impact to the economy. This study has also found out areas for further research in the last sub-section of chapter five which include the need to assess the psychological impact of various micro credit delivery model and the relationship between the ethnic group and source of initial capital.