CHALLENGES FACING WOMEN ACCESS TO MICROCREDIT IN NOTHERN TANZANIA

ABSTRACT The general objective of this study was to determine the factors hindering women’s access to microcredit in an urban region of northern Tanzania. Using a structured questionnaire in a random sample (n=32) from women entrepreneurs, and also a random sample (n=10) from workers of two microfinance institutions in which two were managers and eight were loan officers, the study aimed to identify setbacks that are faced by women entrepreneurs in their economic activities, sources of their capital, access to microcredit and qualifications to access microcredit from financial institutions. Findings suggest that microcredit interest rates are high, husbands withdraw from family responsibility after wives take microcredit, and women need education on how to use microcredit after having accessed it and restricted ownership of family assets limit collateral. These are significant barriers for women in this region seeking assistance with microcredit. Implications of these results suggest the need for best practice approaches in gender and development programmes, capacity building programmes and economic development programmes so as to ensure equity in women’s paid economic activities i CHAPTER ONE INTRODUCTION 1.0 Overview of the chapter This chapter presents historical background of the study, statement of research problem, main objectives of the study, specific objective of the study, research questions significance of the study and limitation of the study 1.1Background of the study The beginning of the microfinance movement is most closely associated with the economist MohamadYunus, who in the early 1970's was a professor in Bangladesh. In the midst of a country-wide famine, he began making small loans to poor families in neighboring villages in an effort to break their cycle of poverty (Grammeen, 2002) In the 1970s, experimental programs in Bangladesh, Brazil, and a few other countries extended tiny loans to groups of poor women to invest in micro-businesses. These microenterprise lending programs had an almost special focus on credit for income generating activities in some cases accompanied by forced savings schemes targeting very poor often women borrowers (www.globalenvision.org, Global envision: , 2005) By the early 1800s, women formed important part of the borrowing clientele of the loan funds. Despite their good intentions, loan funds faced a difficult obstacle in lending to married women: the husband was the owner of all property in a marriage, so that a married woman should not be accepted as the principal debtor. Therefore loan funds faced the problem that in case of default, they were unlikely to be successful in claiming against the husband for a debt incurred by his wife. This did not stop funds from lending to married women, but certainly would have been a discouraging factor. Thus most funds, although theoretically able to lend to both women and men equally, did little lending to married women; though perhaps in some cases when married women wished to borrow, their husbands undertook to borrow for them (Hollis, 1999) 1 In Tanzania it has emerged over the past 30 years from a narrow notion of microcredit – well-defined methodology to extend credit to target groups for enterprise development or some other specific purpose to an ambitious and daring concept of building entire financial systems that serve low income and poor people. In Tanzania, the history of microfinance starts way back in 1985 when the Government promoted and established the Presidential Trust Fund in mid-1990. Other MFIs emerged such as PRIDE, FINCA, and YOSEFO. In the late 1990s the Bank of Tanzania started specialized banks which are commonly known as community banks and cooperative banks. These include Kilimanjaro Cooperative Bank, Mufindi Community Bank and Kagera Cooperative Bank. Akiba Commercial Bank became the first Commercial Bank to venture into microfinance. Therefore it has been strongly feel that a look into empowering women and developing them with the support of the microfinance and the monitoring and creating awareness are important to eliminate the challenges facing by them in accessing credit from Microfinance Institutions. The importance of the economic contribution of microcredit and small enterprises begun to be seen in the mid-1980s.it has now become the main source of employment and incomes for the majority of people in developing countries, including Tanzania. Moreover, participation in the small business sector is widely seen by policy-makers as well as donors as a means of economically empowering marginalized groups, including women (Hanna, 1995) Lack of finance has been mentioned as a major reason which tends to hinder women to participate in Microcredit and Small Enterprises in Tanzania and in Arusha municipal in particular. Therefore this study focuses on factors which hinder women access to microcredit through microfinance in Arusha municipal. For this purpose previous studies from developed and developing countries on this regards have been examined and then found out the solutions from the literatures. Finally, the conclusion of their studies has been analyzed and then provided a comprehensive literature by seeing the experiences and usefulness of the activities about the solutions for the factors hindering women access to microcredit for income generating activities to empower poor women. 2 1.2 The statement of the research problem Despite the government of Tanzania having tried its best levels to ensure smooth provision of microcredit, still there is a problem in accessing such credits especially to most women. Since early of 1995 when it started encouraging commercial banks to give credit to the small and medium-scale enterprises through the establishment of credit guarantee schemes, setting up credit and business development service parastatals to deliver (Tom, 2005) Financial NGOs have been adapting, creating and applying innovative products in their micro-finance operations so as to ensure microcredit lending. Such NGOs include, PRIDE, MEDA, MVIWATA and TIP. Others are, SEDA, CREW, TWFC, TAPSE, TAMEA and Poverty Africa. Other association like Meda operates in Mbeya and Dar es Salaam, mainly target women and micro entrepreneurs who lack access to commercial bank loan and also lack collateral. Yet others which have been operating are Savings and Credit Associations (SACA) Among others, the women are said to lack access to microcredit which is much stimulated by lack of land title (collateral), lack of business records and registration, and services are much costly if not corrupt and discriminatory (REPOA, 2006) It is therefore not clear as to what extent most of women have been hindered to access microcredit in Arusha municipality from microfinance institutions and what are the factors behind the problem. The study therefore aimed at assessing the factors hindering women access to microcredit in Arusha municipality in which women entrepreneurs and two microfinance institutions PRIDE and BAY PORT were studied. 1.3The general objectives The general objective of this study was to determine the factors hindering women in accessing microcredit in Arusha Municipality. 3 1.3.1 Specific objectives The specific objectives of this study were: i. To identify the sources of women’s capital to start their business activities. ii. To determine the challenges facing women in accessing microcredit. iii. To investigate on the qualifications required by financial institutions to provide microcredit to borrowers. 