DEPARTMENT OF GENERAL MANAGEMT

BUSINESS RESEARCH METHOD

IM 205

GROUP ASSIGNMENT

MEMBERS DETAILS

S/NO NAME REG NO PROGRAM

1 MASENGA ,NASIBU 2015-04-03436 BCOM ACCOUNT
CHANDE
2 MAFURU, JEMINI 2015-04-03395 BCOM ACCOUNT
JERSEY
3 MAGANGA,HUMPHREY 2015-04-03510 BCOM ACCOUNT
THADEUS
4 MUSSA, ADAM S 2015-04-03422 BCOM ACCOUNT
5 MBALU, JUMA S 2015-04-03407 BCOM ACCOUNT
6 KHALIFAN KHALSA 2015-04-04097 BCOM FINANCE
7 SAID TAHIYA 2015-04-03682 BCOM FINANCE
8 MWINYI NASRA 2015-04-03614 BCOM BANKING
9 ALLY CHRISTINA 2015-04-03615 BCOM BANKING
10 ALLY SALUM R 2015-04-03521 BCOM ACCOUNT

TABLE OF CONTENTS

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TITTLE: LOW CONTRIBUTION OF MICROFINANCE INSTITUTION ON GROWTH OF
LOW INCOME EARNERS IN TANZANIA.

1. BACKGROUNG………………………………………………………….............
1.1. Background Information……………………………………………………..
2. STATEMENT OF THE PROBLEM………………………………………….....
3. RESEARCH OBJECTIVES OF THE STUDY…………………………………..
3.1 General objectives…………………………………………………………….
3.2 specific objectives…………………………………………………………….
3.3 Research Questions…………………………………………………………...

4. LITERATURE REVIEWS ………………………………………………………...

4.1 Emperical Literature Review…………………………………………………

4.2 Theoretical Literature Review……………………………………………….

4.3 Conceptual Framework Developed From Literature Review

5. RESEARCH METHODOLOGY………………………………………………

5.1 Area of study…………………………………………………………….....

5.2 Research types and approach……………………………………………….

5.3 Population study……………………………………………………………

5.4 Sampling Unit………………………………………………………………

5.5 Sampling Frame…………………………………………………………….

5.6 Sample Size………………………………………………………………....

6. DATA ANALYSIS AND DATA INTERPRETATION………………………...

6.1 Types of data………………………………………………………………..

6.2 Data collection technique……………………………………………………

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 6.3 Data processing and Data analysis…………………………………………..

6.4 Reliability and Validity of data…………………………………………….

6.4.1 Reliability…………………………………………………………………

6.4.2 Validity……………………………………………………………………

TITTLE: LOW CONTRIBUTION OF MICROFINANCE INSTITUTION ON GROWTH OF

LOW INCOME EARNERS IN TANZANIA.

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1 BACKGROUND.

1.1 Background information.

Microfinance financial institution refers to the organizations established in order to help small
scale and medium scale enterprises as well as low income earners which are otherwise excluded
from formal (traditional) banking services. The main aim of microfinance financial institution is
to reduce poverty.

In Tanzania microfinance institution started in 1956, when Roman Catholic Church

established SACCOS in the country. During 2005 to 2009, the number of SACCOS increased
from 1875 to 5344, serving 991,873 people, and therefore reaching the penetration rate of 4
percent.

The National Microfinance Policy (NMP) was established in 2000 and it was officially
implemented. The overall objective of the NMP is to establish a basis for the evolution of an
efficient and effective micro financial system that serves the low-income segment of the society
and thereby contribute to economic growth and reduce poverty. Now days there are many
microfinance institution operates in Tanzania such as FINCA, PRIDE, and SEDA. Etc.

2. STATEMENT OF THE PROBLEM.

Despite the establishment of many microfinance institution in the country and creation of
National Microfinance Policy (2000) to help low income earners still poverty and poor living
standard prevailing in the country.

Therefore the question comes to existence on what are the impact of low contribution of MFI’s
in poverty reduction. Our study will tend to find solution of the gape of knowledge between
MFI’s and low income earners.

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3. RESEARCH OBJECTIVES OF THE STUDY.

3.1. General objective

The main objective of the study is to asses why low contribution of Microfinance institutions
services on the growth of low income earners in Tanzania.

