Micro-Credits and Poverty Reduction in Dar-Es-Salaam, Tanzania: A Case Study of Dar-Es-Salaam Commercial Bank

Abstract

The purpose of this study was to examine the contribution of micro-credits on poverty reduction in Dar-es-Salaam, Tanzania. The study used a sample of 200 respondents taken using simple random sampling, while data was collected using questionnaires and analyzed using statistical methods derived from the use of the Statistical Package for Social Sciences (SPSS) research which, when used, provides a variety of statistical measures like percentages, mean, standard deviation, variances etc. The study found out that Micro-credits contribute positively towards reduction of poverty for Dar-es-Salaam residents who are mainly neglected by the formal banking sector on the aspects of loans provision. The field results presented the following means: creation of employment 4.8300, increase level of income 4.3850, asset accumulation 3.6382, improve borrowers living standards 4.4050, create awareness to borrowing and resettlement monthly 3.8100, and promote respect and social dignity 4.6700 of the total sample. Added to the above, the study found that Dar es Salaam Commercial Bank contributed to the reduction of poverty and vulnerability of poor through enabling them to break the vicious cycle of poverty and also enabling them to enhance self-empowerment, respect and social dignity. The study concludes that micro-credits are a useful means for the poor section of the society to reduce or eliminate poverty. It enables the financially less fortunate members of our society to overcome financial inadequacies. The researcher, thus, recommends the following policy issues: development of ideal means for micro-credit institutions to serve more the section of the society that is neglected by the formal banking sector and assist in the enactment of appropriate micro-credit infrastructure and policies to reach the poor.