The Effect of Microfinance Institutions on Poverty Reduction for Women Entrepreneurs: A Case Study of FINCA Tan ania in Teme!

e Municipa"ity #y $i"ian Fran! Tarimo

A%stract
Microfinance has been increasingly acknowledged as a significant tool for poverty reduction in development. There has been an extensive debate on the success of microfinance institutions for womens poverty reduction. A number of literature debates suggest microfinance institutions as a panacea to poverty reduction. However, argument from the literature review in this study showed that, although microfinance may have positive impacts on womens poverty reduction, it is unlikely to be an easy solution to poverty reduction. The extent to which microfinance institutions can be effective in womens poverty reduction is still uestionable. This research was conducted to examine the effect of microfinance institutions on poverty reduction for women entrepreneurs. The research has been done at !"#$A Tan%ania as a case study. The study focuses on identifying how M!"s can lead to poverty reduction for women entrepreneurs, the extent to which M!"s give women entrepreneurs access to loans and enhance empowerment and self reliance. "n addition the study also examined the extent to which M!"s leads to greater income levels and sustainability for women entrepreneurs. The indicators used were income levels, womens empowerment, self reliance and sustainability. The study revealed that M!"s have contributed to womens empowerment, increased income, sustainability and self reliance. &esides such positive effects, some of the women entrepreneurs have experienced negative impact through microfinance "nstitutions. !indings revealed that loan repayments are only possible under very difficult financial circumstances. They also experience little profit from the income

generating activities as a result of high interest rates, short repayment periods and other set backs at the operational level. "n addition the confiscation method mostly applied by !"#$A in cases of embe%%lement leaves women entrepreneurs without any valuable assets. !inally the research concludes that, indications from the study show that women can benefit from microfinance in increased income levels, empowerment, sustainability and self reliance.