A study of contribution of micro-finance institutions in poverty alleviation through women income generating activities in Kilosa district, Morogoro Tanzania

Abstract

The study was conducted in Kilosa district. The overall objective was to show the contribution of MFIs in poverty alleviation through women IGAs. The study aimed at identifying MFIs operating in the study area; common IGAs performed by women groups, assessing the contribution of MFIs towards poverty alleviation and analyzing factors affecting the performance of women’s IGAs. Cross-sectional research design with structured questionnaire was used to collect primary information from 100 respondents . Secondary data were obtained from various reports and literature surveys. MFIs identified include FINCA, WDF and NMB. Common IGAs found were retail shop, cooked food vending, selling used clothes, local brews, charcoal and firewood, fishmongers, and nursery school. The results indicate that 78% of borrowers and 56% of non-borrowers started IGAs to supplement family income and source of employment respectively. About 54 % of borrowers and 68% non-borrowers used less than Tshs 100 000 as capital to start IGAs from MFIs whereas non-borrowers from own savings and relatives. Gross Margin analysis showed that, incomes earned by 40 % of borrowers and 56% of non-borrowers range between Tshs 50 000 – 100 000. T-test analysis indicated that, borrowers’ income was significantly higher than the non-borrowers (p < 0.05). On average borrowers spent T.shs 63 620; 17 801 and 3 715.33 per month to purchase family food; pay school fees and health services respectively. Non-borrowers spent Tshs 34 020, 8 280 and 1 980 per month for the same items. This complies with alternate hypotheses that MFIs contribute towards poverty alleviation in selected items. Furthermore, competition among similar business, lack of education on business management, high income tax and lack of capital were identified as factors affecting the performance of IGAs. The study recommends MFIs should provide sufficient credit to their clients; group lending should be revised; provide training to borrowers.