1.3.2 Research questions The research questions of this study were: i. What were the sources of women’s capital to start their business activities? ii. What were the challenges facing women in accessing microcredit? iii. What minimum qualifications a borrower needed to have in order to access credit? 1.4 Significance of the study The following are the significance of the study: i. Research findings of this study extend knowledge of the researchers in the field of community development profession and act as a stimulant for the further study to other researchers. ii. Also the findings are used as a guideline to advice the related agents of community and social development on how they could empower women to participate effectively in development activities especially in informal sector through removing or making easier environments for them to acquire small loans Arusha Municipal being a part of beneficiaries of this study . iii. Not only that but also it helps the researcher to coordinate theoretical training obtained in the class with what is actually taking place practically in the course of gender and economic development as well as women in microfinance , so as to integrate theory with practice. iv. This research finding helps in playing the contributive role where the women empowerment and development policy formulators and other practitioners learn 4 from findings that would be found from the study and relate them to their immediate solution. v. The outcome of this research are also more useful to Arusha municipality in its programmes related to women and development ,where they are used as references to be consulted before planning for such women based development programmes. vi. This research is submitted as a partial fulfillment for the reward of a degree in Bachelor of Arts in Community Development of Stefano Moshi Memorial University College 1.5 Limitations of the study The researcher has been constrained with a number of limitations as follows:i. Lack of data: was a limiting factor since the management and staffs were not ready to disclose all the needed information but researcher searched data through internet, libraries and other sources which relate to the place of study. ii. Response from respondents: sometimes did not correspond to the study. Also other respondents were not ready to reveal the truth. iii. Limited time: the researcher conducted research in few days and covered a very small area due to limited time iv. Lack of experience: the researcher being new, it was first time for him to conduct a research, thus it was not easy to absorb what was needed precisely. v. Financial constraints: This is one among the constraints that the researcher faced, that the fund allocated for the research was not enough, but the researcher tried to minimize the cost without affecting the quality of the work. vi. Confidentiality: the researcher did not get all the information as other information was confidential 5 CHAPTER TWO LITERATURE REVIEW 2.0 Overview of the chapter In this chapter the literature review on the factors hindering women’s access to microcredit is reviewed .First is the definition of the key terms followed by the major debates and competing explanations on the factors hindering women’s access to microcredit, empirical studies on the hindering factors to women’s access to microcredit and finally research gap 2.1 Definition of the key terms. 2.1.1 Financial institutions These are public or private institutions that collect funds from the public or other institutions and invest them in financial assets (http;//worldneweb.princeton.financial institution., 2010). Also it is an institution that provides financial services for its clients or members. Probably the greatest important financial service provided by financial institutions is acting as financial intermediaries. Most financial institutions are regulated by the government. They focus on dealing with financial transactions, such as investments, loans and deposits. Conventionally, financial institutions are composed of organizations such as banks, trust companies, insurance companies and investment dealers. Almost everyone has deal with a financial institution on a regular basis. Everything from depositing money to taking out loans and exchange currencies must be done through financial owned institutions. They organizations that, may broadly be shareholder-owned speaking, act as a or government- channel between savers and borrowers of funds (suppliers and consumers of capital). (http;//worldneweb.princeton.financial institution., 2010) 2.1.2 Microfinance Microfinance refers to a variety of financial services that target low-income clients, particularly women. Since the clients of microfinance institutions (MFIs) have lower incomes and often have limited access to other financial services, microfinance products 6 tend to be for smaller monetary amounts than traditional financial services. These services include loans, savings, insurance, and remittances. Microloans are given for a variety of purposes, frequently for microenterprise development. The diversity of products and services offered reflects the fact that the financial needs of individuals, households, and enterprises can change significantly over time, especially for those who live in poverty. Because of these varied needs, and because of the industries focus on the poor. . These services help families to start and build "micro" enterprises, the very small businesses that are important sources of employment, income, and economic vitality in developing countries worldwide (www.themix.org,microfinance, 2002) Because salaried or wage-paying jobs are scarce in many developing countries, most citizens earn their livings through self-employment, creating and operating their own tiny enterprises. But without financial services to fuel their productivity, the poor can never grow their microenterprises into businesses that help them escape poverty. The microfinance movement was born to ease the suffering caused by poverty, and to awaken the global economy's sleeping giant: the under-capitalized productivity of the world's working poor (www.finca.org) It is a source of financial services for entrepreneurs and small businesses lacking access to banking and related services. The two main mechanisms for the delivery of financial services to such clients are: relationship-based banking for individual entrepreneurs and small businesses; and group-based models, where several entrepreneurs come together to apply for loans and other services as a group. 