CHAPTER FOUR

4.1 Introduction
This chapter focuses on data analysis and discussion of findings. Data is presented in
tabular form as well as graphically and findings are analysed per each objective. The
chapter contains a summary of the response rate, reliability and validity test of the
data collection instrument, normality test as well a summary of demographics.

4.2 Questionnaire Response Rate

Category Questionnaires Returned Not returned or Response
sent distored Rate(%)
MFIs Credit 97 90 7 97%
only customers
DTMFIs 8 8 0 100%
Employees
Total 105 98 7 93%
Source:Researcher compilation (2023)

Table 4.1 shows a high response rate of 93%. According to Bistah (2022), any
response rate that is 50% and above would warrant validity of the study findings,
hence the researcher can conclude that this study is valid. The high response rate can
be attributed to the simple to understand and easy to complete online survey.

4.3 Demographic Information

It was requested of the customers that they provide information regarding their
gender, age, status, and the number of times they visit the fields. The researcher
wished to acquire background information regarding the customers of the micro
finance banks. This would allow the researcher to easily distinguish between the
various requirements of the customers of the micro finance banks customers and to
offer effective recommendations to the various categories of customers to ensure that
they are all extremely satisfied. After that, the researcher presented the gender
distribution of the respondents using a pie chart, as illustrated in the diagram to the
right.
4.3.1 Gender

Gender

female
44%
male
56%

Out of 105 respondents, 56% were males and 44% were females. Though the
percentage of men is slightly higher, there is equal representation in gender in the
respondents between male and females.

4.3.2 Age distribution of respondents

age distribution
age distribution

35%
30%

25%
12%

Less Than 20
Years 21 to 30 Years
31 to 40 Years
above 40 years
 The findings indicate that the age groups with the highest frequency of MFI visits are
between 21-30 and 31-40 years old. This is likely due to these age groups being in the
middle of their working years and likely members of the working class, which means
they are likey to be able to working with MFIs very well and therefore visit the mfis
frequently.

4.3.3 Responses regarding bank accounts

Demographic Characteristics Frequency %

variable

Do you have a bank YES 50 51

account?
NO 47 49

60 61
Have you ever YES
obtained a loan ? NO 37 39

Registered financial 43
Was it through institution 42
registered financial
institution or
Exploitative lending
( chimbadzo) Exploitative 55 57
lending(chimbadzo)

YES
Were you charged 35 36
fairly? NO 62 64
4.4 Reliability and Validity Test

The researcher tested the data collection tool for reliability. Reliability test is a
consistency check on the data collection instrument to establish whether the questions
asked were coherent. This is a very crucial tool when conducting quantitative analysis
using SPSS. The researcher was guided by the Cronbach alpha scale as presented in
the next table.

In general, a score of more than 0.7 is usually acceptable, however, some authors
suggest higher values of 0.90 to 0.95, Molhsen & Regh, (2019).

Table 4.2: Reliability Test

Reliability Stats

No of Items
Cronbach’s alpha

0.877 24

The instrument was reliable with a Cronbach alpha of 0.877. According to Johnson,
(2015), if the Cronbach alpha is greater than 0.7 the tool is considered reliable. If the
Cronbach alpha is below 0.7 there will be need to restructure the questionnaire.
4.5 Data presentation and analysis

4.5.1 The impact of microfinance on the usage of financial services by the poor

The purpose of the study was to ascertain how microfinance affects the usage of
financial services by the poor. Figure 4.4 below displays the respondents' comments
regarding the usage of financiql services by the poor.

Figure 4.4: The usage of financial services by the poor

60
40
20
0

Strongly Agree Agree not Sure Disagree Strongly disagree

Source: Research data (2023)

From the above chart, it can be noted that 55% of the respondents agreed that
microfinance is very helpful to the poor on the usage of financial services, while only
5% disagreed that microfinance is very helpful to the poor, notewithstanding, 65% of
the respondents also agreed that the usage of financial services through microfinance
is changing peoples lives, while 35% disagreed that the usage of financial services
through microfinance is changing peoples lives. Also, over 80% agreed that
commercial banks services are not affordable to the poor, while only 15% disagreed
to that. Moreso, 75% of the respondents also agreed that microfinance is able to
bridge this financial exclusion gap. On the other hand, 70% of the respondents agreed
that interest rates and loan payable terms affect the effectiveness of financial services
usage by the poor while 30% disagreed to that fact. Lastly, nearly 50% disagreed that
microfinance has influenced their financial decision making

4.5.2 The impact of micrpfinance on the outreach or penetration to the poor

The purpose of the study was to ascertain how microfinance affects the outreach or
how MFIs penetrate to the poor. Figure 4.5 below displays the respondents' comments
regarding the outreach of MFIs to the poor.

