Assessing the impact of microfinance institutions’ approaches and inclusion of the poorest households in Tanzania: A comparative study of WAT SACCOS and Habitat for Humanity
DOI:
https://doi.org/10.51867/AQSSR.3.1.44Keywords:
Assets, Financial Services, Housing Microfinance, SACCOSAbstract
Microfinance is considered to be a solution to access to finance by poor people due to the provision of affordable loans. This study is an explanatory one and is aimed at comparing the approaches adopted by the two housing microfinance institutions in Tanzania, namely WAT SACCOS and Habitat for Humanity Tanzania (HFHT). It focuses on establishing the relationship between the approaches used by the housing microfinance institutions in Tanzania and the poverty levels of their clients. Theories that anchored this research were the livelihood approach, organization theory, and social network theory. Both qualitative and quantitative research methods were used, together with secondary data from different literature and reports. An independent-sample t-test was conducted to determine if there were differences in the amounts of loans between the clients of WAT SACCOS and those of HFHT. Results revealed that there is a statistically significant difference in loan amounts offered to clients between WAT SACCOS (M=1.4, SD=0.59, SE=0.09) and HFHT (M=2.65, SD=1.33, SE=0.21); t(78)=-5.429, p=.000, i.e., p<0.05, representing effect size r=0.52. This means that at a 5% level of significance, WAT SACCOS clients have, on average, lower loan sizes compared to those of HFHT. An independent-sample t-test was also conducted to determine if there were differences in loan repayment periods between the clients of WAT SACCOS and HFHT. Results indicated that there is a statistically significant difference in loan repayment periods between WAT SACCOS (M=11.53, SD=1.65, SE=0.26) and HFHT (M=13.28, SD=2.93, SE=0.46); t(78)=-3.295, p=.001, i.e., p<0.05, representing effect size r=0.35. This means that at a 5% level of significance, there is a statistically significant difference, with WAT SACCOS showing lower means and hence shorter periods compared to HFHT. With average shorter repayment periods, WAT SACCOS is more favourable to the poorest, hence deeper outreach. From the findings, it has been revealed that the lending methodologies affect the inclusion of the poorest, with group lending allowing for more depth of outreach. Although the two institutions use individual lending for housing improvement loans, the group solidarity approach adopted by WAT SACCOS as a form of group lending has enhanced access for the poorest. It is recommended that there is growing recognition that housing concerns affecting the urban poor need to be integrated into urban development planning and political priorities. Also, parties involved in delivering housing solutions are urged to view homes not just as shelters but as tools for alleviating poverty.
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