2.1.3 Microcredit Is the process of giving very small loans (microloans) to impoverished borrowers who typically lack collateral, steady employment and a verifiable credit history. It is designed not only to support entrepreneurship and alleviate poverty, but also in many cases to empower women and uplift entire communities by extension. In many communities, women lack the highly stable employment histories that traditional lenders tend to require. (en.wikipedia.org/wiki/Microcredit:, 2009) 2.1.4 Women access to microcredit With informal sources of finance being relatively easy to access, women rely on moneylenders and pawnbrokers (a person who lends money at interest on the security of 7 an article pawned), rotating savings and credit associations (ROSCAS), and friends, relatives, suppliers and shopkeepers. While these sources are providing the bulk of financial resources for female entrepreneurs and offer a number of potential advantages, such as proximity between borrower and lender, immediacy of loan disbursement, small loan size, flexible repayment schedules and minimal collateral requirements, they can be costly and discriminatory (ILO, 2004) The provision of sustainable access to financial services for women has therefore become a core component of many women's microenterprise programmes, and is at the center of the attention of governments, social partners, civil society organizations and international donors (ILO, 2004) 2.1.5 Entrepreneurship The capacity and willingness to develop, organize and manage a business venture along with any of its risks in order to make a profit. The most obvious example of entrepreneurship is the starting of new businesses. In economics, entrepreneurship combined with land, labor, natural resources and capital can produce profit. Entrepreneurial spirit is characterized by innovation and risk-taking, and is an essential part of a nation's ability to succeed in an ever changing and increasingly competitive global marketplace. It is the process of identifying and starting a new business venture, sourcing and organizing the required resources, while taking both the risks and rewards associated with the venture (www.businessdictionary.com,entrepreneurship.) 2.1.6 Microfinance policy Microfinance in Tanzania is one of the approaches that the government has focused its attention in recent years in pursuit of its long term vision of providing sustainable financial services to majority of Tanzanians population. In Tanzania, before the current financial and banking restructuring took place, most of financial services for rural, micro and small enterprises were offered by the National Bank of Commerce (NBC) and the Co-operative and Rural Development Bank (CRDB) (REPOA, 2006) Since 1991, the government has been implementing financial sector reforms aimed at putting in place a competitive, efficient and effective financial system. Although the reforms have had reasonable success in bringing about the growth of competitive and 8 efficient mainstream banking sector, it has not brought about increased access to basic financial services by the majority of the Tanzanians, particularly those in rural areas. The realization of the above shortcoming led to the Government’s decision to init iate deliberate action to facilitate alternative approaches in the creation of a broad based financial system comprising of a variety of sustainable institutions with wide outreach and offering diverse financial products .The government’s choice of microfinance was influenced by the conviction that, given adequate attention, microfinance has the potential to contribute considerably to the economic development of the country because it is more adapted to the needs of the low income population which makes up the majority of Tanzanians (REPOA, 2006) 2.2 Major debates and competing explanations of the problem under the study Microcredit is part of microfinance, which provides a wider range of financial services, especially savings accounts, to the poor. Modern microcredit is generally considered to have originated with the Grameen Bank founded in Bangladesh in 1983. Many traditional banks later introduced microcredit despite initial worries. The United Nations declared 2005 the International Year of Microcredit. As of 2012, microcredit is widely used in developing countries and is presented as having massive potential as a tool for poverty alleviation (en.wikipedia.org/wiki/Microcredit:, 2009) The origins of microcredit in its current practical life can be linked to several organizations founded in Bangladesh, especially the Grameen Bank. The Grameen Bank, which is generally considered the first modern microcredit institution, was founded in 1983 by Muhammad Yunus. Yunus began the project in a small town called Jobra, using his own money to deliver small loans at low-interest rates to the rural poor. Grameen Bank was followed by organizations such as BRAC in 1972 and ASA in 1978. Microcredit reached Latin America with the establishment of PRODEM in Bolivia in 1986 a bank that later transformed into the for-profit BancoSol. Microcredit quickly became a popular tool for economic development, with hundreds of institutions emerging throughout the third world.[3] Though the Grameen Bank was formed initially as a non-profit organization dependent upon government subsidies, it later became a corporate entity and was renamed Grameen II in 2002. Muhammad Yunus was awarded the Nobel Peace Prize in 2006 for his work providing microcredit services to the poor (Grameen, 2010). 9 2.3 Empirical studies on microcredit in relation to financial services. Recent studies have shown that, there are over 50 registered MFIs in Tanzania (Chijoriga, 2000), but their overall performance has been poor. In her study Chijoriga evaluated the performance and financial sustainability of MFIs in Tanzania, in terms of the overall institutional and organizational strength client outreach, and operational and financial performance. In the study, 28 MFIs and 194 MSEs were randomly selected and visited in Dar es Salaam, Arusha, Morogoro, Mbeya and Zanzibar regions (Chijoriga, 2000) The findings revealed that, the overall performance of MFIs in Tanzania is poor and only few of them have clear objectives, or a strong organizational structure. It was further observed that MFIs in Tanzania lack participatory ownership and many is donor driven. Although client outreach is increasing, with branches opening in almost all regions of the Tanzanian mainland, still MFIs activities remain in and around urban areas. Their operational performance demonstrates low loan repayment rates and their capital structures are dependent on donor or government funding. In conclusion, the author pointed to low population density, poor infrastructures and low house hold income levels as constraints to the MFIs’ performance. Many of these MFIs have no clear mission and objectives. Also their employees lack capacity in credit management and business skills. Among the questions which arise out of these research findings is whether these MFIs whose performance is questionable will have any impact on poverty alleviation. Rweyemamu et al, (2003).Kuzilwa examines the role of credit in generating entrepreneurial activities. Other studies on microfinance services, in Tanzania were carried out by Kuzilwa (2002) and He used qualitative case studies with a sample survey of businesses that gained access to credit from a Tanzanian government financial source. The findings reveal that the output of enterprises increased following the access to the credit. It was further observed that the enterprises whose owners received business training and advice, performed better than those who did not receive training .He recommended that an environment should be created where informal and quas-informal financial institutions can continue to be easily accessed by micro and small businesses (REPOA, 2006) 10 Rweyemamu et al evaluated the performance of, and constraints facing, semiformal microfinance institutions currently providing credit in the Mbeya and Mwanza regions. The primary data, which were supplemented, by secondary data, were collected through a formal survey of 222 farmers participating in the Agricultural Development Programme in Mbozi and the Mwanza Women Development Association(MWDA) in Ukerewe. The analysis of this study revealed that the interest rates were a significant barrier to the borrowing decision. Borrowers also cited problems with lengthy credit procurement procedures and the amount disbursed being inadequate. On the side of institutions, the study observed that