Chapter One

1.0.0

Introduction

The chapter focuses on the background to the study as well as the statement of the
problem. The objectives of the study, the research questions, the significance of the
research, the limitations and the delimitations were also outlined. Different terms were
also defined.
Studies that have been carried out elsewhere show that microfinance is often considered
one of the most effective, flexible and sustainable strategies in the fight against global
poverty, however it is in the interest of this research to prove if the same can be true in
Zimbabwe.
In its broadest terms Micro-finance can be defined as provision of a range of financial
services such as deposits, loans, payments services, money transfers and insurance to
poor and low income households, and their micro-enterprises Sometimes called banking
for the poor, microfinance is an amazingly simple approach that has been proven to
empower very poor people around the world to push themselves out of poverty. Relying
on their traditional skills and entrepreneurial instincts, very poor people, mostly women
use small loans (usually less than US$200), other financial services and support from
local organizations called microfinance institutions to start, establish, sustain or expand
very small supporting businesses. (www.grameenfoundation.org).
`1.1.0 Background to the study
There has been extensive research on microfinance and poverty alleviation over the
years. These studies were primarily motivated by the need to asses the impact or
effectiveness of micro finance services on poverty reduction amongst the poor and how
banks could make their vast financial resources available to microfinance institutions on
lending to the poor. (Haulme.D, Mosley.P 1996)
In the early 1980s, a program to give poor mostly landless people a new chance through
small loans was started by Grameen Bank one of Bangladeshs micro credit programs is
1

the largest in the world and the government has made providing micro-credit a significant
component of its plan for halving the number of people living in poverty in Bangladesh
by the year 2015(grameenfoundation.org article: microfinance)
While microfinance has had a significant and positive impact on the lives of millions of
Bangladeshis, it is still very young in Zimbabwe and need urgent support. Though
poverty alleviation has been a priority for government the world over, it is still in its
infancy in Zimbabwe and its development is envisaged to make a significant contribution
to poverty alleviation. The poor who have been left out by the formal financial market for
a long time would have a greater chance of tapping additional resources from the
microfinance market at reasonable prices which they can use to expand their earning
capacity and or meet emergency needs of their families. (African Region Microcredit
Summit 2000).

Zimbabwe recently experienced its worst ever economic crisis. The economic meltdown
has pushed the poor further down the poverty datum line. The poverty assessment study
survey (PASS) carried out in 2005 by Care International, a Non Governmental
Organization heavily involved in poverty alleviation programs showed that 75% of all
Zimbabweans are classified as poor and the unemployed rate was at 70%. The
disadvantaged people in Zimbabwe like elsewhere in the world are easily trapped in a
cycle of poverty. Those without land and little or no education or income face tougher
obstacles in finding adequate employment, bringing up healthy families and weathering
the economic downturns.
Market exist through the country for enterprises such as poultry farming, petty trade and
shop keeping, but without start up money, it is impossible for poor to establish small
businesses to capitalize on the demand.
A lack of collateral and an inability to borrow only small amounts a time render most
Zimbabwes poor ineligible for loans from major national and private banks. Instead they

turn to a number of alternatives to obtain credit most of which are informal and have a
tendency to be unstable, unreliable or exploitative thereby pushing them into deeper
poverty. (Bohn Carmen 2000)
The worlds poor have been rarely regarded as a financially attractive group by the
private banking unlike the worlds richest people. How ever in the past two decades,
microfinance has proven that a viable sustainable market in financial services for the poor
can be provided and that giving them an opportunity to help themselves. By bringing
regulated financial institutions to the poor, the impact of usurious, unregulated money
lenders and the like could be limited. Alleviating poverty can not be achieved by aid and
governments alone, banks can play a greater role by making their infrastructure more
accessible to the poor and extending their reach. MFIs in Zimbabwe have tried to some
extent to extend micro credit facilities to the poor. However their noble cause has been
hamstrung by lack of financial resources as they heavily depend on donor funding,
Government grants and Non Governmental Organizations. In human terms more than
75% of Zimbabwes poor lack access to efficient, affordable and appropriate financial
services. Only the capital markets have the resources readily available to close demand
gap especially among poverty focused MFIs who for legal and reasons lack access to
savings as a source of financing.(Bond Patrick 2001)
By using loan guarantees and other financial tools, MFIs can build on the base provided
by donations, multiplying the money and the number of poor people helped and hence at
the end of the day the unbanked become banked through access to financial resources that
lift them further away from poverty.
The major question which drives this research is whether these success stories of
microfinance in the developed countries could be replicated in Zimbabwe.
1.1.0

Statement of the problem

It is the intention of this project to asses the effectiveness of microfinance as a tool to

alleviate the growing poverty in Zimbabwe.

1.3.0 Objectives of the study

To establish the characteristics of Microfinance Institutions

To describe how microfinance help the poor

To examine the effect of microfinance on poverty alleviation amongst the poor

To draw conclusions on whether microfinance can be a panacea for poverty

alleviation in \Zimbabwe

1.4.0 Research Questions

The major questions underlying the basis of the research are as follows:

What are the characteristics of microfinance institutions?

How does microfinance help the poor?

Does it lead to poverty alleviation amongst the poor?

Can Microfinance be a panacea for poverty alleviation in Zimbabwe?

1.5.0 Hypothesis
Microfinance will lead to poverty alleviation amongst the poor
1.6.0 Significance of the study

This research will increase knowledge about microfinance to everyone else in the
society.

To those intending to start up income generating projects, they will have an idea
on where to get the loans from and they will know how microfinance has
improved the lives of other people.

This research presents a unique opportunity for the government to extend the
microfinance programs to rural areas so that the people there can start up income
generating small businesses that can improve their way of living.

To the researcher gained experience in researching and also increased her

knowledge in as much as microfinance is concerned.

To the university, this research will hold an academic value(data bank)on how
people can lift themselves out of poverty and for future reference on microfinance
and poverty alleviation.

1.7.0 Limitations of Research

During the research work, a number of constraints were encountered and one of them was
that there is not much literature on the subject of microfinance with particular reference
to Zimbabwe; this limited the research to review of available literature in developed
countries and few countries in the emerging markets. The other limiting factor was lack
of cooperation from some respondents who didnt send back their responses; however,
follow ups were made to get the responses. Some microfinance institutions were not
willing to disclose their finance activities as they thought that the researcher was not a
student, the research had to show them the student identification card to prove that she
was a student.
1.8.0 Delimitation of the study.
The research was confined to microfinance institutions and Microfinance institutions
clients in Harare. This was due to the fact that the headquarters of the microfinance
institutions are situated in Harare and of the 36 microfinance institutions registered by the
ZAMFI, 30 of them are situated in Harare.
1.9.0 Definition of terms.
Microfinance-The Wikipedia encyclopedia refers microfinance to the provision of
financial services to low-income clients, including consumers and the self-employed.
Microfinance Institutions- these are frontline organisations that reach out to the very
poor and deliver microfinance services to local clients daily as it is defines by the
Grameen Foundation
Poverty-there is no one common definition of poverty that is accepted by all countries.
Barker (1995) says poverty can be generally categorized as material deprivation, and he
also defines poverty as the state of being deficient in money or means of subsistence. The

wikipedia encyclopedia on line defines poverty as the condition of having fewer

resources or less income than others among the countries or worlds average. It further
defines poverty as the condition of lacking basic human needs such as health care,
nutrition, education and shelter because on inability to afford them.
Alleviate- is the act of reducing something unpleasant. (wordreference.com)
1.10.0 Chapter summary
The Chapter introduced what microfinance is about and it provided the background of
microfinance. The statement of the problem, the objectives of the study and the research
questions were outlined. The hypothesis was stated and the limitations, delimitations and
the significance of the study were discussed. The next chapter looks at the literature
review.

Chapter Two
Literature Review
2.0.0 Introduction
This chapter looks at the purposes of the literature review, concepts and definitions as
well as the theoretical framework and the previous studies that reviewed literature.
Micro finance has been extensively examined over the past 10 to 15 years and the
resulting literature is now very large. A focused review of the literature will be conducted
to evaluate past and recent publications regarding the impact of micro finance on poverty.
The number of rigorous studies of client outreach and impact has grown considerably,
especially in the past few years spurred in part by the development of monitoring tools
like The Policy Advisory Group of the Consultative group to assist the Poorest (CGAPs),
USAID AIMS tools and the Central Statistical Offices Food Consumption Poverty
Line(FCPL).
This section seeks to review various literatures that have been brought forward about
microfinance and poverty alleviation locally and globally. The section starts by looking at
the purpose of the Literature review, concepts and definitions about poverty and
thereafter moves onto more incisive arguments about the effectiveness or impact of
microfinance on poverty.
Purpose of the literature review.
The purpose of literature review is to:

Establish a theoretical framework on the effectiveness of microfinance as a tool to

alleviate poverty in Zimbabwe

Define key terms, definitions and terminology

Identify potential relationships between concepts and to identify researchable

hypothesis

Identify studies, models and case studies supporting microfinance as a tool for
poverty alleviation

I identify data sources that other researchers have used

To develop general explanation for observed variations in a behavior of

phenomenon

2.2.0 Conceptual framework

Micro finance institution (MFI) is an organization that provides microfinance services
ranging from small business, small non-profit organizations to medium business.(CGAP)
broadly defines an MFI as any organization credit union, down-scaled commercial bank,
or credit cooperative- that provides financial services for the poor. Usually MFI provide
finance to those individuals who do not have collateral to secure a loan with, also to those
that do not have a credit record and those that have never taken out a loan before.
Knowing what we mean by poverty is basic to assessing the role of microfinance in
alleviating poverty. The Policy Advisory Group of the Consultative Group to Assist the
poorest(CGAP) has defined the poor as those living below the poverty line as established
by the poverty line as established by the government in their country, and the poorest as
the bottom fifty percent of that group of poor. The difficult with poverty line definitions
of the poor is that they rely on indices that appear to be easily measurable such as income
or food consumption measures. These indicators may in fact be difficult to measure at the
individual house hold level. They may be useful in designing programs that assist
different categories of poor and poorest households.
Poverty is for many categories of poor not simply an economic phenomenon; it is also a
social, cultural and psychological phenomenon. Poverty alleviation can be seen not only
as increasing the income and assets of households or individuals, but also enabling or
empowering individuals to get themselves out of poverty. When the definition of poverty
alleviation is expanded to include social dimensions, there are profound implications for
8

the design of microfinance institutions and programs for poverty alleviation. It implies a
social intermediation and even a confidence building role for programs.

