Influence of Microfinance Factors on Poverty Reduction among Youths in Tanzania: A Case Study of Kyerwa District
Abstract
This paper examines the influence of microfinance factors on poverty reduction among youth in Kyerwa District, Tanzania. The specific objectives were to assess the services youth receive from microfinance institutions (MFIs), analyse changes in income and monetary values of asset ownership before and after accessing the services, and determine the influence of microfinance factors on the changes. A sample of 150 youth was selected using purposive and stratified sampling, and primary data were collected through a structured questionnaire and analysed using the IBM SPSS Statistics software for descriptive and inferential statistics. For the latter, multiple linear regression was run. It was found that 92.6% of the respondents had accessed financial and non-financial microfinance services; 86.0% of them had received savings services, and 92.8% of them had received business development, training and capacity building services. The mean increases in incomes and monetary value of assets owned were TZS 3,290,787.00 and TZS 3,515,367.00, respectively. Based on multiple linear regression results, the amount of loan received had a positive influence on changes in both income (β = 1,280,334.689; p = 0.594) and monetary values of assets (β = 2,386,638.904; p = 0.001). Moreover, having business development services also had a positive influence on changes in both income (β = 3,630,612.87; p = 0.393) and monetary values of assets (β = 1,888,063.687; p = 0.154). Moreover, the study employed two Key Informant Interviews (KIIs) and three Focus Group Discussions (FGDs). The KIIs were conducted with microfinance officers, while the FGDs involved 24 youth participants (8 in each group) from different wards. The KIIs used semi-structured guides to capture expert perspectives on microfinance service delivery and youth challenges. The FGDs explored lived experiences, challenges before and after microfinance access, and perceptions on service effectiveness. Thematic analysis of the qualitative data revealed enhanced self-employment, improved decision-making, and empowerment through training, as well as obstacles like high interest rates, limited mentorship, and short loan repayment periods. These findings suggest that, while loans are effective for poverty reduction, business development services to loan recipients are also important. Microfinance institutions issuing loans to youth should also offer them non-financial services, particularly business development, training, and market linkages, if the youth are to reduce poverty effectively. Youth organisations and community groups should actively engage with MFIs to identify youth-specific needs and promote service awareness, fostering greater participation.
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