both credit programmes experienced poor repayment rates, especially in the early years of operation, with farmers citing poor crop yields, low producer prices and untimely acquisition of loans as reasons for non-payment. It was further revealed that poor infrastructure of the MFIs led to high transportation costs, which increased the transaction costs in credit procurement, and disbursement and this ultimately hindered the effectiveness of the credit programmes. This happened because most of borrowers lived in rural areas, far from credit offices. The coverage by Kuzilwa was on the National Entrepreneurship Development Fund only, while Rweyemamuetals’ study was on assessing the micro-finance services for the agricultural sector only. A study of business entrepreneurs in Pakistan shows that women are “shy to approach banks because of the unavailability of collateral, their inability to develop viable business plans, and above all social unacceptability of their interaction with the male bank professionals”(R. Cultural construct of in-appropriate interaction with the male loan officers is also cited by other studies. In the equity market too, studies similarly suggest that gender per se is not a major issue in determining the supply of business angel finance or venture capital .Studies cite women’s lack of access to networks that are largely male dominated as one of the reasons for women’s low access to venture capital funds (Brush, 2004) Other studies however question the assumption of automatic benefits of micro-finance for women. Women’s high repayment levels, for example, do not necessarily indicate that women have used the loan themselves. Men may take the loans from women or women may choose to invest the loans in men's activities .Others argue that while there may not be automatic empowerment benefits but “the fact that women are more likely to 11 share their loans with male household members than men are with women merely strengthens the argument for lending to women, as the entire family is more likely to benefit economically, and women are more likely to benefit personally and socially (Kabeer, 2000) 2.4 Research gap From the conceptual to the theoretical review done as well as the empirical review done in and outside Tanzania reveal that little has been done to enhance women access to microcredit. Much has been discussed on the conceptual of the theoretical review and empirical review .Both have focused on the importance of microcredit towards fighting against poverty and the importance of it to small business women but did not focus on examining the factors that hinder women’s access to credits .This study therefore filled the gap. This study aimed at assessing the factors hindering women’s access to microcredit a case study of PRIDE, BAY PORT and women entrepreneurs in Arusha municipality. 12 CHAPTER THREE RESEARCH METHODOLOGY 3.0 Overview of the chapter. This chapter elaborates the methodology and materials employed in the study. Specifically it focuses on research design of the study, sample and sampling procedures, data collection techniques and data analysis plan. 3.1 Research design. A cross section research design was adopted. It allows data to be collected at a single point in time (Bailey, 1994). The nature of the study objectives and limited resources such as time, labor and funds influenced the researcher to adopt the design. It allowed the collection and analysis of data in a manner that aimed at combining relevance to the research purpose with economy in procedure (Kothari, 2004) 3.2 Area of the study. The study was conducted at Arushamunicipality. Arusha is a major international sensitive center in northern Tanzania, the capital of the Arusha region which is located at (3640'59.880E, 322'0.012S) and has an altitude of1265metres from the sea level with a template climate. It has a projected population of 1,288,088, including 516,000 for the Arusha municipality (2007 census). The city hosts and is regarded as the genuine capital of the East African Community. It is a multicultural city with a majority Tanzanian population of mixed backgrounds: indigenous Bantu, Arab-Tanzanian and IndianTanzanian population, plus small white European and white American minority population. Religions of the Arusha population are Christian, Jewish, Muslim, and Hindu The target area of this research was located in Arusha Municipality which dealt with microfinance institutions PRIDE, BAY PORT and women entrepreneurs within the area. Being the center of east African community, an international tourist recognized center, there is a great chance for women living in this area to use this opportunities as a way to do better in their economic activities. 13 The researcher decided to select this area to be a case study because it is among the areas where there are many economic activities in which most women are involved in informal sector especially micro business. Figure 1; Shows the study area Source:www.google/map/Arusha Tanzania 3.3 Sample and sampling procedures. 3.3.1 Sample size A sample size of 42 respondents was covered in which 32 were from women entrepreneurs, 8 from loan officers and 2 from financial institution managers of PRIDE and BAY PORT .This enabled the researcher to complete study in time and obtain required data. 3.3.2 Sampling techniques. The sampling procedures used were; 14 3.3.2.1 Purposive sampling Purposive sampling was used to get (2) financial institution’s managers to obtain precise and deep details on how these institutions relate to women’s failure to access to microcredit through structured interviews. 3.3.2.2 Simple random sampling. Simple random sampling was used to select 32 respondent’s women entrepreneurs and 8 loan officers from the two financial institutions respectively .Simple random sampling was also preferred to be used because it was cheap and easy to get data. 3.4 Data collection techniques Both primary and secondary data were used in this study where by primary data was collected using questionnaire, interview and other while secondary data was obtained from microfinance institutions. Primary data was collected from the respondents using structured questionnaire and unstructured questionnaire of both open and closed ended questions. Face to face interview also was used as a questionnaire. A check list was employed to solicit the information from key informants like managers of the institutions. 3.5.1 Methods or techniques of data collection a) Interview Two (2) financial institution’s managers of PRIDE and BAY PORT were interviewed respectively through structured interviews so as to get data on how it’s operation relate to women’s failure to access microcredit from them. b) Questionnaire Forty (40) questionnaires were distributed in which 8 were filled in by loan officers from two financial institutions that were BAY PORT and PRIDE and 32 questionnaires were filled in by women entrepreneurs who were asked questions through structured questionnaires. 3.5 Data processing and analysis plan. The collected data for this study was subjected to statistical analysis and the summing of data collected was analyzed using both quantitative and qualitative methods 15 CHAPTER FOUR FINDINGS AND ANALYSIS 4.0 Overview of the chapter This chapter presents and discuses findings of the study .the chapter is divided into two main sections .The first section presents the demographic and social economic characteristics of the respondents the second section presents findings on the factors hindering women’s access to microcredit in Arusha Municipality. 