Figure 4.5 The Outreach or penetration of MFIs to the poor

60
40
20
0

Strongly Agree Agree not Sure Disagree Strongly disagree

Source:Research Data (2023)

The above chart clearly shows the responses concerning the outreach or penetration of
MFIs to the poor. Firstly it can be easily be seen that almost 95% of the respondent
agreed that microfinance institutions has been able to provide its services to the poo,
while only 5% denied that it does not. Alternatively, 65% agreed that microfinance
has increased its outreach to the remote areas while 35% disagreed by saying they is
still a long way to go to cover most of the remote areas in Zimbabwe. Thirdly, half of
the respondents agreed that there are existing financial inclusion programmes that are
being used to improve microfinance outreach while half , also disagreed saying there
are no financial inclusion programmes under way. Additionally, 55% of the
respondents denied that there are efforts being made to make sure that the
marginalized population is being reached, and lastly, 65% of the respondents
disagreed that microfinance outreach has helped in increasing the low income
people’s lives

4.5.3 The impact of microfinance on the access of financial services by the poor

The purpose of the study was to ascertain how microfinance affects the accessibility
of financial services by poor. Figure 4.6 below displays the respondents' comments
regarding the access of financial services by the poor

Figure 4.6 The Access of Financial Services by the poor

60
50
40
30
20
10
0

Strongly Agree Agree not Sure Disagree Strongly disagree

Source:Research Data (2023)

The above diagram illustrates the responses regarding the accessibility of financial
services by the poor as impacted by MFIs. As shown in fig 4.6, majority of the
respondents (67%) agreed that microfinance provides a wide range of financial
services to the poor, while 57% denied that it provides a wide range of financial
products. Moreso, 85% of the respondents agreed that microfinance allows access of
banking services to the unbanked. On the other hand, more than 70% of the
respondents agreed that the rate of financial exclusion gap has been reduced through
these services, whilest only 25% denied to that fact. Additionally, 65% agreed that
there is evidence that shows improvement of microfinance on access of financial
services. Lastly majority of the respondents (80%) agreed that microfinance has
influenced financial inclusion of the marginalized population in Zimbabwe.
4.5.4 The impact of microfinance on the quality financial services provided to the
poor

The purpose of the study on the last objective was also to ascertain how microfinance
affects the quality of financial services by poor. Figure 4.7 below displays the
respondents' comments regarding the quality of financial services by the poor

Figure 4.7: Quality of financial services provided to the poor

60
50
40
30
20
10
0

Strongly Agree Agree not Sure Disagree Strongly disagree

Source:Research Data (2023)

As shown in figure 4.7 above, responses concerning the quality of financial services
provided o the poor by MFIs were clearly indicated. Firstly, respondents (50% )
disagreed that microfinance has improved the quality of financial services that are
made available to the poor, while again 50% agreed that it does. Secondly, 60% of the
respondents agreed that there are tailor made financial services provided by
microfinance institutions that meet the needs and requirements of the poor, while 30%
denied, saying there are no tailor made products that are available at the moment.
Thirdly, 65% agreed that the quality of the financial services being provided is up to
satisfaction, while 35% disagreed that there are not up to satisfaction. Moreso, over
90% of the respondents agreed that there are areas that needs to be improved to meet
the expectations of the customers in terms of service quality, and lastly, more than
half of the respondents disagreed that the poor customers receive the same quality of
financial services as credit worth customers
4.6 Inter-correlation of items
Inter-correlation of items shows a relationship of each independent variable against
the dependent variable, basically looking at direction, magnitude and significance.
Spearman’s rho correlation test was used, as it is ideal for abnormal data together with
other non-parametric tests as alluded to earlier under normality test.