2.3.0 Theoretical Framework

Management of financial institutions is a course that is constituted within the Banking
and finance Degree Program. The course focuses on how financial institutions are
managed and the course contents include some issues on microfinance institutions. It
became an interest to know how microfinance institutions operate. It has been discovered
that most of the microfinance institutions are run by non governmental organizations. The
institutions offer loans to those individuals that lack collateral and those who want small
value loans that can not be offered by banks.
Microfinance started in Bangladesh. There was this year where it so happened that there
was drought and a lecturer known as Muhamad Yunus gave small amount of money to his
students so that they could use the money to venture into a small business that could help
them earn more money. This whole idea latter developed into Grameen Foundation. It
later spread all over the world and that is how microfinance started. This mainly targets
poor house holds. This whole idea has been working for the poor in different countries
and it became of interest to know if microfinance could be used to alleviate poverty in
Zimbabwe.

2.4.0 PREVIOUS STUDIES

2.4.1 Characteristics of Microfinance Institutions.
Most MFIs exhibit similar financial characteristics and usually they are interrelated.
Small Value loans- Loans offered by microfinance institutions are almost always small
in value. This occurs for two reasons. The first results from the risk involved in making

loans. Poor individuals often own little or no collateral with which to borrow, if they
possessed collateral, it is likely they could borrow from a more conventional bank.
Hereby, defaulted loans result in a loss to the microfinance lender. The second reason
results from the capabilities and goals in microfinance as an institution. Being donation
based, few lenders possess large sums of money, at least initially. This coupled with the
desire to aid as many individuals as feasible results in loans tending to be small in value. .
(Douglas Snow & Terry Buss, 2001.Policy studies Journal. Pgs .296-305).
The small value loans is the characteristic that is most common in all microfinance
institutions because most MFIs clients are those people that lack collateral and who can
not go to banks for loans because they lack proof of source of income. The MFIs offer
small value loans because their clients do not have collateral and this fact protects the
MFIs in the event that the clients fail to pay back. However, the poor benefit in that they
are able to venture into some small businesses that help them generate income. This
income after sometime can enable them to lift themselves out of poverty.
High Effective Interest Rates: high interest rates result directly from the lack of
collateral backing loans. The ever-present possibility of an uncompensated default loan
forces microfinance lenders to charge high interest rates. (SKS Microfinance: frequently
asked questions about microfinance)
The high effective interest rates as explained above result directly from the lack of
collateral, but the MFIs clients get the loans without collateral of which they will be able
to make use of the loans for their own benefit, that is to be able to use the loans on
activities that can improve their way of living.
High Operational Costs: Only indirectly related to the above characteristics, MFIs
exhibit high operational costs. This occurs because of the transaction costs involved with
providing loans to the MFI clients. Operation costs run particularly high in ratio to the
value of loans.

10

Part of the operational costs are used in educating those benefiting the micro loans, they
are given Ideas on how to use their loans into some thing that can be more productive and
thus by being educated on how to use the given loans, they can venture into businesses
that can enable them to acquire more assets, get better nutrition and hence are able to pull
their selves out of poverty.

Success for Larger Loans: Lenders with a borrowing base who demand more valuable
loans tend to also suffer fewer default loans. MFIs who offer larger loans have
empirically faired much better than those firms offering small donations. (Daniel C.
Hardy, Paul Holden, Vassili propenko, sept2003.policy study.pg.150).
Usually MFIs clients get micro loans-which are small loans, but as they start small
business they are able to repay their loans, as their businesses improve, they will be able
to even larger loans which can even improve their businesses. By so doing this improves
their way of living.
Non-sustainability: While microfinance lenders exist who are sustainable, most report
losses. Again this is the result of the frequency of uncompensated defaulted loans.
Unaided by external donation most microfinance institutions would fail. For this reason,
cost recovery is closely watched figure in all MFIs. Most analysis involving the success
of individual MFIs is actually based heavily upon cost recovery alone. (Douglas Snow &
Terry Buss, 2001.Policy studies Journal. Pgs .296-305)
2.4.2 How does Microfinance help the poor?
Poor people often live from day to day and a few have reserves for major expenses such
as illness, house repairs or education. They are often unable to save for these expenses or
have been unable to open a bank account that would enable them to build their savings,
and therefore need to borrow to meet these unexpected costs. However at its core
microfinance is about human dignity, it is based on the old adage if you give a man a
fish, you have fed him for today, teach a man to fish, you have fed him for a life time.

11

Microfinance borrowers work hard to survive from day to day and a loan provides a way
for them to create a sustainable solution to their economic lot in life. Microfinance
provides poor people with access to small loans at a more manageable interest rates and
this helps them to be self sufficient and enables them to have:

An Increase in income. Financial services can improve peoples lives by

providing needed financing for business activities, which can increase their
household income. Microfinance empowers poor people to diversify their income
sources, meet basic needs and cope with shocks to their incomeWhile increased
earnings are by no means automatic, reliable sources of credit provide a
fundamental basis for planning and expanding business activities, which can
enable clients to save, manage cash flows, and reduce the need to sell assets in
times of crises.
There is overwhelming evidence to demonstrate that families that participate in
microfinance programs enjoy an increase in household income (Murdoch and
Hailey 2002:5; Simanowitz and Walter 2002:20) in case study in Bangladesh,
Shahid Khandker finds that microfinance participants do better than non
participants in both 1998/1999 in per capita income,per capita expenditure, and
household net worth.(2001:11). Simanoz and walter, in a research article entitled
ensuring Impact, site a case study conducted by CRECER,a Bolivian micro
credit bank, that reads : increased income was reported by 66 percent of
clients.participants most commonly attributed this

improvement to the

expansion of their income generating activity, reduced output costs as a result of

buying in bulk or with cash, or the new activities of products made possible by
access to credit and selling in new markets

Better Nutrition. Microfinance makes an impact on more than just household

income; case studies indicate that microfinance has substantial effect on the
nutrition and health of the poor, especially for children (Wright 2000:31;
Khandker 1998:148). Indirectly, microfinance has a positive influence on

12

nutrition and health because increased income through participation in

microfinance programs invariably will lead to higher nutrition and greater access
to health care Simanowitz and Walter 2002:23). Graham Wright in his book,
microfinance systems : designing and quality financial services for the poor
concludes that Nutritional indicators also seem to improve where Microfinance
institutions have been working, Hashemi and Morshed cite a case study conducted
by the world bank in collaboration with the Bangladesh Institute of development
Studies , which showed that the Grameen Bank not only reduced poverty and
improved the welfare of participating households, but also enhanced the house
holds capacity to sustain their gains over time, this was accompanied by an
increased caloric intake and better nutritional status of children in households of
Grameen bank participants(2000:31-32).
Murdoch and Haley conducted an extensive investigation of the effect of
microfinance on the realization of the United Nations millennium Goals, the first
of which is to eradicate extreme poverty and hunger. Their findings revealed that:
on Childrens nutritional status, measurements of the same Children in Ghana
showed the Nutritional status of participants one year olds both weight for age
and height for age, also significantly improved relative to the children of residents
in control communities.
The case study show that microfinance can significantly increase the income of
poor house holds, which translates into better nutrition and health for
impoverished families. The nutritional benefits are felt by children.