3.2. Specific objectives

I. To examine the effect of Microfinance institution to the low income earners

II. To assess how the government policies support Microfinance institutions and the low income
earners

III. To examine how microfinance institution manage the transaction cost and deals with their
competitors.

IV. To examine the influence of bad debts on microfinance institutions.

V. To assess inadequate knowledge among low income earners on microfinance institutions.

3.3. Research questions

I. What are the effects of microfinance institutions to the low income earners?

II. What are the government policies that support Microfinance institutions and the low income
earners?

III. How the microfinance institution manage the transaction cost and deals with their
competitors?

IV. What are the influence of bad debts on microfinance institution?

V. Why inadequate knowledge among low income earners in microfinance institution?

4. LITERATURE REVIEW

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The origin of microfinance institutions in the world can be traced back in the 16 th century in
which informal microfinance system such as ‟Susus” in Ghana , Tandas in Mexico. Around 17 th
century more organized microfinance institution started to exist including the Irish Loand fund
system which was established in the year 1700s by Jonathan Swift to provide small short term
loans to rural poor people with no collateral, limitating of the Swift ideas, 300 funds centres were
established throughout the Irish country by 1840s service 20% of Irish household annually and
brought high positive impact to the growth of their economy

The development of micro finance institutions in the Irish country accelerated the establishment
and spread of the microfinance institution worldwide whereby, Tanzania has the spread of the
credit unions since 1956 when the Roman Catholic church established SACCOS in the country

Although, Micro finance institutions established long time ago in Tanzania, Micro finance
institutions gained popularity in the 1990s following the Micro credit Summit campaign in 1997,
and later on the establishment of National Microfinance policy and the united Nations
Declaration of 2005 as the international year of Micro credit after recognizing their role in
poverty reduction.

It is therefore believed that Micro finance institutions is one of the tools that can economically
and socially empower low income earners and the poor who are excluded from the traditional
banking sector and as well as promoting the growth and the development of the informal sector;
Traditionally banks view poor people as unviable clients and often will reject them due to
unstable credit or employment history and lack of collateral information, hence organized Micro
Finance institutions aim to offer inclusive financial services which are less exploitative.

A review of types of services offered by Micro Finance institution to low income households and
the poor may show the ways the intend to participate in reducing poverty.These include;

 To increase income of the low income earners. When low income households access
microcredits, they are expected to invest in their activities and improve their living
standards and create the self employment.
 Risk management to the poor people. Micro Finance institutions aim to enable micro
credits to manage the risks involved from the sudden financial shocks through the savings
which can be used for the future consumptions such as health care, education investments
and borrowing for emergence consumption.
 Women empowerment. It is believed that the majority of women are poor because they
lag behind in terms of productive resources (human capital and productive assets ). The
traditional cultural settings excluding women in the management of income generating
activities (ishengoma 2004), thus Micro Finance institution play a great role of providing
self employment opportunities through the establishment of Micro Finance Institutions
operated by women like WANAMA, SACCOS and Micro Finance Institutions provides
micro credit to women.

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  Provision of financial advices to the low income earners. Through the provisions of
education on entrepreneurial skills on how to establish, manage and maintain the growth
of small and medium enterprises established by the low income earners

4.1 EMPERICAL LITERATURE REVIEW

Based on the emperical literature reviews, the direct and indirect observations on the research
problem can be reviewed as a result of the following

 Insufficient funds to the Microfinance Institution this led to the collapse of many
microfinance institution due to the failure of the borrower to pay back loan
 Insufficient working premises and limited access to finance.
 High operational costs on monitoring and supervision of the loan repayment from the
borrower
 Low level of participations of the low income earners to the micro finance institution due
to high interest rates which discourage borrowings
 Non sustainability of micro finance institution due to the dependence on donor funds.

4.2 THEORETICAL LITERATURE REVIEW

This part of theoretical literature review will base and explain on the universal theory of demand
and supply, that states when the price of goods rises, the quantity demand by people will fall.
This relationship is called the “Law of demand”. There are two reasons for this law that are
Income effects and substitutional effects such as follows;
 When people become more poor, they will not be able to afford so much goods in the
market because of the low purchasing power of money they have, therefore the fall in
purchasing power termed as Income effect.
 When goods costs more than there substitute goods and people will decide to shift to
demand the substitute goods therefore this effect is termed as Substitute effect.
Therefore more goods will be supplied at high prices by the suppliers.

