The role of microfinance in improving the livelihoods of the community: the case study of crdb-microfinance company
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Date
2008
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Sokoine University of Agriculture
Abstract
Microfinance is defined as the supply of Ioans, savings, and other basic financial
services to the poor. People living in poverty, like everyone else, need a diverse
range of financial instruments to run their businesses, build assets, stabilize
consumption, and shield themselves against risks. Poor people, with access to
savings, credit, insurance, and other financial services, are more resilient and better
able to cope with the everyday crises they face. This study aimed at describing the
role of microfinance services in improving the livelihood of the community. The
research was conducted at CRDB-Microfinance Company Limited. This company
was established in 2001. A focus group research design was used to collect data from
clients of microfinance institutions throughout the country. A simple random
sampling procedure was applied to obtain the microfinance institutions. Out of 193
partner institutions, only five partner institutions were selected for the study. The
primary data collection was through interviewing the management of microfinance
institutions. This included the secretaries or managers. The secondary data was
obtained from existing information/literature, published and unpublished reports. It
also involved surfing/browsing through different websites by internet. Trend analysis
was employed to come up with certain judgments. The study showed an increase in
number of members, shares, deposits, loans disbursed as well as the net profit in
respect to time. This shows that people have faith in microfinance institutions and
they are benefiting from them. The increase in shares and deposits increases the
capital base of the institutions enabling them to lend to more people as well as bigger
amounts. The increasing of disbursed amount shows that people are taking the loans. As in June 2006 the company was serving more than 105 652 clients through 193
partner institutions in the Tanzania Mainland. Also by December 2007 the company
had disbursed a total of Tshs 122 126 501 000. The study goes further to the
microfinance market as well as the regulatory environment in Tanzania. It gives the
brief profile of CRDB Bank Limited and the history of CRDB-Microfinance
Company including its initial proceedings, supports it offers to SACCOS, Products
and services it offers to SACCOS and members. It also gives the brief profiles of
other commercial banks and financial institutions involved in microfinance in
Tanzania. The study concludes that microfinance industry seems to be the only
vehicle in improving the livelihood of the community after many people being left
out of the
conventional
financial
system. Also the
study gives some
recommendations on areas which should be worked on in order to make the impact
of microfinance services to be vivid in improving the livelihood of the community.
Description
A research paper submitted in partial fulfilment of the requirement for the degree of masters of business administration in agribusiness
Keywords
Microfinance, Livelihoods-community, CRDB-microfinance company