Higher school Attendance.Manypoorchildrenandadolescentsdonothavethe

chancetoobtainaneducationbecausetheirparentscannotaffordtosendthemto
school.Thecostsoftransportationandeducationalmaterials aretoomuchfor
someimpoverishedfamilies.Adolescentsinparticularareoftenforcedtodropout
of school to find a job to supplement the family income. Microfinance, by
contributing to an increase in household income and better financial stability,
13

enablespoorfamiliestobearthecostsofsendingchildrentoschool.MFIsare
knownforencouragingfamilies tokeepchildreninschoolandinsomecases
school attendance is mandatory in order to participate in the microfinance
program(MurdochandHaley2002:113).
TheSavetheChildrenfoundationofLondonauthorizedaresearchprojectin
1999onmicrofinanceandlevelsofeducation,inchildrenoftheparticipants.The
Investigationrevealedthat:Improvementsinschoolattendanceorinprovisionof
educational materials are widely reported. Invariably this related to increased
householdincome.InHonduras,participantsstatedthatparticipationinthecredit
andsavingsprogrammehadenabledthemtosendseveralchildrentoschoolata
time, and had reduced dropout in the higher primary school grades...Where
takingcreditwasenablingpeopletodevelopagricultureorotherenterprisesclose
tohomeandreducingtheneedtomigrateforseasonalwork,childrenschancesof
attendingschoolweregreatlyincreased(Marcus,Porter,andHarper1999:46).
Microfinancecontributestoincreasedincome,consumptionsmoothing,and
enableshouseholdstosustaingainsovertime,betterhealthandnutrition,
andimprovementinschoolattendance.Allofthesebenefitsareinterconnected;
theimprovementofonewillinvariablyhaveapositiveeffectontheothers

Womens empowerment.Microfinancecanplayacriticalroleintherealization
ofthethirdMillenniumGoal,topromotegenderequalityandempowerwomen.
Currently,70%ofpeopleinabsolutepoverty(livingonlessthan$1aday)are
women(ChestonandKuhn2002).Inordertoalleviateextremepoverty,women,
whosufferthemost,mustbeempoweredtobreakfreefromtheirmarginalized
status in society. Microfinance can provide the economic opportunities that
womenneedtocontroltheirlives.Povertyalleviationstrategies thatfocuson
empoweringwomennotonlyimprovethelivesofwomen,butalsopositively
affectentirefamiliesandcommunities.Studiesshowthatwhenwomenaregiven
14

greaterautonomyovertheirlivesandthelivesoftheirchildren,livingconditions
invariablyimprove.Thisismostlyduetothefactthatwomenaremostapttouse
householdincometobetterthenutritionandeducationalopportunities oftheir
children (Grasmuck and Espinal 2000:240). According to the World Bank,
societiesthatdiscriminateonthebasisofgenderpaythecostofgreaterpoverty,
slowereconomicgrowth,weakergovernance,andalowerlivingstandardoftheir
peopleoverall,evidenceismountingthatimprovedgenderequalityisacritical
componentofanydevelopmentstrategy(ChestonandKuhn2002).For women,
money management, greater control over resources, and access to knowledge
leads to more choices and a voice in family and community maters. Women who
participate in microfinance programs have proved to become more assertive and
confident, in regions where womens mobility is strictly regulated, women have
often become more visible and are better able to negotiate the public sphere.
Women involved in microfinance may also own assets, including land and
housing, and play a stronger role in decision making there are even reports of
declining levels of violence against women. AcasestudyofSinapiAbaTrust,a
microfinanceinstitutioninGhana,wasconductedinordertodeterminewhether
microfinancehasanimpactonwomensempowerment.Thestudyshowsthat
running a successful business not only contributes to womens improved
welfare,italsocontributesbothdirectlyandindirectlytotheirempowerment
the increase in working capital is particularly important for womens
empowermentinalmostallcases,theincreaseincapitalhasgivenwomenmore
optionsandgreatercontrolovertheirbusinessesandtheirlives(Chestonand
Kuhn2002).
Microfinanceenableswomentogainaccesstoalloftheseempowermenttools.
Borrowingcredittostartamicroenterprisegiveswomencontroloverhousehold
incomeandentryintothepublicdomain,aswellasprovidesthemwitheconomic
andeducationalopportunities.Whenwomenhavecontroloverhouseholdincome,

15

childrensnutrition,health,andeducationimprovesubstantiallymorethanwhen
mencontroltheincome.

ReducedVulnerability. Byreducingvulnerabilityandincreasingearningsand
savings, financial services allow poor households to make the transformation
fromeverydaysurvivaltoplanningforthefuture.Individualswillbeabletosend
morechildrentoschoolforlongerperiodsandtomakegreaterinvestmentsin
theirchildrenseducation.Increasedearningscanleadtobetterlivingconditions
whichtranslatesintoalowerincidenceofillness.Increasedearningsandaccessto
microinsurance also mean that clients may seek out and pay for health care
serviceswhenneededratherthangowithoutorwaituntiltheirhealthseriously
deteriorate.(CGAP.org/p/site/c/1.26/1305).

AssetBuilding.Duetoincreasedincome,andtheabilitytosaveandtakeon
credit,microfinancecanprovidethemeansforthepoortoacquireland,construct
orimprovetheirhome,purchaseanimals andconsumerdurables,orcreateor
expand their business. Studies have shown that clients who take part in
microfinanceacquiremoreproductiveassetsovertimethanthosewhodonot
(CGAP.org/p/site/c/1.26/1305).
Thisthereforeshowsthatindividuals,whoparticipateinmicrofinanceprograms,
arecapableofliftingthemselvesoutofpoverty!Moreassetsareacquired,women
areempowered,andincomeincreasessignificantly.

2.4.3 Does it lead to poverty alleviation amongst the poor?

A).Poverty Alleviation and microfinance in Bangladesh: the Grameen Bank.
Grameen Bank is a microfinance organization that started in Bangladesh around 1976
through a pioneering experiment by Dr Muhamad Yunus that made small loans (known as
microcredit) to the impoverished without requiring collateral. The system was based on

16

the Idea that the poor have the skills that are underutilized and that the use of
microfinance services can significantly result in the utilization of those skills.
Bangladesh, one of the poorest countries in the world is the cradle of the so called microcredit movement. Grameen bank enjoys nternational fame and its model has been
replicated in countries all over the world. Most recent research on impact assessment of
microfinance schemesin Bangladesh fund that 91% of Grameen members improved their
economic and social status after joining the Grameen bank.(Khandiko.1998)
The research used income and consumption as dependent variables for themeasurement
of the impact of micro credit institution had a positive impact on combating poverty.

Table 1. Economic impact of Micro-credits

(Percentage change for a 10% increase in loan size)
Grameen Bank
Household Indicator Loan

Men

Women

0.18%

0.43%

0.15%

0.43

Expenditure per Capital net worth

Source: Khandker 1998 Fighting poverty with Microcredit : Experience in

Bangladesh. P 63.
Khandker( 1999) revealed that for Grameen Bank, the per capita spending and net worth
(assets plus savings , minus loans outstanding) of the members increased with an increase

17

in micro credits. He further argued that women scored better than their male counterparts
when it came to per capita spending while in general men have a higher net worth.
Finally Khandker and Chodbury pointed out that for a programme to be successful it was
not only important to alleviate poverty of its clients but also to achieve a long
sustainability of the benefits. They further argued that it took approximately five years for
a programme member to work his way up above the poverty line and eight years before
they were able to function independently from the micro credit Institution. Consequently,
the researchers above were convinced that providing microcredit was an effective
instrunment to reduce poverty and even overcome it.
B).Microfinance in Zimbabwe- Zambuko Trust
Over the past decade there has been a significant transformation in the delivery of
financial services to the poor and low income people in developing countries especially
in Zimbabwe. As more and more institutions have discovered innovative and efficient
ways to channel credit to micro-entrepreneurs, a number of long standing assumptions
about the bank ability of the poor have been overturned. On the client level it has been
shown that the poor i) can use loans productively, ii) are capable of repaying when given
proper incentives and iii) are willing to pay above commercial interests on credit. On the
methodological level a number of break throughs including i) solidarity groups, ii)
shortened turnaround time and iii) linking increases in loan size and term to repayment
performance have allowed microfinance institutions to lower transaction costs thereby
making the loans they disburse to the poor, cheap and effective. (Microfinance in
Zimbabwe: evaluation of Austrian support to MFIs in Zimbabwe, may 1999).
Zambuko Trust is one such microfinance that began in 1990, when a group of influential
Zimbabwean business community and church leaders formed a board of trustees with the
goal of establishing an organization that could serve as a link between underprivileged
and opportunities for enterprise and income generation. After searching assistance from a
variety of sources, most importantly the NGO, opportunity international, Zambuko was

18

established as the first urban based microfinance program in Zimbabwe in February of

1992. to date it has thus built a solid foundation as the most effective and potentially
viable micro enterprise, institution in Zimbabwe, already in its 8 th year, history, it has
expanded its scale of operations significantly and has played an important role in
bridging the gap between income generation and the underclass of Zimbabwes
economically active informal sector compromising mostly the poor.

