Impact of Micro Finance on Poverty Reduction in Tanzania: A Case Study of Sido in Ilala District

Abstract

This study sets out to investigate the Impact of Micro Finance on Poverty Reduction in Tanzania, using a case of Small Industries Development Organization (SIDO) in Ilala District. This organization disburses loans to small and medium enterprises throughout the Country. Data for study were collected from Ilala and Temeke district between January to July, 2017 and a sample of 90 respondents was involved. These were business entrepreneurs who had loans from SIDO and others had not taken loans. The finding of the study indicates that business growth needs more capital, training, lower interest rates and a reduction of different charges as well as conducive environment for business operations. Moreover, it was noted that SIDO loans was meant for poor people lacking tangible assets for security, but this rule was not adhered and the disbursed loan amount were  too small to boost clients business. Therefore the study suggests that the organization should acquire more seed fund in order to increase its disbursement capacity and a change in programme’s operation should take place for the benefits of the loan borrowers because a comparison of SIDO loan borrowers and non-borrowers indicated that there is no significance difference. This indicates that the loan did not help much and something was needed to supplement the loan. If changes would be made, SIDO loans would be a more effective tool in the effort to alleviate poverty.

Keywords: Microfinance, poverty reduction, Impact, Small Industries Development Organization (SIDO) and SMEs

DOI: 10.7176/EJBM/11-2-01