Mfi as an engine in improving the business and living standards of low income earners : The case of pride Tanzania

Micro finance institution is an organization that offers financial services to the very poor. MFIs emerged to serve the financial needs of these poor people in the community. The general objective of this study was to examine the contribution of Micro-finance institutions to low income earners. To meet the study objectives, data was collected from two branches of PRIDE Tanzania namely Magomeni and Buguruni. Questionnaires were distributed to PRIDE clients as well as officials. Data was analysed quantitatively. Pie charts, histogram and frequency distribution tables were used to present the findings. The study shows that, PRIDE Tanzania uses a modified Grameen Bank model as credit delivery model. The model relies on solidarity group guarantee as an alternative to conventional collateral system. Through this model, it was found that, utilization of financial resources has improved the household income level among clients likewise, the profit of most small enterprises was found to increase. The study concluded that despite the stringent borrowing conditions posed by MFIs, yet the clients continue to borrow. The study recommended that the MFIs should revise the lending conditions especially the interest rate and also device a new way of tackling loan defaulters instead of leaving the burden to other clients in the group. Lastly, there is a need for conducting further study to assess the financial strength of the existing MFIs. This will reveal the actual situation on the current size and the amount to be loaned by the clients.