2.4.4 Can Microfinance be a Panacea for poverty in Zimbabwe?

The idea of attempting to reduce poverty in developing countries such as Zimbabwe
through the provision of loans, by specialized financial to micro-enterprises urban and
rural has in recent years generated enthusiasm bordering on hysteria (Rogaly 1996).
Financial services are envisaged to alleviate poverty by the provision of income
generating loans. According to Yunus, the founder of the Grameen bank, a virtuous circle
can be established: low income, credit, investment, more income, more credit, more
investment and more income.
The fascination with new approach derives from the assumption that microfinance
enterprise is a solution that can meet the goal of poverty reduction and pass the test of
sustainability at the most time. Some have even alleged that this new world of microenterprise finance has the potential to do in microfinance, what the green revolution has
done in agriculture provide access on a massive basis( Otero & Rhyme 1994:1)
Financially, institutions such as the Grameen bank of Bangladesh and Barnco Sol of
Bolivial, often achieved higher loan recovery rates than those achieved by commercial
banks in the same country inspite of lending to poor, mostly those without collateral.
These success stories seem to indicate that a reliable financial tool and a proven
organizational design for lending to the poor of developed countries now exist, elements

19

of these innovations and new policies are cost covering interest rates, the group lending
mechanism , incentives and disincentives system for staff as well as customers, the
provision of savings, facilities, non traditional forms of collateral, the use of
professional management information systems and the adoption of financial services to
local demand, through mobile banking( Buckley, G. 1997: microfinance in Africa: is it
either the problem or the solution world development Vol25.Nr 1081-1093).
In accordance with these principles, two widely accepted key indicators of success have
emerged: financial sustainability and out reach , the new microfinance approach is
usually linked to a minimalist strategy: loans are disbursed without any other technical
support, various international initiation/ incentives including the world bank based on the
consultative group to assist the poorest(CGAP) and the Micro credit summit held in
Washington DC in February 1997, have been taken to diffuse these innovation on the
premise that this make a large contribution to reducing the level of world poverty.
There also seems to be a consensus concerning the applicability of these financial
technologies and institutional designs irrespective of the specific environment, although
most scientist and practitioners are constantly repeating that MFIs need to fit into the
local environment, most MFIs still resemble the Grameen bank or other best practice
models and provide standard products. Applying financial technology using
organizational arrangements which have proved to be successful is of course not an
unsound policy as such, studies have confirmed for example that the financial technology
used to service formers need not differ completely from the technologies applied by
urban MFIs(Hulme 1992,& mondrof 1998) whether uniformed replications, adopting
successful models can generally be considered as good practice will be discussed below.
In any case, the new approach emphasizes on professionalism, sustainability,
accountability, transparency and the use of proven financial technologies and institutional
designs has certainly contributed a great deal to the ability to provide financial services to
the poor on broad and cost effective basis, however in spite of the fact that usually only
favorable results are published, there is growing evidence that microfinance is no panacea

20

for poverty alleviation and that the client impact of savings and credit interventions often
remains rather limited.
A minority (in Africa, less than 10%) of borrowers were able to demonstrate any type of
change in technique or technology since they had received their first loan (bucley: 1997,
Hulme and Mosley 1996). Few Micro enterprise experience sustained growth while a
majority grow only a little, or maintained their operations at a constant level (Sebstand
and Chan 1996). It is unusual for credit to trigger a continuous increase in technical
sophistication, out put or employment. It is much more common for each of these
variables to reach a plateau after one or two loans and remain in a steady state (Hulme
and Mosley 1996). The impact on the number of paid employees is concentrated on a
small proportion of the borrowers (Buckley 1997, Sebstand and Chan 1996). The
availability and sustainability of existing sources of finance may be undermined by
microfinance institutions (Rogaly 1996).
Micro enterprise credit enterprise may reinforce existing inequalities in power relations
and thereby reproduce the conditions of poverty (Goetz & Gupta 1996, Mcgregor
1988).Microfinance can only make a relatively limited contribution to reducing the
vulnerability of poor households to sudden and dramatic declines in income and
consumption levels (Hulme 1995).the very poor receive few direct benefits from income
generating credit initiatives (hulme 1995, Mosley & Haulme 1998) some borrowers
usually the poorest of the poor can even be worse off as a result of borrowing ( Bechtel
and Zonder 1994, Mosley and Hulme 1998). Credit given to women is often not utilized
by them, instead it is handed over to husbands or other male relatives (Khankor, Goetz &
Gupta 1998) Microfinance schemes concentrating on women usually have little impact
on the empowerment of these (Khandkor 1998, Osman 1998)
These arguments should not be interpreted as a general rejection of microfinance as an
instrument of poverty alleviation. There is enough evidence that the provision of loans
and savings facilities can improve the living conditions of the poor in developing
countries, however the above evidence shows that microfinance is not the magic bullet to

21

poverty reduction.Significant and sustained positive impacts for the beneficiaries of

micro-enterprise credit programs are rare and this is especially true for Africa (Brackley
1997). This mismatch between expectation and out come may be due to the core
assumptions on which most of the microfinance schemes are built, i) the benefit of credit
for poor people lies essentially in its use as capital to be invested in productive projects.
ii) Loan repayment implies that the borrower has profited from the credit.
The notion of credit as capital to be used for income generating projects is a very strng
one in urban as well as rural MFIs. The above cited Grameen Bank formulation of its
strategy for poverty reduction, (income or investment, more income) reflects this. The
notions has been reinforced by the popular representation of Microfinance borrowers as
microcredit summit held in Washington in early 1997 was to launch a global campaign
to extend small loan to facilitate self employment projects providing a path out of
poverty ( Ito 1998;178).
If credit is primarily understood as an instrument to generate income out of productive
projects, this implies that poverty is conceived to be largely about material needs, by
using income as the only indicator of poverty, there is a greater potential to quantitatively
compare and analyze changes in the access of different people to their most pressing
material needs.(Haulme.D, Mosley.P (1996) finance against poverty, Routledge, London).
However this definition of poverty has been heavily critised for its reductionism. There is
broad agreement that income is an inadequate measurement of welfare. Many forms of
deprivation that poor people identify themselves as experiencing cannot be captured by
income poverty measures, these include vulnerability to sudden and dramatic decrease in
consumption level, il health and physical weakness, social inferiority, dependence ,
powerlessness, humiliation and isolation.(haulme 1995, Khondor 1998).
Microfinance is not a silver bullet; it will not defend global poverty by itself. But it is an
important part of the solution; Microfinance provides a stable and sustainable source of
income that enables clients to climb steadily out of poverty, while providing better living
conditions and opportunities for their families. For some progress means moving from a

22

house made of mud to one made of wood, for others it means better nutrition and the
money to finally send their children to school. A 1998 world bank study showed that in
Bangladesh, Grameen banks clients were escaping poverty at the rate of 10 000 per
month.
Microfinanceclearlycontributestoagreatereconomicstabilityandwellbeingof
poorfamiliesthroughincreaseinincome,health,nutrition,education,andempowerment,
but can microfinance actually lift families out of poverty? The answer is yes.
Microfinanceisproventoimprovethestandardoflivingofmanyfamiliestosucha
degreethattheyarecompletelyliftedoutoftheirimpoverishedsituation.GrameenBank,
thelargestandmostrenownedofmicrofinanceinstitutions,withamembershipof2.4
million,reports:
[Over the course of a decade]compared with 18% of non members, 58% of the
Grameenborrowershadcrossedovertheextremepovertyline(definedbyanannual
incomesufficienttoprovideeachfamilymemberwithadailyintakeof1,800calories.)
Ofthe42%oftheGrameenborrowerswhofailedtocrossthepovertyline,fully60%had
experienced a serious illness in the familymost commonly tuberculosis, typhoid,
jaundice, and gastric ulcer. Grameen loans prevented these families from becoming
destitute,buttheywereinsufficienttoovercometheircrises(Wright2000:32).
AnotherstudybyShadihurKhandkerinBangladeshinvestigatedthepercentage
offamilieswhowereabletoliftthemselvesandtheirfamiliesoutofpovertythrough
accesstomicrocredit.Khandkerreportsthatmicrofinancereducespovertybyincreasing
percapitalconsumptionamongprogramparticipantsandtheirfamilies.Poverty
reductionestimatesbasedonconsumptionimpactsofcreditshowthatabout5percentof
programparticipantscanlifttheirfamiliesoutofpovertyeachyearbyparticipatingand
borrowingfrommicrofinanceprograms(1998:60). Theevidenceismountingtoshow
thatmicrofinancecanbeusedasameansnotonlytoincreasehouseholdincome,butto
completely lift poor families out of poverty. Currently, it is estimated that about 30
millionfamiliesparticipateinMFIprogramsandenjoybenefitssuchasincreasedincome
anddecreasedvulnerability toeconomicshock(UNDPR).Usingthelowestavailable
23

estimate, that 5% of microfinance participants are lifted out of poverty each year,
microfinanceenables1.5millionfamiliestocompletelybreakfreefromimpoverished
condition(Khandker1998:60;UNDPR).MoreoptimisticstatisticsshowMFIprograms
thatenablebetween40%90%ofparticipantstoliftthemselvesoutofpoverty(Remenyi
andQuinones2000;YearofMicrocredit2005:1).
Withmicrofinancebecominganincreasinglypopularprogram,itcanbeexpectedthat
MFIswillexpandanddevelopprogressivelymoreefficientmethodologiesinorderto
reachmillionsmorepoorpeople.

