The effect of credit on income: a case of women’s micro projects for poverty alleviation in Shinyanga urban and rural districts
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Date
2000
Authors
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Journal ISSN
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Publisher
Sokoine University of Agriculture
Abstract
Micro-credit funding for women income generating activities is one of the current anti
poverty measures that are adopted by many developing countries to alleviate poverty
amongst the poor. This study was conducted in Shinyanga region to examine the
effectiveness of credit scheme models by this mode of funding to women’s micro
projects at the grassroots.
Both questionnaire and personal observation methods were used to collect data
amongst women beneficiaries in Shinyanga urban and rural area districts. A total of
121 respondents was interviewed, and the collected data were analysed using both
quantitative and qualitative approaches.
The results show that, credit loans for women micro-projects have an apparent positive
effect on the overall income of beneficiaries. But despite this, the credit loans to urban
beneficiaries have shown overall poor performance. The variation of performance
between the urban and rural beneficiaries was analysed by using the ‘current ratio’
(CR) measure. Thus, the
test shows that there is a significant (P < 0.05) association
between future sustainability of the micro-projects and the respective respondents’
location (either urban or rural area) - in terms of CR measure. The results also indicate
that most of the micro-projects (54.5%) in rural areas have CR > 2. The average CR
for the urban and rural area micro-projects were 1.3310 and 7.8250 respectively. This
implies that the performance of rural area micro-projects was superior to the urban
counterpart.
Factors that contributed to this effectiveness include suitable creditiii
policies and associated conditions that are flexible and affordable by the poor women
at the grassroots. These features are reflected by the size of the loan, the type of
projects for the targeted population and the modes of loan repayments.
Furthermore, the T test for the difference between means of different group pairs of
initial capital shows that there is a greater statistical (P < 0.05) difference between
respondents with zero initial capital and those ranging between zero and Tsh.15 000.00
each. Similar results are indicated by the test between respondents with zero initial
capital and those with capital ranging between Tsh.49 650. 00 and Tsh. 68 880.00.
Basing on the study results it is recommended that, in order to support the poor women
at the grassroots credit schemes for poverty alleviation must review their credit
policies, so as to meet the conditions of the resource poor. But again, the study has
noted that commercial oriented policies that create loan dependants are more likely to
worsen the poverty situation irrespective of the location and target factors that are to be
addressed. Credit policies can serve the poor when they address the factors that
perpetuate poverty in the different localities.
Credit agencies therefore, should make necessary reforms and preparations for the
schemes before implementation. Among other things, targeting has to identify the real
poor by assessing their actual requirements in the context of Tanzania environment.
Description
Dissertation
Keywords
Credit on income, Poverty alleviation, Women micro-projects