4.1 Social economic characteristics of the respondents The social economic characteristics of the surveyed data which were considered include age, marital status, and education. 4.1.1 Age of respondents The distribution of the respondents involved in the study on the factors hindering women’s access to microcredit by age was presented according to the data collected. Table 1 shows that 32 respondents equivalent to 100% of surveyed women entrepreneurs are of the age between 18 and above while those with the age below 18 years consisted 0%.The implication of this data is that most if not all the respondents surveyed have the age between 18 years and above. This is not surprising because most of them are married and they are the one who take care of families, hence they are involved in microcredit to sustain their living Table 1: Age of respondents Age group Frequency Percentage Below 18 0 0 Above 18 32 100 Total 32 100 (Surveyed data, (2015) 4.1.2 Marital status of respondents This section intended to identify the marital status of the respondents. Results in table 2 shows that 8respondents were single equal to 25%, 19 respondents were married equal to 16 60% followed by 2 respondents who were divorced equal to 6% and 3 respondents were widows which is equal to 9%.the implication of the above married female representation suggests that married women are the mostly involved in accessing credits to run their micro business. Table 2; marital status of the respondents Marital status Frequency Percentage Single 8 25 Married 19 60 Divorced 2 6 Widow 3 9 Total 32 100 Surveyed data, (2015) 4.1.3 Education of the respondents Education is a very important variable as it affects level of exposure of individual and general perception of world issues. (URT,2005).Also it enable people to have knowledge and skills that can lead them to better quality of life .Table 3 shows that 66% of respondents had a primary school education followed by those with secondary which constituted 28%and 6% had attended tertiary education which includes colleges, training institutes and universities and only 0% without formal education. The over representation of the respondents with primary school education underscore the fact that individual with more than secondary school education do not commonly involve in micro business ,they tend to work on public sector and other paying employments. 17 Table 3; Education of the respondents Education level Frequency Percent Primary education 21 66 Secondary education 9 28 Tertiary education 2 6 Total 32 100 Surveyed data, (2015) 4.2. Findings on the factors hindering women’s access to microcredit The findings of the factors hindering women’s access to microcredit were surveyed basing on sources of capital, financial institutional measures ,effects of interest rates, other external hindering factors to access microcredit, micro business sustainability, qualifications to access microcredit, the rate of women involved in credit application within past five years and reasons for low enrolment in credit application by women. 4.2.1 Sources of women’s capital to start their business activities. This section aimed at assessing the sources of women’s capital necessary for running their micro business. Results in the table 4 show that only 6% of women entrepreneurs obtain capital from both Village Saving and Loan Associations (VICOBA) and Village Community Banks (VICOBA) or from personal assets while 94% of the respondents obtain capital from Microfinance Institutions. This implies that few women entrepreneurs have no ability to obtain capital for their micro business from Microfinance institutions and large part of women entrepreneurs obtains capital for their business from microfinance institutions. These variations are due to lack of collaterals that are required by microfinance institutions. 18 Table 4. Shows source of women’s capital to run their micro business Sources of capital Frequency Percent 2 6 30 94 32 100 VSLAs and VICOBA, personal assets Microfinance institutions(MFIs) Total Surveyed data, (2015) 4.2.2 Institutional measures towards late or failure to repay the loan. The researcher intended to investigate whether the institutions have favorable procedures towards late or failure to repay credit. Results in table 5 shows that 50% of financial institutions impose penalty for late and failure to repayment and the same time collaterals are still handled by MFIs till time of loan completion. Also 50% of MFIs sell the clients collaterals through public sale after failure to repay loan. This implies that most of the women who either fail to repay the loan on time or completely fail to repay, their collaterals are penalized and sold which cause loss of assets and overturn from micro business which eventually affects family stability and welfare since they are the care givers of their families. Table 5; Institutional measures towards late or failure to repay the loan. Institutional measures Frequency Percent 0 0 0 0 Selling clients collaterals 1 50 Imposing penalty 1 50 2 100 Taking away of collaterals Detaining the client and imposing penalty Total Surveyed data, (2014) 19 4.2.3 The effects of interest rates imposed on the microcredit This part aimed to investigate whether the interest rates imposed to micro credits affect the women who take such credits. Table 6 shows that out of 30 respondents who ever for microcredit,17 respondents(57%) fail to repay the loan on time where as10 respondents(33%) their business fail to produce adequate profit and 3 respondents(10%) cause financial disturbance to group members since some microfinance use group lending models in provision of microcredit. This implies that the interest rates imposed by microfinance institutions are high which cause some women to close their business after loan repayment instead of boosting up their business which is the focal aim of Micro Finance Institutions (MFIs). Table 6; the effects of interest rates imposed on the microcredit Effects of interest rates Frequency Percent Failure to repay loan on time 17 57 Causing disturbance to group members during loan 3 10 repayment Failure for the business to produce adequate profit. 10 33 Total 30 100 Surveyed data, (2015) 4.2.4 External factors hindering women’s access to microcredit The researcher went further to find out factors apart from the microfinance barriers which contribute to hinder accessibility of microcredit to women. Results in table 7 shows that 38% husbands withdraw from family responsibilities after their wives have accessed microcredit for business, 43% lack microcredit education to run their business, 13% of the respondents face patriarchal system in their families which hider them to participate fully in production activities, 3% have no freedom of money at family levels and 3% face high taxes in the markets which force them to use large part of capital to pay for such tax. The over representation on lack of microcredit education implies that most of their micro business are not last long because they have no enough skills which makes their business strong. Also husband withdrawal from family responsibility after 20 their wives have accessed microcredit implies that women use large part of the microcredit to take care of family needs which cause them not to be able to produce profit and repay loan on time or completely fail to pay. Table 7: External factors hindering women’s access to microcredit External hindering factors Frequency Percent Lack of microcredit education 14 43 High taxes in the markets 1 3 Patriarchal system on family assets 4 13 Husband withdrawal from family responsibility after women access to microcredit 12 38 Lack of freedom on the money in the family 1 3 32 100 Total Surveyed data, (2015) 4.2.5 Sustainability of women’s micro business after loan repayment The researcher intended to assess the sustainability of the credit by borrowers. Table 8 indicates that 25 respondents (78%) their business has been able to go on even after the loan repayment while 7 respondents (22%) face economic crisis after loan repayment which eventually lead them to close their business for some time. The over representation of data collected indicate that 25 respondents equivalent to 78%,their business are sustainable even after repayment but only 22% face enormous crisis after repayment. This implies that such micro credits reduce income generation to some groups which affect their economic status and strike them to poverty as a result of business closure. 