2.5.0 Strengths and weaknesses of the sources used

The sources that were used in the literature review were Morduch and Hailely. These
authors have been for many years, analyzing and writing articles on microfinance issues
since the launch of microfinance in Bangladesh which make them to be quite reliable, for
an example, Murdoch wrote journals such as the Microfinance Promise, New Evidence
from flagship programs in Bangladesh-Does Microfinance really provide for the poor.
This shows that he has been researching and analyzing the impacts of microfinance.
When writing about microfinance Mordoch can not be left behind
The internet was mainly used in the literature review and this revealed most recent
articles on microfinance, the journals on the internet are updated frequently and this is
strength in the sense that the information is up to date. The internet also has a wide
variety of valuable information.
On the authors like Douglas and Terry buss, their main focus was on Policy studies and
thus the weakness comes in such a way that the topics on which they were writing their
journals were no related to Microfinance. This means that they are not well vested with
the area and hence the information they are providing might not be accurate

24

.Some text books that were used in the literature review were written long back, some
dates back to 1995 of which thats a long time ago and hence some of the information the
authors highlighted has since changed due to time. Even though the information was
written a long time ago, their information is important as it gave light to what
microfinance is and how it started.
2.6.0 Justification of the study.
The economic meltdown in Zimbabwe has contributed immensely to the rising incidence
of poverty. Most families are finding it hard to cope with the ever increasing of basic
commodities. The economic crisis has put the basic cost of health and education beyond
the reach of many and the hardest hit are those living below a dollar a day. Recent studies
carried out in the developed world have indicated that microfinance programs can be of
benefit to the poor especially if they are properly packaged and the targeting perfect.
It is against this back ground of rising poverty in Zimbabwe that motivates this project to
assess the effectiveness of microfinance given that it has worked for the poor elsewhere
in the developed world.
2.7.0 Summary
The Chapter outlined the purpose of the literature review, the conceptual framework, and
the theoretical framework was also discussed. The chapter also looked at the
characteristics of MFIs and reviewed how microfinance helps the poor. Success stories of
microfinance in other countries were also reviewed showed how microfinance alleviated
poverty elsewhere.

The next chapter shows how this research was under taken

highlighting the research design, sample population and the sources of both primary and
secondary data collection methods.

25

Chapter 3
Research Methodology
3.0.0 Introduction
Substantial progress has been made over the years on the methodology to measure the
impact of microfinance on poverty alleviation through microfinance institutions. Never
the less debate still ranges among both academics and practitioners on precisely how to
do this. As such the issue is not a closed one and this study took this into account from
the very beginning.
This chapter puts emphasis on how data used for research work was gleaned. It therefore
includes descriptions and explanations of the techniques used in the collection and
analysis of both primary and secondary data.
3.1.0 Research Design
It is a tentative outline of proposed research work. In this case the researcher used
surveys since they go hand in hand with questionnaires. Surveys also work when
respondents are geographically distributed and this was important since the clients of
MFIs were scattered all over. Surveys enabled the researcher to gather a large volume of
data in a short space of time.

26

3.1.1 Surveys
It is a very broad term to describe the collection of data from multiple cases such as
consumers, or a set of products. Surveys can be conducted by mail, web, observation,
focus groups and content analysis. Surveys are an extremely useful tool for gathering
information using a series of questions to gather data about attitudes and behaviors.
The researcher had to use surveys because they were efficient in collecting information
from a large number of respondents. This meant that large samples were possible and
thus validity and reliability could be determined. Surveys enabled an economy data
collection due to focus provided by the standardised questions. The questions that were of
interest to the researcher were asked, recorded, confided and analysed thus saving time
and money.
The use of surveys left room for some shortcomings which resulted in errors due to non
response. How ever, the researcher had to make follow up requests so as to increase the
response rate. The researcher had to convince the respondents that they could make a
difference by providing as much information as they could and the researcher also
guaranteed anonymity because some respondents do not want to be exposed.
3.2.0 Population.
A population can be defined as the collection of all the items about which one want to
know some characteristics. The population that one wants to know and is interested in is
known as the target population, in this study the target population are those individuals
that have benefited from Microfinance Institutions.
It will be difficult for an individual to asses the information from the whole population
and thus a sample will be required from which information is to be obtained.
3.3.0 Sample

27

A sample is a small part of anything intended as a representative of the whole. The

population sample consisted of 36 MFIs registered with the Zimbabwe Association of
microfinance Institutions (ZAMFI). Due to foreseen difficulties of total expenses to be
incurred, accessibility to MFIs and time constraints, the study selected a sample of 50%
of all MFIS that were members of the ZAMFI. This sample formed the basis of
information extraction to be used to make conclusions about the population
3.3.1 Sampling method
In this study, the researcher used simple random sampling because it gives each member
of the population an equal chance of being chosen. Random numbers were assigned to
each member of ZAMFI. The names of various MFIs were then printed on paper and
those papers were placed in a hat. The reasercher had to pick 18 papers which were
written the MFIs names. Those 18 MFIs that were picked represented the sample of the
MFI population.
3.3.2 Advantages of using Random sampling in the research.

The researcher discovered that random sampling was a straight forward and
probably the simplest method of sampling techniques.

It attempts to ensure that the sample is random and thus representative enough the
make generalization about the whole population.

3.3.3 Disadvantages of Random Sampling

It required an accurate list of the whole population

It was expensive to conduct as those sampled MFIs were scattered over a wide
area.

However the researcher had to liaise with the ZAMFI to make sure that the list she was
given that represented the population of the MFIs was updated.
3.3.4 Purposeful sampling

28

For the researcher to get to the respondents, she had to use non probability sampling
method, in this case being purposeful sampling method. This was the only way to track
them down from the microfinance institutions where they had acquired their loans.
Purposeful sampling is a sampling method in which the researcher attempts to obtain a
sample that appears to be a representative of the population and will try to ensure that a
range from one extreme to the other is included.
To distribute the questionnaire, the researcher had to liaise with the finance managers of
the selected MFIs who had to give the questionnaires to the clients who were coming to
payback their loans. The researcher was also given a list containing addresses and phone
numbers of various clients of MFIs. She had to call some of the clients so that she could
interview them or hand them questionnaires. The total number of those who returned the
questionnaires and those that the researcher interviewed was 61. This was the sample that
represented the population of those who benefited from the Microloans that they got from
various MFIs.

3.3.5 The strengths of using purposive sampling were that:

The researcher was able to judge the subjects that were typical or representative
of the phenomenon being studied

The researcher was able to choose subjects that were knowledgeable about the
research at issue because of their own personal experience

The data collected was very informative of this research (brink 1996:141)

3.3.6 The weaknesses of using purposive sampling were that:

The researcher knew that the sample selected may not represent the total
microfinance beneficiaries population and that it would limit the generalization of
the findings

29

The researcher however decided that it would be the most suitable method to use and that
the criteria set for a respondent to be selected for inclusion in the sample would be
followed closely.(Brink 1996:141)
3.4.0 Estimation procedure
The researcher used mainly quantitative and qualitative methods to analyze primary data
from the questionnaires. The control group was consisted of the non beneficiaries of
micro loans while the treatment group was the participants of microfinance services
3.4.1 Levels of analysis.

Individual level: the study sought to establish if there were any initial differences
between beneficiaries and non beneficiaries of micro loans especially female
respondents. It looked at the age distribution of beneficiaries, marital status,
education levels and previous activities before the current micro enterprise loan
was availed

House hold level: the house hold level sought to verify the impact of microfinance
on poverty reduction and empowerment of women through microfinance
programs. It looked at the changes in house hold items, education and health. In
the final analysis improvements of livelihoods at the household level are the
ultimate objective of all economic activity, particularly in developing counties

MFIs: these are the suppliers and financiers of the poor individuals, low income
households and micro enterprises. They are the supply side of the equation and
their policies and lending procedures have direct impact not just on micro
enterprises but also on households. To this end the study examined impact of MFI
lending from the perspective of the recipients.

3.5.0 Research Instruments

30

The researcher administered questioners to both beneficiaries of micro loans from the
chosen sample of MFIs. The use of a questionnaire administered to both the control group
and the treatment group, quantitative data was used to establish the difference between
the two by taking the double difference in the selected sample means that is taking the
differences between beneficiaries and non beneficiaries before an intervention, in this
case a loan, and the difference in outcome between the two groups after the intervention
arrives.
3.5.1 Developments of research instrument
The researcher had to draft a questionnaire on her own using the information she had read
on the internet on how to draft a questionnaire, the used sites such as wikipedia.com. the
questions that were included in the questionnaire were drafted from the research
questions. The same was applied to the interview schedule.

3.5.2 Questionnaires
These are any written instruments that present respondents with a series of questions or
statements to which they are to react either by writing out their answers or selection from
among answers. (Brown: 2001, p.6).
Questionnaires are an inexpensive way to gather data from a potentially large number of
respondents. Often they are the only feasible way to reach a number of reviewers large
enough to allow statistically analysis of the results. A well-designed questionnaire that is
used effectively can gather information on both the overall performance of the test system
as well as information on specific components of the system. MFIs and ZAMFI staff
were involved in the discussion of the draft questionnaire and wherever possible
information beyond that asked in the questionnaire was collected. No information was
treated as irrelevant no matter how much it deviated from the interview. The
questionnaire was used as the research instrument because it made it possible to reach the
different clients of MFIs, it also gave them enough time to give their responses.

31

However, questionnaires have their strengths and weaknesses too as outlined below;
measures to cater for the weaknesses of the questionnaires are also outline below.

3.5.3 Strengths of Questionnaires

The responses were gathered in a standardised way, so questionnaires were more

objective.

The researcher found questionnaires being relatively easy to analyse.

A large sample of the given population was contacted at relatively low cost.

The researcher found questionnaires being simple to administer.

The format was familiar to most respondents.

Respondents had time to think about their answers since the researcher did not ask
them to reply immediately.

3.5.4 Weaknesses of questionnaires

Those who have an interest in the subject may be more likely to respond, skewing the
sample

The respondents ignored certain questions

The respondents incorrectly completed the questions.

Some respondents failed to return the questionnaire.

3.5.5 Measures to overcome the weaknesses

To cater for some of the disadvantages, the writer, for the respondents used:

An easy response format, that is, check boxes.

