Impacts of Lutheran Church Microcredit Loans on Borrowers in Northern Tanzania: A Case Study of Building A Caring Community Project

The main objective of this study was to assess impact of BCC microcredit program on livelihood improvement of the respondent households. Specifically the study evaluated the client’s changes of livelihood on income, food adequacy, assets, capital, health and education and to assess factors that influence the loan repayment performance. Purposive sampling procedure was applied to select a sample size of 123 respondents that were the BCC beneficiaries who have received loan for a period of more than one year. Interviews and questionnaires were used as main data collection tools and the collected data were analyzed using qualitative, descriptive, paired t-test and logistic regression model. The findings of this study (p-values < 0.05) reveal that there was a significant improvement in overall family annual income, number of meals taken per day, ability to buy assets, access to health and education services and business value after taking loan from BCC microcredit program. Specifically the study reveals that the mean income increased from 500,000 to 1,500,000 Tsh while the business capital changed from 500,000 to 2 million Tshs and the number of meal increased from 1 to 3 meals per day before and after taking loan respectively. The results from the multivariate linear regression model indicate that business experience influences positively while amount of loan received influence negatively the loan repayment performance. Based on the findings, we recommend the flexibility on loan amounts, increase of loan repayment period and ongoing training to borrowers on loan use and entrepreneurship and close supervision to increase the loan repayment rate. The government also should formulate policies that will facilitate the CBO MFIs like BCC to access various services such as regulated risk management, health insurance and other financial facilitating services