Table 4.4 Inter-correlation of items

Correlations
Financial Usage of Outreach Access Quality
inclusion FS by to-the of FS of FS
the poor poor by the to the
poor poor
Financial Correlation coefficient 1.0000
inclusion Sig,(two-tailed)
N 215
Spearma Usage of Correlation coefficient 0.244** 1.0000
n’s FS-by the Sig,(two-tailed) .001
rho poor
N 215 215
Outreach Correlation coefficient 0.477** 0.234** 1.0000
to-the poor Sig,(two-tailed) .000 .00

N 215 215 215

Access of Correlation coefficient 0.221** 0.899** 0.366** 1.0000
FS by the Sig,(two-tailed) .00 .002 .001
poor
N 215 215 215 215
Quality of Correlation coefficient 0.115** 0.544** 0.145** .288** 1.0000
FS to the Sig,(two-tailed) .006 .00 0.000* .002
poor
N 215 215 215 215 215
Correlation is sig at the 0.01 level 2-tailed
Source: Research data (2023)
Direction

All the independent variables which are MFI Usage of financial services(FS) by the
poor, MFI outreach to the poor, Access of financial services by the poor and Quality
of services provided to the poor had a positive relationship with financial inclusion.
The highest positive correlation exists between MFI outreach and Financial inclusion,
whereas the least positive correlation exists between MFI quality of financial services
and Financial inclusion.

Statistical Significance

Two stars (**) entails that the Correlation is significant at the 0.01 level (2-tailed)
whereas one star (*) means that the correlation is significant at the 0.05 level (2-
tailed). All the independent variables were statistically significant as they relate to the
dependent variable (Level of corruption awareness) as shown in the table above. All
the highlighted relationships were statistically significant according to correlation at
99% confidence level.

Magnitude

Sounders et al. (2010) posit that, correlation coefficient between 0 - 2.99 is considered
as weak, yet, 0.3 - 0.499 range is considered to be moderate and anything above 0.5 is
considered to be strong. Following these ranges, the relationship between MFI
outreach to the poor and Financial inclusion had the biggest magnitude of .477**.
This was followed by access of financial services and financial inclusion with .366**
(moderate). Weak relationships existed between Financial inclusion (dependent) and
MFI acces of financial services and quality of financial services provided to the poor
with .221** and .115** respectively.

4.7 Regression Analysis

Before testing for a cause and effect relationship between financial inclusion and its
independent variables, the variables under each pillar were transformed first. Below is
the Model summary, Anova or F test and Co-efficient tables.
Table 4.5: Regression Model summary

Model Summary
Model R R-SQUARED Adj. R squared Std. error
1 0.877 0.655 0.511 0.40992

a. predictors: (constant), USAGE OF FS , OUTREACH TO THE POOR, ACCESS BY THE

POOR AND QUALITY OF FS TO THE POOR

Source: Research Data (2023)

Essentially, the model summary table bounces in terms of percentage the level at
which the dependent variable is influenced by the independent variables. A regression
analysis was prepared between the dependent variable (Financial Inclusion) and
Independent variables, as shown in the table above. The findings of the model
summary give an R Square value of 0.655 and Adjusted R Square is .511. The
investigator utilized the Adjusted R. Square since it is deemed to be more precise in
displaying the predictive power on the dependent variable, since it is adjusted for
sampling errors. As a percentage, 51% of financial inclusion is explained by its
independent variables. However, the remaining 49% is explained by other variables
which are probably not covered in the scope of this analysis.

Table 4.6: Goodness of fit

ANOVA

Model Sum of dF Mean Square F Sig

Squares

Regressio 62.109 5 14.988 62.993 b

.000
n

Residual 49.677 210 .211

Total 111.786 215

a.Dependent variable: Financial Inclusion

b.Predictors: Usage of FS, OUTREACH TO THE POOR, ACCESS OF FD BY THE POOR
An ANOVA analysis was conducted between Financial inclusion and the independent
variables at 95% confidence level, the F value = 62.993, P<0.000). Therefore, it was
proven that there was a linear relationship between Financial inclusion and its
predictors.