Reassured the respondent that their response will be treated in confidence

Send a reminder to the respondents concerning the due date

Made sure that the questionnaire was not too time consuming to complete

On distributing, the questionnaire, the researcher:

32

Included information setting out the purpose of the questionnaire

Gave instructions in a different type of face from instructions

Showed a return date so that the respondents could know how much time they had

The writer also allowed ample space for answers on open questions and used terms which
could be easily understood by all the respondents.
3.5.6 Interviews
An interview is a quantitative research method commonly employed in survey research.
The aim of this approach is to ensure that each interviewee is presented with exactly the
same questions in the same order. This ensures that answers can be reliably aggregated
and that comparisons can be made with confidence between sample subgroups or
between different survey periods.(http://en.wikipedia.org-07-07-2009)
Interviews were conducted with MFIs field staff that is, those who dealt directly with the
loan applicants. The advantage of this approach compared to MFI head offices is that it
gave an insight into the practical operational issues faced by MFIs. An interview was also
conducted with the chair person of ZAMFI on one occasion to gauge the operational
objectives of the association. This enabled the researcher to understand the roles of
Microfinance Institutions.
3.5.7 Strengths of using Interviews

The researcher explained any points that the person has misunderstood and could
answer any questions and repeat or rephrase them

The researcher found interviews to be useful to obtain detailed information about

personal feelings, perceptions and opinions

They allowed more detailed questions to be asked by the researcher.

respondents' own words were recorded

3.5.8 Weaknesses of using interviews

33

They can be very time-consuming: setting up, interviewing, transcribing,

analyzing, feedback, reporting, some of the managers kept on rescheduling
meetings.

they can be costly

Different interviewers may understand and transcribe interviews in different

ways.

Measures to overcome the disadvantages.

3.6.0 Data collection procedure.

The Questionnaires was distributed directly to the clients of MFIs and the others were left
at the Micro finance head offices so that those who were coming in to repay their loans
and those who were coming to borrow loans again were given them to fill in. For those
directly given to the clients, the researcher had to call them and had to visit them
physically to where they carry out their projects, some of these clients were at their
homes for thats where they had their businesses based, others were based on Mupedza
nhamo and Siyaso in Mbare suburb. The clients were given a weeks time to fill in the
questionnaires; a reminder was sent to some of the clients a day before the collection
date.
3.6.1 Data presentation and analysis procedure
Data analysis is the systematic organisation and synthesis of the research data and the
testing of research hypothesis using those data (Polit & Hungler 1991:143). It also entails
categorising, ordering, manipulating and summarising the data and describing them in
meaningful terms (Brink 1996:178)
Most of the questions included in the questionnaire were closed questions and hence they
were coded for analysis. Open questions were also categorised by hand by the researcher.

34

The findings were discussed in chapter 4 and the data were mostly presented in the form
of graphs, tables and pie charts.
3.7.0 Reliability and Validity of the research
Polit and hungler (1999:246) states that reliability refers to the stability, constancy and
dependability of an instrument. An instrument which is reliable measures accurately and
reflects time score of the attributes under investigation. Reliability of the research was
ensured by making use of two instruments namely, the interview and a questionnaire for
the respondents.
The reliability of the instruments was ensured by clearly wording of the questions
included in the interview as well as in the questionnaire. A pretest was done to ensure the
respondents understood the questions correctly. Where the questions didnt seem clear
enough, the adjustments were made before the questionnaire and the interview schedule
were finalised.
To ensure that the respondents understood the questions correctly, the researcher
translated the questions into the language understood by the respondents; in this case the
Shona language was used.
Validity refers to the degree to which an instrument measures what is supposed to
measure and therefore an unreliable instrument can not be valid. (Polit and Hungler
1999:246; Polit et al 2001:308)
The validity of the instrument was tested for face validity by the researcher and the
supervisor and they concluded that the instrument appear as though it could measure the
appropriate construct.
Content validity was also tested; the instruments were developed after the researcher
studied the literature as well as the conceptualisation which came from a rich first hand
knowledge of the researcher and other professionals in the field of microfinance. The
researcher and expects in the microfinance field scrutinized the questions of the

35

questionnaire and the interview schedule and compared them with beach dimension of
the objectives and what was discussed in the literature review.
3.8.0 Chapter Summary
In this chapter, the research methodology was discussed and the criterion which was
applied to determine the research population and the sample was outlined, the method of
obtaining a sample was also discussed. Questionnaires and interviews were constructed
and administered to all the respondents in the population. Steps that were taken to ensure
the reliability and validity of the findings were also discussed. Survey research was
designed and adopted for this dissertation because the population could be enumerated, is
literate and most of the MFIs could be located and accessed. Alternative sources were
used to verify some responses from the respondents.. Through desktop research, the
researcher availed information from the Internet, journals, fund surveys and the library.
Primary data was analysed and presented in the form of tables, graphs and pie charts.
Chapter focuses on the analysis of the research Finding

Chapter 4
Data analysis and presentation
4.0.0 Introduction
Zimbabwe ranks among the more developed countries in the eastern and southern Africa
region, however the majority of its population remains poor. This section seeks to analyse
data collected from low income households that benefited from MFIs.

4.2.0 Demographic Characteristics of respondents

Table 4.2
20-25 years

Females
5

males
1

26-30 years

12.20%
7

5%
3

17.07%

15%
36

31-35 years

11

35 years and above

26.83%
18

35%
9

Total

43.90%
41

45%
20

100%

100%

As explained by the graph, it can be concluded that almost half of both the males and
female beneficiaries of microfinance loans fall under the age group of 35yrs and
above.26.83% of the female respondents were in the age group 31-35years and under that
age group, were 35% of the male respondents. Under the age group of 26-30 years, the
females constituted 17.07% and the males 15%. 5% of the males were under the 20-25
age groups, 12.20% were the females.
From the above information, it can be noted that females are the ones who benefited most
from the micro loans. This could be from the fact that they are not employed by any
institutions and they have time to carry out their own businesses unlike their male counter
parts who only concentrate on going to work rather than starting up their own small
projects. It could also be concluded that females are the ones who are responsible in
running the family, i.e having to make sure that kids are fed, and are going to school and
hence they have to think out of the box in order to make the extra dollar and hence they
are encouraged to go and get micro loans.
Most of the MFI beneficiaries, both the females and the males were over 35 years which
could be explained by the fact that, those are individuals that already have families that
they have to look after their families and hence have to work and generate extra income
to cater for their family needs.
Those in the Age group 26-30 years,20-25 years are very few both on the female and the
male side, this could be due to the fact that they have less responsibilities and there fore
only a few opted to start their own income generating projects.

37

4.3.0 Educational background

As explained by the diagram below, just above of the total female beneficiaries have
attended school up to grade seven or below, on the other hand, only 20.69% of the males
attended school up to grade seven. The majority of the males attended school up to form
four, and only 24% of them reached the Advanced level. 28% of the females attended
school up to ordinary level, and only 15% of them attended school up to Advanced level
It can be noted that the majority of the females beneficiaries have received low education
which made them not to qualify or have less chances of being employed thus being
exposed to poverty. however the availability of micro loans have made them to venture
into some projects that can generate income for them, the same applies to the male
beneficiaries, and they have an added advantage in that they have a bit of some education
and can run their projects successfully. Beneficiaries who have attained advanced level
are very few and this could be due to the fact that most of those people who have attained
advanced level have better opportunities to work elsewhere rather than venturing into
their own projects.

Table 4.3
Grade seven and below
Upto form 4
A level
Total

Females
18
56.25%
9
28.13%
5
15.63%
32
100%

Males
6
20.69%
16
55.17%
7
24.14
29
100%

Females
11

Males
13

4.4.0Vocational Training
Table 4.4
Yes

38

No
Total

27%
30
73%
41
100%

65%
7
35%
20
100%

Almost three quarters of the female respondents did not receive any vocational training
whilst the other 27 % received the vocational training. The male beneficiaries had 65% of
them having received vocational training and only 35% did not attend any vocational
training.
Though most males received the most vocational training, the females are the ones that
dominated in receiving loans from microfinance. Fewer females attended vocational
training due to the belief that the boy child is superior to the girl child, this fact has made
the girl child prone to poverty that the boy child, however the females are lifting
themselves out of poverty due to the micro loans being offered to them, and hence they
are being empowered.

4.5.0 CHANGE IN OUTPUT.

Table 4.5
Remained the same
Improved Slightly
Declined
Greatly Improved
Total

Females
2
5%
16
39%
3
7%
20
49%
41
100%

Males
1
5%
8
40%
1
5%
10
50%
20
100%

The above diagram show that almost half of the female respondents reported their outputs
to have greatly increased since the use of the loans, half of the male respondents also
reported to have their output increased. On both the female and the male beneficiaries,

39

5% of them reported that their out puts have remained the same. 7% of the female
beneficiaries said that their output has declined and 5% of the males said that their out put
declined. 40% of the male respondents reported that their output improved slightly, and
the 39% of the females reported that their output improved slightly as well.
It can be concluded that both the female and male beneficiaries have had their outputs
increased since they have received the micro loans; this is especially true in that they
have managed to start up their projects and they have improved significantly in their
output. The figures above also show that through the loans, outputs of both the female
and male respondents improved slightly which has made an impact on their way of
living, thus this leads to increased income, thus lifting the poor from poverty.