21 Table 8: Sustainability of women’s business after loan repayment Sustainability Frequency Percentage Yes 25 78 No 7 22 Total 32 100 Surveyed data, (2015) 4.2.6 Qualifications required by financial institutions to provide microcredit to borrowers. Under this part, the research aimed at identifying the qualities that enable one to be given microcredit from the surveyed microfinance institutions loan officers. Results in table 9 shows that 5 respondents(loan officers) (62%) suggested that a client should have fixed assets with the values similar to the credit he/she takes, 2 respondents (25%) said that a client should have an age above18 years and 1 respondent (13%) suggested that a client should have a business activity. The over representation on having fixed assets with the values similar to the credit he/she takes implies that most of women with no such qualification have lack an opportunity to access microcredit from the microfinance institutions as far as ownership and control of resources to most women is concerned. Table 9: Qualifications required by financial institutions to provide microcredit Qualifications Frequency Percent A client should be known to the society and be in a group 0 0 A client should have fixed assets with the values similar to 5 62 A client should have an age above18 years 2 25 A client should have a business activity 1 13 Total 8 100 the credit he/she takes Surveyed data, (2015) 22 4.2.7 The rate of women involved in microcredit taking from MFIs five years to present. This section aimed at exploring the rate of women who have been involved in microcredit taking from microfinance institution five years to the time of data collection which would help to view the trend of women access to microcredit .The two microfinance institution managers were able to reveal it. Table 10 shows that women access to microcredit five years to present is ranged between 26-50% .This implies that the number of women involved in applying for microcredit has been increasing and the increase in range of women taking microcredit suggests that women have improved in conduction of microbusiness to support their living and development and they are the key contributors to supply of economic services in the city. Table 10: The range rate of women taking microcredit from MFIs five years from 2009 to 2014 Frequency Percentage 0-25% 0 0 25-50% 2 100 50-75% 0 0 75-100% 0 0 2 100 Range rate of women taking microcredit in 5 years(2009-2014) Total Surveyed data, (2015) 4.2.8 Reasons for low rate of microcredit application by women entrepreneurs The researcher intended to explore the reason for low rate of microcredit application, this was obtained from the women entrepreneurs .Table 11 indicate 12 respondents (38%) fear for husbands withdrawal from family responsibilities after women access to microcredit ,11 respondents(34%) lack microcredit education,4 respondents(13%) face patriarchal system on the ownership of family assets,3 respondents (9%) have no business education,1 respondent(3%) responded to have lack of rights on ownership of family assets and 1 respondent (3%) suggested that lack of freedom because of husbands that wants to be given that money. The over representation on husbands 23 withdrawal from family responsibilities and lack of microcredit education implies these factors that cause low rate of women application for microcredit to run microbusiness. Table 11: Reasons for low rate of microcredit application by women entrepreneurs Frequency Percent microcredit 11 34 Lack of business education 3 9 Lack of right to own family assets 1 3 Patriarchal system on the ownership of family assets 4 13 Lack of freedom because of husbands that wants to be given that money 1 3 Fear for husband withdrawal from family responsibility after women access to microcredit 12 38 Total 32 100 Reasons for low rate of credit application Lack of education Surveyed data, (2015) 24 CHAPTER FIVE CONCLUSION AND RECOMMENDATIONS 5.0 Overview of the chapter This chapter presents the summary of the major findings and recommendations derived from the study, the specific objectives considered in this study were to: 1. Identify the sources of women’s capital to start their business activities. 2. Determine the challenges facing women in accessing microcredit. 3. Investigate on the qualifications required by financial institutions to provide microcredit to borrowers. 5.1Summary of major findings The following are summary of the major findings arising from the current study presented as per each specific objective. Objective 1: To identify the sources of women’s capital to start their business activities. The study found that majorities (94%) of women entrepreneurs obtain the capital for their business from microfinance institutions and minority (6%) obtain such capital from village savings and loans associations (VSLAs) and Village Community Banks (VICOBA).This is due to the variations on asset ownership which are required by Microfinance Institutions . Objective 2: To determine the factor hindering women in accessing microcredit. The study found that Lack of property rights, collaterals and startup capital to women has been a great barrier for them to access microcredit as required my microfinance institutions .Access of collateral and asset-based lending generally was also mentioned as one of the constraints to women from accessing microcredit. As Majority of microfinance requirements (about 62%) require collateral and capital which is among the major barrier towards women’s access to finance. Women are not entitled to land or other assets like livestock, house assets which might be used as collateral for the loans. For that reason, women can access the assets but they have no control of them and hence 25 they can never use them as collateral to loans. Men on the other hand has all the power to use any asset at home as their collateral. Lack of microcredit education constituted about 43% of women entrepreneurs , husband withdrawal from family responsibility after women access to microcredit in 38% of women are affected by such situation as well 13% of women face patriarchal system on family assets .All these contribute much to hinder women’s access to microcredit. Objective 3: To investigate on the qualifications required by financial institutions to provide microcredit to borrowers The study found that a client to access microcredit should have collaterals, aged above 18 and must have already established business. Loan officers (62%) suggested that a client should have fixed assets with the values similar to the credit he/she takes. 