The role of micro financing in poverty reduction

Abstract

The main purpose of the study was to assess to assess the role of micro finance on poverty reduction. The study was guided by the following objectives: To establish the contribution of micro-finance saving mobilization on poverty reduction, to find out the contributions of micro finance credit provision on poverty reduction and to analyze the Contribution of micro finance training services on poverty reduction.. The study was carried on using a detailed literature review thereby analyzing what various authors have written about the topic. This was done by looking into different books. Data was collected using a self-administered questionnaire, and face to face interviews. The study was conducted using 102 respondents including the clients and employees of Pride Microfinance. The results from the findings indicated that majority of the respondents were males in and were in the age group between 26 – 30 years who were married and had degrees. The findings revealed savings mobilization provides relatively less costly information during loan appraisal process and that saved money accumulates and has helped them to buy assets which can be used as collateral for bigger loans. The study also reveals that the essence of saving is refraining from spending part of their income and putting it one side and that savings has improved my welfare as a result of better access to small loans and that saving are a means of security in times of emergency. Credit has enabled them to overcome their liquidity constraints and undertake some investments and credit has helped them to smooth out the consumption patterns during the lean periods of the year. Additionally, trainings guarantee effective use of credit and improvements in productivity income for entrepreneurs and that training has enabled them to mobilize their own funds and build my capacities. It was also revealed that they are able to acquire micro credit management skills through trainings and that training has enabled them to get advice and technical assistance for problems as they come up. Finally, a number of recommendations were suggested such as Microfinance institutions should also establish programs that sensitize communities on eradication of poverty through training and educating the communities on how to save and gain. It was also recommended that the management needs to revisits and reconsider their policies and provide grace periods for these households before they begin with the repayment process. This will allow them get enough time to gather money for the repayments