4.6.0 Accounting for the change in output

The table below shows the responses made by the beneficiaries of micro loans as they
account for the change in output.
Table 4.6
Access to better material
Availability of loan
Improvement in skills
Change in economical status
Total

Females
11
27%
15
37%
10
24%
5
12%
41
100%

40

Males
4
20%
9
45%
5
25%
2
10%
20
100%

Almost half of the male respondents reported that the change in output was due to the
availability of loan.37% of the females also agreed that the change in output was due to
the loans they received. However, a quarter of the male beneficiaries said that it was due
to an improvement in skills and the same response was given by almost a quarter of the
female beneficiaries too. A fifth of the male beneficiaries believed that the change was
due to access to better material, and 27% of the females believed the same. 12% of the
females believed that the change was due to the change in economical status, and the
same response was supported by 10% of the male beneficiaries.
The higher percentage of the responses from the male and female beneficiaries clearly
show that the out put change was due to the availability of loan. This could there fore
mean that the loan has contributed positively to outputs being generated by the project
and hence increased income. The quarter percentage responses from both the males and
females supporting the fact that the change was due to improvement in skills could be
explained by the fact that, when those individuals applied for loans, they were educated
on the projects that could quickly generate income. This could have increased their skills
and thus contributed to the output change. The 12% and the 10% reported by the female
and male respectively, could have been due to inflation that once hit the Zimbabwean
economy. The beneficiaries were not spared either and hence this fact could have affected
their output negatively. Access to better material was favored by27% of the female
beneficiaries and by 20% of the male beneficiaries. This could be due to the fact that,
since they started the projects, they were able access better materials due to the income
they were generating as a result of the loan.

4.7.0 Loan use

It is the writers belief that loan use is very useful in making any assessments on the
effect of microfinance, on house holds as well as enterprises. This stems from the
assumption that because of their daily circumstances, there is a higher possibility that
women would use their daily loans to cope with shocks that is sudden declines in income
or emergencies within the household. The study wanted to establish the extent to which
individual and low income households on the basis of sex differentiation on this

41

important measure in the belief that there are differences between sexes arising from
different gender roles in the use of loans. This in itself was bound to have an impact on
the performance of enterprises.
Fig 4.2

There were on statistically significant differences between male and females in terms of
loan use. Therefore quite contrary to the above assumptions, it was not possible to find
evidence that women used loans for purposes other than those stated, fortunately, both
sexes appear to be very clear on the importance of productive use of their micro loans.
4.8.0 Frequency of borrowing from Microfinance institutions
The table below shows the frequency of loan borrowing from microfinance Institutions.
Table 4.7
0-5 times

Females
10

Males
5

Total
15

5-10 times

24%
14

25%
7

25%
21

10 and above

34%
17

35%
8

34%
25

42%

40%

41%

42

About a quarter of the total beneficiaries borrowed uptown 5 times, two years prior to this
study. 34 % borrowed between 5-10 times and the remaining 41% borrowed for over 10
times. However it is important to note that the female beneficiaries had the highest the
frequency in borrowing from MFIs than their male counter parts. This only shows that,
women are mostly associated with MFIs and they see MFIs as an important welfare
enhancing mode of income.

The graph below shows that the beneficiaries, both males and females received a loan
that was greater than the one they were previously given. This is an important fact in that
the Zimbabwean MFIs have the characteristics of other MFIs that have succeeded else in
poverty alleviation elsewhere. This there fore means that, the small projects that the poor
people engage themselves in have the potential to grow and thus more income generated
and as they grow, employment is made possible thus eliminating one of the factors
contributing to poverty.
Fig 4.3

43

4.9.0 Impact at individual level

Quantifying self perception is probably one of the most difficult thing that the writer had
to achieve. This study therefore did not attempt to do that either, rather it made inferences
from the responses made by the respondents. In any case self evaluation whether
exaggerated of modest, reflects precisely on what an individual thinks of themselves of
feels.

Table 4.8
Status change
Acquisition of assets

Female
25

Male
12

Total
37

More respect

61%
13

60%
6

61%
19

Still the same

32%
3

30%
2

31%
8

Total

7%
41

10%
20

8%
61

100%

100%

100%

44

It is quite notable from the above data 61% of the beneficiaries of microfinance acquired
assets from the time they started benefiting from microfinance.31% of the total
beneficiaries reported to have gained more respect and the remaining 8% said that their
status never changed since they received a micro loan. In the final analysis, it could be
seen from the above statistics that social status of previously poor people changed as a
result of microfinance loans.
4.10.0 Employment creation
One of the biggest problems facing the economy is unemployment. It is an issue which
has appeared in every economic policy document since independence. Apart from export
and investment growth, one of the cornerstones of the post 1990 reforms was
employment creation; it is only too relevant that this study should look at the employment
creation effects of microfinance.
The very existence of Micro and small enterprises is gainful employment to the
previously poor owners of these enterprises. In case where they decide to engage labor,
there is additional employment creation. The impact of microfinance loans in
employment creation can be viewed in terms of impact of such loans in expanding
businesses as reflected by additional employment
Data indicated that only 1/3 of beneficiaries of loans employed at least one person in
addition to themselves in their enterprises. The balance of two thirds was owner operated.
The largest enterprise in the sample employed 30 people. Two enterprises employed 23
and 21 people each and four enterprises employed 7 people each. These were all MFI
loan beneficiary enterprises.
The low employment figure didnt come as a surprise for the following reasons. Firstly,
MFIs are definition focused on the marginalized, those who are no reached by main
stream financial institutions because of the small size loans, they require and the
perceived ensuring transaction costs. The size of the loans given to enterprises enabled

45

them to make profits, repay their loans and meet their other basic household requirement.
Beneficiaries of MFIs suffer great variability of income such as that what might pass as a
minor crisis among higher income groups often urn around to be minor crisis among
higher income groups often turn out to be major crisis to house holds. It is meeting these
other households requirements that result in MFI beneficiaries failing to reinvest
adequately in order to expand and increase employment.
4.11.0 Impact at household level
The beneficiaries were asked to asses on their household expenditure on education and
expenditure on food before and after receiving the loan. The following responses were
reported by both the male and female beneficiaries.

Table 4.9
Before loan
Meet bills with great difficulty

After loan
% change
Before loan

Meet bills with relative ease

After loan
% change
46

females
13

males
7

32%

35%

20%

20%

- 12%
9

-15%
3

21%

15%

11

27%

30%

+ 6%

+15%

total

41

20

100%

100%

The study revealed that 32% of the females were meeting bills with great difficult before
receiving the loan and only a fifth of the females reported to still have great difficulty in
paying bills after receiving the loan. It is important to note that the percentage dropped by
12% meaning that the loan somehow helped some of the female beneficiaries to ease the
bill payment. A similar pattern applies to the males who before receiving the loan, 35% of
them met bills with great difficulty and the percentage dropped by 15% resulting in only
20% of the males reporting that they still facing difficulty in paying for the bills after
receiving the loan.
15% of the male respondents were meeting bills with relative ease before receiving the
loan, but after receiving the loan, 30% of them said that they were able to meet the bills
with relative ease, thus an increase of 15%. The same applied the females who reported
an increase of 6% from 21% to 27% being able to meet bills with relative ease due to the
loan they had received.
The loan has made possible for the beneficiaries to be able to meet up with the
educational and food bills, this fact can show that the poor are able to lift them selves
from poverty if they have access to micro loans and hence micro finance helping in some
way to alleviate poverty in Zimbabwe.
4.12.0 Qualitative analysis
From the responses made by the beneficiaries of MFIs, it can be noted that the client base
was made up of mostly females as they are perceived to be honest. The responses also
showed that females were less educated and hence they were the ones who had to
ventures into small project such as poultry or vegetable gardens. The projects taken by
both the females and males beneficiaries seemed to improve their way of living, in terms
of assets airing, meeting of bills and increase in income. These facts there fore support
the hypothesis that microfinance will lead to poverty alleviation amongst the poor in
Zimbabwe. From the literature review, it can also be concluded that Microfinance can be
a success just like in Bangladesh and other countries because the results yielded by other

47

researches are more or less to those results obtained by this research. From the interviews
carried out by the researcher, the beneficiaries of MFIs preferred MFIs to money Landers
and banks due to the favorable conditions that are offered by the MFIs
4.13.0 Chapter summary.
In this chapter, the data that was collected was represented in forms of tables and graphs.
Percentages of the respondents were calculated regarding to the questions that were asked
in the questionnaires and interviews. Data was sorted by hand and placed in various
categories. The findings were discussed and described and he researcher analysed the
research findings and gave her views. The next chapter will look into the research
findings, conclusions and recommendations

