The challenges facing the user-owned microfinance institutions: a case study of jiendeleze saccos in Mbeya rural district.
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Date
2007
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Publisher
SOKOINE UNIVERSITY OF AGRICULTURE
Abstract
The importance of accessibility of credit to all social classes has necessitated the
formation of microfinance policy so as to guide the development of the sector. With
the formation of microfinance policy there is a number of public and private MFIs
including some banks that provide micro finance services. However, with the current
micro finance institution in Tanzania there is no sufficient documentation of the
, strengths and weaknesses of user owned microfinance institutions. This study thus,
aimed at evaluating the challenges faced by user owned MFI’s in Mbeya district.
Primary data were collected using questionnaires administered to randomly selected
samples of 30 members of user owned MFI. MFI management team and staffs were
also interviewed as key informants to supplement information of the respondents.
Secondary data were collected from various sources including library, IFAD, District
council offices, and SACCO’s data. Descriptive statistics (percentages and
frequencies) were employed using SPSS computer software to describe the
challenges faced by MFIs.
User owned MFIs found to have both internal and
external barriers limiting their performances. Internal barriers were found to be those
related to poor education background whereas external barriers involve institutional
weaknesses. Many MFI members (73%) reported to lack adequate basic financial
skills, whereas 67% are not conversant with business planning and operation. Hence
this study recommended that proper measures such as period, provision of
entrepreneurship skills and business training for MFI members and changing of laws
and regulations which seem to be barriers to the development of user owned
microfinance institutions.
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Keywords
microfinance, jiendeleze saccos, Mbeya, rural district, institutions