5.2 Conclusions of the study Based on the above findings suggest that microcredit interest rates are high which limits the expansion of women’s business because at the end they repay higher amount of money that leave them with financial instability in their business. The measures taken to failure to repay loan on time also discourage more women to approach microfinance for microcredit application and this observed when clients’ collaterals are taken and auctioned by these microfinance institutions. Also husbands’ withdrawal from family responsibility after wives take microcredit has been a major hindering factor to women’s business activities which forces them to use some of that money to handle family needs. Most women don’t have education on how to use microcredit after having accessed it this was described as another factor which causes inappropriate use of microcredit instead of the money to be used to expand their business activities. Restricted ownership of family assets limit women’s access to microcredit because microfinance institutions always need collateral to secure their money which they provide to such women. 26 These are significant barriers for women in this region seeking assistance with microcredit. Implications of these results suggest the need for best practice approaches in gender and development programmes, capacity building programmes and economic development programmes so as to ensure equity in women’s paid economic activities 5.3Recommendations The study recommends the following; 1) Women entrepreneurs For the women who need to begin their business they should conduct market research for their products before taking microcredit .This means that they should make sure they have customers for their business activities which in return favor loan repayment because of adequate benefit. There is a need to involve husbands at microfinance offices during loan receiving and both get instructions on the factors which may lead to failure to repay loan in which the findings has shown that men’s withdrawal from family responsibility causing women to use that money for family needs .Therefore if both become familiar with this there may be no problems associated with failure to loan repayment. 2) Microfinance institutions The microfinance institutions should design products that are flexible and meet most women’s needs. Some women may need long term loans or short term loans; others may be interested in loans to meet more immediate needs for their business. So the financial institutions should design microcredit services in a participatory way to know what is preferred by their current and prospective clients. The microfinance institutions should also design credit services that are convenient and easily accessible (Matin et al., 2002).this means they should make application requirements appropriate for women’s literacy and numeral levels. Customer care should be emphasized in the financial institutions, as to have equal treatment of men and women. Since women happen to be marginalized and being left out in access of larger loans rather than men. The MFI’s are advised to review on the current requirements to save since this was one of the complaints by women. To do this they should 27 look into the existing charges and fees requirements are set at a level that women micro entrepreneurs can afford. 3) Government and other stakeholders Government, NGOs and CSOs have to work closely with the women who are willing and able to start business activity, by providing advices, training on business initiating, running and managing business to ensure sustainability. Since the Bank of Tanzania is responsible for registration and controlling all the MFI’s operating in the country it is their duty now to see whether the interest rates charged by these MFI’s are relevant to the market and the type of clients. By researching this it will be able to regulate it according to the type of client the MFIs have, that is, whether they are from micro, small enterprises they should be charged minimal interest rate differing with large enterprises. 28 REFERENCES Brush, C. N. (2004). Gatekeepers of Venture Growth: A Diana Project Report on the Role and Participation of Women in the Venture Capital Industry. Chijoriga, M. M. (2000). The Performance and Sustainability of Micro Finance Institution In Tanzania” Working Paper. Dar es salaam. Chijoriga, M. M;Kuzilwa,J.A. (2000). The Role of Credit for Small Business Success s: A Study of the National Entrepreneurship Development Fund in Tanzania” A Paper Presented at the 6t h Annual International Conference on Entrepreneurship and Small Business Development (ICAESB). Dar es salaam. Conflicts over Credit: Re-Evaluating the Empowerment Potential of Loans to Women in Rural Bangladesh. World Development Journal Elsevier Science Ltd (Vol. xxix). (2000). D, Rweyemamu C;Kimaro M.P;Urassa O.M. (2003). Assessing Micro-Finance Services in Agricultural Sector Development: A Case Study of Semi Formal Financial Institutions in Tanzania” Economic and Social Research Foundation. Dar es salaam. en.wikipedia.org/wiki/Microcredit:. (2009, February 16). Retrieved May 12, 2014, from Microfinance Information Exchange, 2009 MicroBanking Bulletin Issue #19, December, 2009, http://en.wikipedia.org/wiki/Microcredit: Grammeen. (2002). Market Survey of Microfinance for Grameen Replication. 29 pp. 49: Hanna, A. (1995). Credit Schemes and Women’s Empowerment for Poverty Alleviation:. Hollis, A. (1999). Women and Microccredit in History:Gender in the irish Loan Funds. University of Calgary. http;//worldneweb.princeton.financial institution. (2010). Retrieved May 02, 2014, from Princeton. Financial Institution: http;//worldneweb.princeton.financial institution. ILO. (2004). Paper prepared by ILO for the Inter-Parliamentary Union (IPU) Annual Conference, Windhoek, Namibia,. Windhoek,Namibia. Kabeer, N. (2000). Conflicts over Credit: Re-Evaluating the Empowerment Potential of Loans to Women in Rural Bangladesh. Bangladesh: World Development Journal Elsevier Science Ltd. Mbughuni, P. (1994). Gender and poverty alleviation in Tanzania: Issues from and for research. Dar es salaam: Dar es salaam University Press. Migiro, A. R. (2003). Tanzania Women Entrepreneurs :Going Through 2003,. Geneva International Labour Office. Milinga, A. (2001). The state of Microfinance in Tanzania. Dar es salaam. REPOA. (2006). Research on Poverty Alleviation,The Contribution of Microfinance Institutions to Poverty Reduction in Tanzania. Tom, K. O. (2005). Microfinance in Tanzania: The experience of Akiba commercial Bank. Dar es salaam. www.businessdictionary.com,entrepreneurship. (n.d.). Retrieved May 10, 2014, from Entrepreneurship.: 30 http//www.businessdictionary.com www.dsp.org.au,. (n.d.). Retrieved May 12, 2014, from Development of the women's movement: http//www.dsp.org.au www.finca.org. (n.d.). Retrieved April 28, 2014, from Rising the Capacity of Poor Women: http://www.finca.org www.globalenvision.org, Global envision: . (2005). Retrieved May 12, 2014, from Exploring Market-driven Solutions to Microfinance in Tanzania : http://www.globalenvision.org, Global envision: www.sgiquarterly.org,Occasional paper 1, February 1995, UNDP. (n.d.). Retrieved May 13, 2014, from Occasional paper 1, February 1995, UNDP: http//www.sgiquarterly.org www.themix.org,microfinance. (2002, January 23). Retrieved April 28, 2014, from Microfinance Information Exchange: http://www.themix.org,microfinance 31 APPENDICES; Appendix i; Questionnaire for financial institutions managers THIS QUESTIONNAIRE IS TO BE FILLED BY FINANCIAL INSTITUTIONS MANAGERS Please fill the number of your answer in the box provided: suppose you select option 1 1. What do the policies of your 1.Microcredit are provided only to institution state in relation to Superior business persons microcredit provision? 