Table 4.7: Regression Coefficients

Coefficients
Model Unstandardized Standardized t Sig
coefficients coefficients
B Std. Error Beta
(Constant) 2.113 .028
USAGE OF MFI FS .422 .183 .533 2.344 .001
1 BY THE POORR
MFI OUTREACH TO .866 .056 .766 13.55 .000
THE POOR
ACCESS OF FS BY .467 .064 .422 6.43 .000
THE POOR
QUALITY OF .238 .174 .246 .3.233 .011
SERVICES TO POOR
a. dependent variable: financial inclusion
Source: Research Data (2023)

According to regression test, Financial inclusion can be indomitable by Usage of MFI

financial services by the poor, MFI outreach to the poor,Access of financial services
by the poor and Quality of MFI services provided to the poor . Therefore, the cause
and effect relationship of the dependent variable and predictors was significant since
all the p values of the predictors were less than a p-value of 0,05.. All other
relationships where positive which implies that an improvement on each factor by 1
unit will proportionately result to an improvement on financial inclusion. According
to regression, a p-value below 0.05 signifies a relationship between the dependent and
independent variables.
4.8 Discussion of findings and testing of hypothesis

H1: Microfinance have a positive impact on the usage of financial services by the
poor

To prove or disprove the above hypothesis, a regression was conducted as shown in

the tables above. The results shows a p value of 0.01 which is less than 0.05,
therefore, we cannot reject H1 at 5% confidence level, and the conclusion is that
microfinance have a positive moderate impact on the usage of financial services by
the poor. These results are consistent with the findings of Armendariz and Morduch
(2020), Khandker et al. (2022) who also discovered that microfinance has a positive
impact on the usage of financial services by the poor. However the results are
inconsistent with the findings of Bateman and Chang (2021) who found that there is a
negative impact of microfinance usage of financial services by the poor

H2: Microfinance has a positive impact on the outreach to the poor

To prove or disprove the above hypothesis, a regression was conducted as shown in

the tables above. The results shows a p value of 0.000 which is less than 0.05,
therefore, we cannot reject H2 at 5% confidence level, and the conclusion is that
microfinance have a positive strong impact on the outreach to the poor. These results
are consistent with the findings of Cull, Demirgüç-Kunt, and Morduch (2019),
Chowdhury, Klapper, and Muzi (2022) who also discovered that microfinance has a
positive impact on the outreach to the poor. However the results are inconsistent with
the findings of Dichter and Harper (2017) who found that there is a negative impact of
microfinance outreach to the poor.

H3: Microfinance has a positive impact on the access of financial services by the
poor

To prove or disprove the above hypothesis, a regression was conducted as shown in

the tables above. The results shows a p value of 0.000 which is less than 0.05,
therefore, we cannot reject H3 at 5% confidence level, and the conclusion is that
microfinance have a positive moderate impact on the access of financial services by
the poor. These results are consistent with the findings of Duvendack et al. (2021),
Sinclair and Saffu (2022) who also discovered that microfinance has a positive impact
on the access of financial services by the poor. However the results are inconsistent
with the findings of Hudon and Traca (2021) who found that there is a negative
impact of microfinance access of financial services by the poor.

H4: Microfinance has a positive impact on the quality of services provided to the
poor

To prove or disprove the above hypothesis, a regression was conducted as shown in

the tables above. The results shows a p value of 0.01 which is less than 0.05,
therefore, we cannot reject H4 at 5% confidence level, and the conclusion is that
microfinance have a positive strong impact on the quality of financial services to the
poor. These results are consistent with the findings of Arun, Bendig, and Arun (2019),
Mersland and Øystein Strøm (2020) who also discovered that microfinance has a
positive impact on the quality of financial services to the poor. However the results
are inconsistent with the findings of Armendariz and Morduch (2020 who found that
there is a negative impact of microfinance quality of financial services to the poor.

4.9 Chapter Summary

The chapter examined data collected by the researcher. SPSS version 24 was utilized
to process the data. Detailed tests have been explained and their relevance to the
research stated. Findings have been discussed and fused with the literature of the
study. The next chapter is going to look at conclusions and recommendations.
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1 INTRODUCTION

The upcoming chapter will provide a synthesis of the study findings and evaluate to
what extent the research objectives have been achieved. It will also draw conclusions
on how well the research findings align with existing empirical evidence and offer
recommendations based on the research results. Finally, the chapter will suggest
potential areas for future exploration that were not covered in this investigation or
could enhance it.

