An Assessment of Microfinance Institutions in Providing Credit to Poor Households and Small Enterprises. A case of Unguja South Region

The implementation of financial reform and the subsequent privatization of the government owned financial institutions have made things worse to the majority of the rural poor households and small enterprises. The government focuses to strength banking system in low risk urban based clients in order to improve their portifolio performance rather than reach out smaller clients located in rural areas. The main objective of the study was to assess the effectiveness of microfinance institutions in providing crerdit to the low income rural society, to determine the constraints of MFIs in Tanzania, to assess how these small income earners have access to loan and also to assess whether the conditions and procedures of loans and credit granting set by the MFIs favour the rural poor house holds and small enterprises. The purpose of using both methods is to be able to examine further into the data set to understand its meaning and to use another method to verify findings from other methods. This study used descriptive and cross-sectional design. The purpose of descriptive design was to observe, describe, and document aspect of situation, naturally as they occur in a given population. The findings of the study revealed that most of the rural poor house holds and small enterprises are not accessible the financial services. Some conditions such as high interest rates, securities of the loans and other procedures such as formalities, lack of training have made them not benefited by loans. The researcher recommended that the government to establish rural financial services, government to have the awareness programs on MF services to poor rural house holds and small enterprises, interest rates should also be reduced and rural properties such as houses should have ownership deeds