2.Microcredit are provided to middle and Superior business persons 3. Microcredit is provided to all business persons, lower, mid and superior business persons provided that they have fixed assets. 4.Microcredit provision specific protocol has no 5.Answers 1-3 are collect 6.Answers 1-4 are collect 7.I don’t know 2. For five years before up to now what 1. is the situation of microcredit provision Has improved 2. Has declined 3. level Has remained on the same to women? . 3. For five years before up to now what 1=0-25 ( is the estimated rate of women taking 2=26-50 ( microcredit? % ) % ) 3=51-75 ( % ) 4=75-100 ( % ) 4. Why do many women don’t take 1.Most of women fears to take microcredit in relation to the total microcredit 32 1 number of women in this municipality? 2.Most of them have not been motivated 3.Most of them are not competent 4.They lack competent education 5.There are other financial institutions that impose lower interest rates 6.Most have no collaterals 5. Are there external factors limiting you 1=Yes to provide microcredit efficiently? 0=No 6.If the answer is yes to question 5,what 1.Government policies do not are those challenges encourage our financial institutions 2.There is no enough security 3.Economic changes 4.Escaping debtors away of microcredit 5.Deaths of microcredit debtors 7. Is there a good service relationship to 1. microcredit borrowers with the staff? Yes, to large extent 2. Yes, on average 3. Yes, to a small extent 4. No 5. I don’t know 8. What do you do to those who lately 1=Taking away of collaterals pay back microcredit? 2= Detaining the debtors imposing a penalty well 3= Selling of client’s collaterals 4= Imposing penalty . 33 9. What do you do to those who 1=Taking away of collaterals completely fail to pay back microcredit? 2= Detaining the debtors imposing a penalty well 3= Selling of client’s collaterals 4= Imposing penalty 10. What do you comment to be done so 1= Rates of interest imposed on as to encourage more women to take microcredit should be reduced microcredit? 2= Education on the safe use of microcredit should be done 3= Microcredit provision should target to raise women capability in business 4= Business education should be provided Appendix ii; Questionnaire for loan officers from microfinance institutions THIS QUESTIONNAIRE IS TO BE FILLED BY LOAN OFFICERS FROM MICROFINANCE INSTITUTIONS IN ARUSHA MUNICIPALITY Please fill the number of your answer in the box provided: suppose you select option 1: 1 1. What is the percentage trend rate of 1=0-25 ( women microcredit borrowers five years 2=26-50 ( before up to now? % ) % ) 3=51-75 ( % ) 4=75-100 ( % ) 2. What are the minimum qualifications 1.A client should be known to the that a borrower needs to have so as to take society and should be in a group microcredit? 2.A client should have fixed assets with 34 the values similar to the credit he/she takes 3.A client should have an age above18 years 4.Age doesn’t matter provided the client is able to repay microcredit 5.A client should have a business activity 6.Answers 1-5 are applicable 3. Are these qualifications encouraging 1= Yes women to take microcredit? 4. If no, what might be the reasons for them not to take microcredit? 0= No 1.Most of them have no enough education on how to use business credits 2.Most of microcredit them fear to take 3.Most of them like to take microcredit but have no collaterals 4.Our interest rates are higher 5.They are taking microcredit from other financial institutions 5. Are the measures taken to microcredit 1=Taking away of collaterals borrowers who fail to repay it on time? 2= Detaining the debtors well imposing a penalty 3= Selling of client’s collaterals 4= Imposing penalty 6. Do you provide education to your clients on how to use microcredit? 1=Yes 0=No 35 7. Is there a good service relationship to 1. microcredit borrowers with the staff? Yes, to large extent 2. Yes, on average 3. Yes, to a small extent 4. No 5. I don’t know 8. What do you do to those who lately pay 1=Taking away of collaterals back microcredit? 2= Detaining the debtors well imposing a penalty 3= Selling of client’s collaterals 4= Imposing penalty. 9. What do you do to those who completely fail to pay back microcredit? 1=Taking away of collaterals 2= Detaining the debtors well imposing a penalty 3= Selling of client’s collaterals 4= Imposing penalty 10. What do you comment to be done so 1= Rates of interest imposed on as to encourage more women to take microcredit should be reduced microcredit? 2= Education on the safe use of microcredit should be done 3= Microcredit provision should target to raise women capability in business 4= Business education should be provided 36 Appendix iii; Questionnaire for women entrepreneurs THIS QUESTIONNAIRE IS TO BE FILLED (BUSINESSWOMEN) IN ARUSHA MUNICIPALITY BY WOMEN ENTREPRENEURS Please fill the number of your answer in the box provided: suppose you select option 1 1. Have you ever approached microfinance 1=Yes institutions to take microcredit? 0=No Skip this question if you answered question 1 NO to 2. If yes, how far have you benefited from it? 1=Production has improved 2=Production has remained on the same level 3=I am now able to manage my family needs. 4.question 1,2,3 are correct 1=I had no collaterals Skip this question if you answered question 1 YES to 2=I had no any business activity 3=An institution did not trust me 3. If no, why? 4=Mention if there is any other………… 1=I have sold my assets Skip this question if you answered question 1 YES to 2=I have got assistance from nongovernment organization. 4. If no, what is your source of capital in doing your business activities? 3=I got loan from VICOBA,VSLA,s 5=A help/assistance from relatives. 5. 0 Are microfinance institutions credits’ rate of 1=Yes interest encouraging you to apply for such 0=No microcredit? Skip this question if your answer to question 5 1=Failure to repay loan on time was YES. 2= Causing lots of disturbances to group 6. If no, what are the effects of such interest rate members during loan repayment to your business activity? 3= Failure of the business to produce adequate profit 4= Question 1, 2 and 3 are all correct. 37 1: 7. Are you able to go on with your business even 1=Yes after loan repayment to microfinance institutions? 0=No 8. What are the effects of failure to repay loans on 1=Taking away of collaterals time? 2= Detaining the debtors well imposing a penalty 3= Selling of client’s collaterals 4= Imposing penalty 9. What are other factors hindering you to apply 1= Lack of microcredit education for microcredit apart from those of microfinance 2= Lack of business education institutions? 3= My business activity takes too long to be bought 4= I have no right to own family assets 5= The taxes in the markets are high 6= The area I am doing my business has no many customers & there are no other areas 7= Patriarchal system on the ownership of family assets 8= Lack of freedom because of husbands that wants to be given that money 9= My husband withdraws from being family caregiver as soon as I access microcredit and start doing entrepreneurship 10. What should be done so as many women can 1= Rates of interest imposed access to microcredit microcredit should be reduced on 2= Education on the safe use of microcredit should be done 3= Microcredit provision should target to raise women capability in business 4= Business education should be provided 38 39