The role of Microfinance Institutions in Improving the ...

1 International Journal of Scientific and Research Publications, Volume 4, Issue 11, November 2014 1. ISSN 2250-3153. The role of Microfinance Institutions in Improving the Economic Status of Women in Tanzania: The Case Study of PRIDE TANZANIA (Arusha Branch). Tiberius P. Mlowosa*, Natalia Kalimang'asi**, and Bundala Dodo Mathias**. *. Mwalimu Nyerere Institute of Management and Administration (MNIMA) Dar es Salaam- Tanzania **. Local Government Training Institute (LGTI) Dodoma -Tanzania Abstract- The roles of Micro finance institution is to provide technology and gender bias, division of labour, diseases, large small loans to their clients, creation of employment household size, unequal exchange in international trade, opportunities, capacity building to borrowers by offering problems of refugees, debts burden, dependence on foreign aids, different skills such as use of loans, entrepreneurship and poor policies and introduction of new policies.

2 World bank managerial skills. The research intended to examine the role (2000) argued that dependence on natural rain water causes poor played by financial institution's operations in Improving the harvest, which result in food and income shortages which would economic status of women in Tanzania through provision of soft in turn have helped them to afford other social services such as loans, by taking PRIDE TANZANIA-Arusha as a case of study education, housing and health services. basing on the fact that women are the poorest amongst the Microfinance is a system that allows people in poor world's poor people. countries to borrow small amount of money to help them start a Both primary and secondary data were collected.

3 Primary small business. It is the provision of financial services to those data was collected by questionnaires, interviews and observation who are excluded from conventional commercial financial for 100 women respondents whereby Secondary data were services since most are too poor to offer much - or anything - in obtained from books, journals, research reports, news papers, the way of collateral. Poor people have few assets that can be dissertation and Inter-net website. Responses from interviewees secured by a bank as collateral were coded and analyzed by using Statistical Package for Social Traditionally women are undermined, they are not given Science (SPSS) tool. Results from the analysis showed that chance to own means of production such as land and other assets.

4 Majority of loan beneficiaries( ) use loans for invest in Microfinance Institutions (MFI) are organizations that provide business and of respondents use the profits generated from Microfinance services, ranging from small non-profit Pride Tanzania to meet family needs. This implies that most organizations to large commercial banks. The nature of PRIDE TANZANIA loan beneficiaries invest their loan received commercial banks is that interest rates need to be high to return in business Nearly three quarter of respondents ( ) said that the cost of the loan. Most commercial banks provide loans on they have managed to improve their standard of living after collateral basis. Poor people can not get those loans since they receiving PRIDE TANZANIA loans and the rest said that they have few assets to be secured by banks which would have helped have experienced an increase in consumption.

5 Findings from this them to engage in economic activities as a means of poverty study proved that Microfinance (PRIDE TANZANIA) operations alleviation. works among the poor people. Furthermore, findings evidenced Microfinance both credit and savings has potential in that women economic status in the community changed from Improving the well being of the poor in developing countries. living in difficulties to a better life. The researchers recommends Currently the availability of suitable Microfinance Institutions to the policy formulating organs to institute appropriate (MFIs) in Tanzania, which are capable of serving households, interventions that will enable easy accessibility of provision of small farmers, small and micro enterprises in rural as well as in small soft loans to make poor rural people get out of poverty.

6 Urban area, is limited. For the vast majority of Tanzanians whose incomes are low, access to financial services would offer the Index Terms- Microfinance Institutions , Loans, Women possibility in managing scarce household and enterprise economic Empowerment resources more efficiently, protect against risks, provision for the future, and taking advantages for investment opportunities for economic returns and hence poverty reduction. This is only I. INTRODUCTION possible through establishment of well designed and sustainable Microfinance activities in the country. PRIDE TANZANIA is T anzania got its independence in 1961. Soon after independence Tanzania declared war against three development enemies namely ignorance, diseases and poverty, one of the Microfinance institution involved in the provision of credit to the low income earners in Tanzania.

7 But there were no specific action against poverty. In Tanzania It is from this context that the study wanted to know to what poverty is caused by many factors such as drought, extent micro finance Institutions operations in Tanzania through unemployment, underemployment, low level of production, poor International Journal of Scientific and Research Publications, Volume 4, Issue 11, November 2014 2. ISSN 2250-3153. loans provision improve the economic status of women by taking women in Tanzania will increase women capabilities and their PRIDE TANZANIA - Arusha branch as a case of study. abilities towards gender balance. It is from these facts that the president of United Republic The Concept of Micro Finance of Tanzania His excellence Jakaya Mrisho Kikwete in 2006 came Microfinance both credit and savings has potential to up with the idea of providing soft loans to the lower capital improve the well being of the poor in developing countries.

8 Business groups across Tanzania by assigning 20 billions and I. Micro financing is a provision of small loans to small billion to Tanzania mainland and Zanzibar respectively. The entrepreneur who lack the credentials and collateral demanded by loans extremely known as JK billions was aimed at empowering banks. These small loans are normally provided by Microfinance SMEs grow bigger to both Tanzanians to increase their levels of Institutions (MFIs). They provide financial service which income and enable them participate effectively in building the include; saving, credit and insurance. Apart from financial national economy. services some MFIs provides social services such as group formation and training on investment skills and group Limitations of Micro Finance Institutions in Relation to management (Salay, 2006).

9 Women empowerment MFIs mostly SACCOS are more supportive and friendly to Most Micro finance Institutions provide soft loans on poor ordinary people who are ignored by the sophisticated collateral bases. Women are deprived from owning means of financial services systems (Banks). These Institutions work hand production such that they cannot easily access these loans. Social in hand with the Government in extending small loans to poor attitudes to women are responsible for gender differences in both people to avoid risks/loss of their funds. The groups use the loans system of labor, training and education. There is a discrimination in establishing micro business or enriching the already owned against woman and the judicial system does not provide adequate micro business.

10 Protection for women and children, inadequate capacity of the Having explained the background information of the public law enforcement Institutions , low awareness of civil operations of MFIs it is now appropriate to define the term rights, ambiguity of law and limited options for redress (WB. Microfinance . Different scholars have defined the term 1988). Microfinance differently depending on contingent factors. In addition, most poor people have few assets that can be Microfinance is defined by Longman dictionary of contemporary secured by a bank as collateral. As documented extensively by English (2003) as a system that allows people in poor countries Hernando de Soto and others, even if they happen to own land in to borrow small amount of money to help them start a small the developing world, they may not have effective title to it.