The Effect of Microcredit on the Household Welfare (Empirical Evidences from Women Micro-entrepreneurs in Tanzania)

In the recent days, microcredit schemes have been proliferating in all parts of the world. Although the impact of those schemes on the borrowers’ businesses and household welfare is widely contested, the number of women borrowers has been on sharp increase. This paper endeavoured to assess the effect of microcredit on the welfare of households of women borrowers in Tanzania. The paper made use of survey data collected from 400 respondents including 217 borrowers and 183 non-borrowers. Using Chi-square method, the findings revealed that borrowers’ households were more likely to own living houses than those of non-borrowers. Using Principal Component Analysis, the study revealed that on aggregate borrowers’ households had acquired more household assets than those of non-borrowers. Qualitative evidences revealed that borrowers had used part of their loans to finance children’s education and medical treatments. Also, they had used part of the loans to finance the household pressing needs like paying the previous debts. This paper concludes that microcredit had contributed to the improved welfare of women borrowers’ households by enabling them to own long-term assets. In that way, it is noted; women’s participation in microcredit contributed to household poverty alleviation.