Assessment of Factors Affecting Financing of Women under MFIs in Rural Musoma District – A Case Study of Village Saving & Loan Associations (VS&LA)

Published on January 1, 2009 | Author: Ganza Mfumya

The general objective of the study was to assess the factors affecting financing of women under MFIs in Rural Musoma District with reference of VS&LA. While specific objectives of the study were; To find out the role of Microfinance Institutions in improving poor women livelihood with reference to rural Musoma District through VS&LA, To analyze the working of formal and informal microfinance Institutions in serving the poor women in rural Musoma District in reference of VS&LA. And to identify factors impending MFIs in serving poor women with reference to rural Musoma District through VS&LA.

This study applied a” mixed methodology” approach, that was, the use of quantitative and qualitative in data collection and analysis procedures.

The major findings for this study were in terms of; the frequency of using medical services whether had increased or remained the same after the respondents joined VS&LA, the findings indicate 94.7% of respondents use more medical services than before joined VS&LA. As regard with the improvement of respondents’ nutrition status after joined VS&LA, the findings show 83.3% of respondents their nutrition status was good after joined VS&LA. The findings shows that the food availability was improved after the respondents joined VS&LA as 73.3% had food security within the period of 10 to 12 months compare 31.3% for the same period before respondents joined VS&LA. With regard with number of meals per day, respondents who takes three (3) meals per day had increased from 27.3% before to 76.5% per day after respondents joined VS&LA. Regards with the ability to meet their education obligation to their families the findings shows 96.6% of respondents the ability to meet education obligation had increased. As regards to the source of capital that the keep their IGA run 87.2% of respondents get their capital from Informal microfinance Institution. Also the findings shows 93.3% of respondents their status had improved after joined VS&LA. With regards of the availability of financial institution in rural area 63.3% of respondents had access with Informal Microfinance Institutions. With regards of savings facility 97.3% of respondents save their money in Informal Microfinance Institution like VS&LA. On other hand 91.3% of respondents get loan from IMFIs like VS&LAs. The Principal uses of loans was for consumption and school fees constituted 23.3% followed with IGA consumption medical expenses (22.7%). With regards with satisfaction 100% of respondents were satisfied with the financial services that are offered with VS&LAs.With regard with sustainability 74% of respondents to them sustainability was high. As for the quality of facilitation on the methodology 74% of respondents to them the quality of facilitation was very good. With regard with interest rate 83.4% of respondents to them the interest rate was high. For those who said the interest rate was high were asked if the interest rate was high why are they still taking loans, 82% of respondents said they take loan as they get good dividends at the end of the cycle.

From the above summary of findings it was evident that Informal microfinance Institution were required to help the poor improve household and enterprise management, increase productivity, smooth income flows and consumption costs, enlarge and diversify their businesses, and increase their incomes. It also helps the women low-income earners to cover key social obligations such as health services and schooling. As for these findings the Informal Microfinance Intuitions were pinpointed as an alternative channel for the financial services to reach the very poor especially women in rural areas, the following recommendations were pertinent;

  • IMFIs to be used as an alternative approach to reach poor and as a Cost minimization strategy at the mini-time.
  • Capacity Building it was very important as most MFIs were still limited in outreach, quality of services and operations. A great deal of capacity building was required to enable MFIs become sustainable to play an effective role in poverty reduction.
  • VS&LA as an alternative savings mechanism, as the study revealed almost poor people in rural area save in Informal Microfinance Institutions rather than Formal Financial Institutions, so for this fact IMFIs was the best alternative for the neglected and marginalized group of poor to provide saving facility
  • Integrating financial service with establishment of IGAs, it was advised more emphasis on entrepreneurship skills so that to link them with financial services that was to enable smoothly repayment of loans
  • A prospect for MFIs, The Researcher was convinced that if IMFIs were given adequate attention, they have the potential to contribute considerably to the economic development of the district as well as for the entire country.
  • Proposed future study topics; does a focus on sustainability really secure access to quality financial services for those who are excluded from the financial system, including the poorest? As institutions move toward profitability, do they move away from the poor clients? How can microfinance commercialization be pursued with a win-win gain for the clients and MFIs? What MFI profit levels can clients’ ably sustain without any limitations to attaining the good life they desire?
    Mfumya, G. (2009). Assessment of Factors Affecting Financing of Women under MFIs in Rural Musoma District – A Case Study of Village Saving & Loan Associations (VS&LA). Master’s Thesis. Open University of Tanzania.

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