5.2 SUMMARY OF THE STUDY

This research focused on the Analysis of the role of microfinance in promoting
financial inclusion. The study objectives were to examine the impact of microfinance
on the usage of financial services to the poor, to determine the impact of microfinance
on the outreach to the poor, to explore the impact of microfinance on the access of
financial serviced by the poor and to evaluate the impact of microfinance on the
quality of services provided to the poor. One study conducted by Armendariz and
Morduch (2020) found that microfinance institutions (MFIs) have been successful in
reaching the unbanked population and providing them with access to credit. Another
study by Mersland and Strøm (2019) examined the outreach of microfinance
institutions and investigated the factors that contribute to their success in reaching the
poor. The researchers conducted a cross-country analysis and found that the legal and
regulatory environment, as well as the governance structure of MFIs, significantly
influence their outreach to the poor. Another study by Cull, Demirgüç-Kunt, and
Morduch (2022) found that access to microfinance services increased the likelihood
of having a formal bank account among low-income individuals. The research
followed a positivist perspective and employed a causal-research design. The target
populace consisted of 328678. Using the Rao-soft sample size calculator, a
convenience sample of 105 customers and MFI employees was drawn, Data was
collected from the respondents through questionnaires, while secondary sources such
as journals, articles, and books were used to supplement the research. The surveys
were circulated on the spot, and a participation rate of 93% was achieved.
5.3 SUMMARY OF FINDINGS

The data collected was analyzed through the use of descriptive statistics and
regression analysis. The study findings suggest that microfinance have a positive
moderate impact on the usage of financial services by the poor. microfinance have a
positive strong impact on the outreach to the poor, microfinance have a positive
moderate impact on the access of financial services by the poor. microfinance have a
positive strong impact on the quality of financial services to the poor.

5.4 CONCLUSION

This research focused on the Analysis of the role of microfinance in promoting

financial inclusion. The study findings suggest that microfinance have a positive
moderate impact on the usage of financial services by the poor. microfinance have a
positive strong impact on the outreach to the poor, microfinance have a positive
moderate impact on the access of financial services by the poor. microfinance have a
positive strong impact on the quality of financial services to the poor.

5.5 RECOMMENDATIONS

In order to enhance the capacity of MFIs in promoting financial inclusion in

Zimbabwe, the following recommendations were proposed;

It is recommended that government should review MFIs licences to allow them to

mobilise deposits which have a potential to become a major and sustainable source of
funding as opposed to the commercial loans. In addition, the government should also
review the Moneylending and Rates of Interest Act that controls interest rates. If the
Act is reviewed and MFIs allowed to set market interest rates commensurate with the
transaction cost of servicing the rural areas, the financial inclusion goal would be
attained.

The study also recommends that government and donors should avail cheaper funds
towards lending to the targeted poor who are engaged in agricultural activities. This is
critical because agriculture is the major income generating activity for the majority of
the poor household. MFIs are hesitant to extent significant loans in this sector because
of the high risk associated with weather uncertainties that ultimately affect the cash
flows of the clients.

The government should proactively promote financial inclusion by offering fiscal

incentives to MFIs to that operate exclusively in rural areas. The incentives can be in
the form of tax reliefs and subsidised lines of credits.

It is also recommended that MFIs should be innovative in order to achieve a

significant depth of outreach. As more numbers of people in rural and economically
marginalised areas begins to have access to the mobile internet, technology can be
used to promote financial inclusion. Further, MFIs should enter into strategic alliance
with formal banks in order to have access to their infrastructure which is critical for
online transactions. The use of online methods of payment and receipting can reduce
the transaction costs involved in servicing the remote areas

5.6 AREAS FOR FURTHER STUDY

The researcher recommends further studies to focus on DTMFIs, so as to capture their

impact on financial inclusion. Further research focusing on other variables which also
affect financial inclusion but were not considered in this research is recommended.
The other financial inclusion pillars may also be studied to establish their individual
contribution to the financial inclusion agenda. Further research is suggested on
models for sustainable microfinance funding in a volatile environment.