4.3 CONCEPTUAL FRAMEWORK DEVELOPED FROM LITERATURE REVIEW

The conceptual framework the literature review opens the way for the methodology of this study.
Under this study the conceptual framework developed has two main aspect;
 Low income earners who have already joined with the network of the financial services
offered by the Micro Finance Institutions (MFI’s).
 Low income earners who have no idea and do not have the access into the service offered
by Micro Finance Institutions (MFI’s).

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By knowing these two areas this will help us to make the effective assessment on the impact of
Micro Finance Institutions (MFI’s) to the low income earners as well as to other sector of the
economy

RESEARCH METHODOLOGY

By definition, Research Methodology- Refers to the process used to collect data for the purpose
of research study.

Hence, here under this part we will discuss and justifies various methods and techniques that will
be used in getting the sample, collecting data and making data analysis.

RESEARCH TYPES AND APPROACH

The study will tend to use both positivism( quantitative research method) and interpretivism
(qualitative method of research), this is because the study subjected to quantity that is the number
of people benefited with the Micro Finance institutions services in Tanzania and also the
statistical data on the performance of the Micro Finance institutions and their impact to the
country’s economy to ensure the economic growth of low income earners in our area of study
Tanzania.

Also the study has to do with the human behavior, as to why people especially low income
earners of our area of study participate on the services provided by Micro finance institution in
Tanzania, and the reasons as to why most of the low income earners group are not improving in
terms of their living standards despite of the existence of various Micro finance institutions and
the presence of the National micro finance policy (2000).

POPULATION STUDY

As our research title suggest, our study will focuses on low income earners groups who in some
ways or another have been neglected from the easy access of the financial services provided by
those established micro finance institution.

Also the study will focuses on long time established micro financial institutions to assess why
and how they fail to provide the services as expected on their contribution to eradicate poverty in
Tanzania.

SAMPLING UNIT

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We as researchers we will target the low income earners groups in these three districts (that are
Ilala, Kinondoni and Temeke in Dar es Salaam) to offer and to give out contribution on the
subject matter of the study.

SAMPLING FRAME

We will use the old and new micro finance institutions registered by BRELA ( Business
registration and licencing authority) and B.o.T (Bank of Tanzania) to collect data based on the
old and new factors contributed to the failure of micro financial institutions to provide service to
the public at large to achieve the major objectives of their establishments.

Also we expect to collect data by listening views from users and non-users of financial services
provided by micro finance institutions on their efficiency and effectiveness of these institutions
on the provision of their services.

SAMPLE SIZE

We will take a sample of five micro finance institutions , also will collect data from members
and non-members of micro finance institutions from the selected area of study, but mostly we
will use women on data collection as our first priority since they are the most affected party on
our study.

DATA ANALYSIS AND DATA INTERPRETATION

TYPES OF DATA

The study will use both primary and secondary data. Primary data will be collected through
observation, structured questionnaires and semi structured interviews using checklist of reading
questions

Secondary data is going to be obtained through the sources such as micro finance
institutions(MFIs) through the use of report

DATA COLLECTION TECHNIQUES

The study will collect data through the following techniques;

Structured questionnaires: this will be used to collect information from the low income earners.
questionnaire will be formulated to measure the awareness of the impact of micro finance
institutions(MFIs) on the improvement of the poor people

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Semi-structured questionnaire: This will provide the lines and guidance to the stake holders and
the owners of micro finance institutions(MFIs) on the answering the questions regarding the
plans, vision, mission of spreading micro finance institutions(MFIs) and services offered to help
poor people.

Observation: This method/technique will applied in the field mainly to cover broad scope of the
issue not accomplished by the questionnaires and semi structured questionnaire.

DATA PROCESSING AND DATA ANALYSIS

The collected data will be processed through editing, coding, classification and analysis the
researchers are going to use statistical software package.

The processed data will be analysis effectively to show and prove the relationship that exist
among the data groups, both descriptive and inferential analysis will have to be in place to insure
validity and reliability of the study conducted.

RELIABILITY AND VALIDITY OF DATA.

RELIABILITY

The research is ensuring the reliability of the measurable data by reviewing information from
reliable authoritative source documents.

VALIDITY

I this study will ensure that data are collected from concerning personnel and also data are
collected by those who understood better the phenomenon, that are working capital management
and are cross-checked in different collection method.

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