Microcredit firms and their influence on women’s entrepreneurship in Tanzania: The case of Mwanza City Council

Résumé

This study examined the impact of microfinance institutions on women's entrepreneurship development in Mwanza City Council, Tanzania. Specifically, it aimed to determine whether access to credit was an enabling factor for women entrepreneurs, investigated the economic growth effects of high microcredit loan interest rates, and explored the impact of microcredit loan recovery mechanisms on female entrepreneurs. According to Fermin's theory, this research employed an explanatory design with a quantitative approach. Up to 90 women microfinance clients participated in the study. Data were collected through questionnaires and analysed using SPSS software. Correlation analysis revealed a significant positive relationship between loan availability and women’s entrepreneurship (r = 0. 790, p < 0. 01), while loan interest rate (r = 0. 326, p = 0. 002) and loan recovery mechanisms (r = 0. 315, p = 0. 003) showed slight positive correlations. Regression analysis indicated that when women’s entrepreneurship was the dependent variable and loan availability the independent variable (β = 0.712, p < 0.001), there was a significant relationship. In contrast, loan interest rate (β = -0.041, p = 0.509) and loan recovery mechanisms (β = 0.048, p = 0.416) were not significant predictors. The model explained 62.77% of the variation in female entrepreneurship (R² = 0.627), and ANOVA confirmed that these results were statistically significant beyond chance (F = 48.196, p < 0.001). The findings underscore the importance of improving credit access and increasing women’s participation in both government and microcredit programs to enhance transparency and support women’s entrepreneurial success. The practical implication of this study is to influence the development of gender-inclusive credit policies in Tanzania. This could help eliminate business and income inequalities faced by women and strengthen gender-inclusive credit frameworks. The study also recommends implementing gender-sensitive credit policies with flexible collateral requirements, ensuring transparency through independent monitoring, and mandating women’s representation in policymaking committees to promote gender equality and support women’s entrepreneurship and participation in governance.