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

This paper assesses the effect of microcredit on the welfare of households of women borrowers in Tanzania. It is based on survey data collected from 400 respondents, including 217 borrowers and 183 non-borrowers. Using regression and principal component analysis, the paper finds that borrower households were more likely to own houses and had acquired more household assets than non-borrowers. The paper also reveals that borrowers had used part of their loans to finance children’s education, medical treatments, and paying previous debts. It concludes that microcredit contributes to the improved welfare of women borrowers’ households by enabling them to own long-term assets and leads to household poverty alleviation. The paper covers the following sections in detail:

• Scope of the study and review of relevant literature;
• Materials and methods used in the study with a focus on research design, sampling procedure and sample size, data collection, and data analysis;
• Results of the data analysis with a focus on impact of microcredit on credit and ownership of living houses and household assets, investment on children’s education and health, and household consumption;
• Discussion of the findings and recommendations to increase the positive impact of microcredit.