Impact Analysis Of Credit To Borrowers In Tanzania: The Case Of Mbeya Municipality

ABSTRACT

Micro-credit funding for income-generating activities is one of the current anti-poverty measures that are adopted by many developing countries to alleviate poverty amongst the poor. The study was conducted in Mbeya Municipality to asses the overall impact of credit to borrowers. Both questionnaire and personal observation methods were used to collect data amongst borrowers in Mbeya Municipality. A total of 100 respondents were interviewed, and collected data were analyzed using Statistical Package for Social Sciences (SPSS) computer programme. The results show that, loans for income generating activities have overall positive effect on the borrowers. The performance among borrowers was analyzed by using the proper evaluation of the difference before and after changes resulting from the credit. The results indicate that the major sources of credit agencies are from PRIDE and NMB. 64% of the respondents generate income beyond the poverty line because borrowers have earned substantial amount of income. 70% of respondents’ have high and modern standard of houses assets, kitchen facilities, media and communication items and transportation facilities. Furthermore, 58% of respondents project the life span of their business to be more than 8 years. This implies that the performance of income generating activities was effective. Factors that contributed to this positive impact include suitable credit procedures and conditions of some of financial institutions that are flexible and affordable by the poor people at the grassroots. These features are reflected by the size of the loans taken, the type of projects for the targeted population and the modes of loan repayments. Basing on the on the finding of this study it is recommended that, in order to support the poor people at the grassroots level loans agencies should review their credit procedure so as to meet the demand of borrowers. ii