Chapter 5
5.0.0 Introduction.
This chapter summarises the major findings of the research and it also gives conclusions
to the research question. It also states the recommendations and suggestions for
improvement on the study.
5.1.0 Summary
Chapter introduced the topic and provided the background of microfinance. The problem
statement and the objectives were outlined. The research questions, hypothesis,
delimitations and limitations of the study were also brought forward. Chapter two
outlined the purpose of the literature review, concepts and definitions were discussed as
48

well. The theoretical framework and the previous studies were also discussed and this
included the characteristics of MFIs, how microfinance help the poor as well as
microfinance in Bangladesh and in Zimbabwe. The strengths and weaknesses of the
sources were discussed as well as the justification of the study. Chapter three looked at
the research design and surveys were used by the researcher. The strengths and
weaknesses of surveys and the measures to overcome the weaknesses were discussed.
The population was defined as well as the sample. The sampling methods that were used
were random sampling and purposeful sampling. The advantages, disadvantages, and
measures to overcome the weaknesses were also discussed. The estimation procedure was
outlined. The research instruments used consisted of questionnaires and interviews. These
instruments were evaluated. Data procedure was described as well as the presentation and
analysis procedure. The reliability and validity of the research was also discussed.
Data was collected and analysed. Only 46% of the respondents returned the
questionnaires. It was also noted that the majority of the respondents were mainly female.
Most of the beneficiaries used the loan exclusively for their projects thus helping them
generate income, this way they were able to lift themselves off poverty. It was also
discovered that those individuals who borrowed loans more than once received a loan
that was greater than the one they had received earlier. This made it possible for them to
diversify in their small businesses, diversification as it is well known leads to more and
improved outputs. This fact also relates to the characteristics of MFIs in other countries
and it can be said that it also applies in Zimbabwean MFIs.
Though microfinance can not be purely a panacea for poverty alleviation, most
individuals reported to have acquired an asset or two and received more respect from
their colleagues. It can be said that poverty is not only about income and material things
and microfinance alone can not lead to total poverty alleviation.
One of the major problems being faced by the economy is unemployment. Microfinance
has helped the poor in that the previously poor have managed to employ themselves and

49

one or two more people in their small businesses thus the existence on microfinance
could lead to a reduced number of individuals who are unemployed in Zimbabwe.
5.2.0 Conclusions
The main research question was on the analysis of the effectiveness of microfinance as a
tool to alleviate poverty in Zimbabwe. The hypothesis was microfinance will lead to
poverty alleviation. Most research findings pointed

there was significant change in

meeting educational and food bills after they had received the loan. The number of
individuals who used to pay bills with great difficulty decreased after they had received
the loan. The number male and female beneficiaries who used to meet bills with relative
ease increase after they had received the loan. The micro loan thus helped the
beneficiaries to cope with the daily challenges and it enabled them to be able to pay for
their childrens educational bills. When one is educated, they are less prone to poverty.
The theory explained that microfinance in Bangladesh and other countries enabled the
poor to enjoy benefits such as an increase in income, decreased vulnerability to economic
shock, womens empowerment and higher school attendance, was also experienced by
those who participated in microfinance programs.
On the status of MFIs in Zimbabwe, they seem to operate like any other MFIs elsewhere
in the world. The same characteristics found from those in other countries are the same as
those in Zimbabwe. However, the hyper inflationary environment that Zimbabwe was
experiencing in 2008 forced some of the MFIs to close down, but some managed to pull
through. Though there was a time these MFIs stopped the borrowing activities, when the
economy was dollarised they resumed their operations. As said earlier, most MFIs are
non governmental organizations, they receive donor funding and usually in American
dollars thus their operations were not affected much by the hyper inflationary
environment.
5.3.0. Recommendations

50

1. To MFIs- from the interviews conducted with the MFIs clients, MFIs need to
examine the payback period as some of the clients felt that they needed time to
generate enough profits to sustain them.
Standard ceilings on all loan applications need to be reviewed since they can stunt
some enterprises with potential growth. There is need for MFIs to treat
applications case by case.
2. To the Government- The researcher proposes that the government should increase
the number of MFIs to rural areas as well, it has been noted that most MFIs are
based in Harare and just a few in the major cities. Since microfinance has proved
to be enabling the poor to generate income in Harare, the same can be applied to
those in rural areas.
3. To BUSE.- he university can come up with the idea of microfinance for those
students that are less privileged so that they can start up small businesses that can
generate income so as to enable them to pay up for their fees. In this dollarised
economy, each extra dollar earned makes a difference.

Appendix One: References

African Region Microcredit Summit (2000): Microfinanc in Africa.A sustainable
Approach to poverty Reduction.Harare
Adams D.W (1999): Rural financial markets in low income countries: recent
controversies and lessons. World Development, Volume 14 No 4477-487

51

Bennet.L (1993): providing enterprise Development and Financial services to Women.

Technical paper 236. World Bank. Washington Dc
Brand M. (1998): New Product Development for Microfinance. US Agency for
International Development, Microenterprise development office. Washington DC.
Bond Patrick. Uneven Zimbabwe: A study of finance, Development and underground
development. Trenton n J Africa World press.
Bohn Carmen(2000), moving forward:An analysis of the impact of the self help
development Foundation of Zimbabwe (SHDF) credit programs. Harare
Hulme David (1999) : Impact Assesment Methodologies for Microfinance, Theory
Experience and better Practice. University of Manchester, Institute for development and
Management.
Hulme D, Mosley P 91996): Fight against Poverty. Volumes 1 and 2 .Routledge. London.
Hossain M (1997): Reaching the poor with effective Microcredit: Evaluation of a
Grameen Bank replication in the Philippines. International Research Institute. Philippines
Halder S (1999) : Identification of the poorest and the Ipmact of Credit on them: The case
of BRAC. Mimeo,BRAC Research and Evaluation Division.Dhaka
Khandker S (1998) : Fighting poverty with micro credit: Experience in Bangladesh.
Oxford University Press. New York
Mungosho Vimbai. (2000): management of Resources among Poor house holds in
Zimbabwe.A case study of savings clubs members .SHDF. Harare.

52

Moyo Theresa (2001): Financial Sector Liberalisation and the poor. A critical Evaluation.
Saprin . Harare.
Rutherford. s. (1997): The savings of the poor: Improving Financial services in
Bangladesh. University Press. Uk

Appendix Two: English-Letter of introduction and Questionnaire

My name is Nyaradzo Shambira and I am a third year student at the Bindura University
of Science Education. As part of my Honors Degree in Banking and Finance Program, I
am carrying out a research on the effectiveness of Microfinance In reducing poverty in
Zimbabwe for the past Five years. I have therefore structured a number of questions for
your kind completion.

53

Research Topic
An analysis of the effectiveness of Microfinance as a tool to Alleviate poverty in
Zimbabwe.
Privacy Policy
The answers sought by this questionnaire are purely for use in this dissertation and
academic reasons only. The same shall be kept confidential, respondents will be kept
anonymous unless one elects or otherwise. Views expressed in this dissertation represents
personal opinions and are to be treated as such and not as authoritative source.
Thanking you in anticipation.
Nyaradzo Shambira.

1. Demographic characteristics of respondents

Age group.(tick appropriate)
20-25 years
25-30 years

30-35 years
35 years and above

Sex
Number of children
Head of House Hold
2. Educational Background
Highest Educational level attained
Do you have any vocational training?.....yes/ no? ..
If yes please give information below
Course

Duration and year

Qualification
54

Awarding organization

3. How has your output changed since you received the loan (tick appropriate?)
1.remained the same
3. Declined

2. improved slightly
4. Greatly improved

4. How do you account for this change? (Tick appropriate)

1. access to better material
3. Improvement in skills

2. Availability of loan
4. change in economical conditions

5. Did you use the loan exclusively for enterprise? Yes/ No

6. How many times have you borrowed from a Microfinance Institution?...........................
7. If you borrowed more than once, where you given a bigger loan than the one you
Were given before? Yes/ No.
8. Have you acquired any assets since you started your business enabled by the loan?
Yes/No..
9. Do you feel respected in any way y other people since you started your own project?.
Yes/ No?.......................................
10. Before you were given the loan, were you able to meet educational and food bills
with difficulty? Yes/ No
11. After you received the loan were you able to meet educational and food bills?
Yes/No.
12. Before you received the loan, were you able to meet educational bills for your
kids and fool bills with relative ease? Yes/No
13. After you received the loan, were you able to meet educational bills for your
kids and fool bills with relative ease? Yes/No.

55

14. Have you managed to employ anyone since you received the loan to start your
Project? Yes/ No..
15. If yes, how many people did you manage to employ?......................................
16. What is your assessment of the impact of the loan on your business?
................................................................................................................................................
................................................................................................................................................
................................................................................................................................................
................................................................................................................................................
................................................................................................................................................
................................................................................................................................................
................................................................................................................................................
................................................................................................................................
End of questionnaire

Appendix Three: Shona- Letter of introduction and Questionnaire

Zita rangu ndinonzi Nyaradzo Shambira uye ndiri mugore rechitatu pazvidzizvo
zvandirikuita paBindura University of science Education. Sechikamu chechidzidzo
changu che Banking and finance , ndirikuita tsvagiridzo mairirano nekuti Chirongwa
chekukwereteswa kwemari (microfinance) kune avo vasingakwanisi kukwereta
kumabhangi makuru , chingapedze here hurombo kuvanhu vemuZimbabwe . Nokudaro
ndagadzira mibvunzo yekuti mupindure pane zvandichabvunza.
Musoro we tsvagiridzo unoti:
56

The effectiveness of microfinance as a tool of poverty alleviation in Zimbabwe.

Kuvandiswa kwe Mhinduro Dzenyu
Mhinduro yenyu irikubvunzwa nerino bepa ichangoshandiswa mutsvakitidzo ino
zvichienderana nechidzidzo chandiri kuita ichi chete. Hapana mazita achadurwa kunze
kwekuti imi matoda henyu kuti muzivikanwe. Zvese zvamunopindura zvichangotorwa
sezvazviri, hapana kumanikidzwa kuchaitwa.
Maita zvenyu basa
Muzvare Nyaradzo Shambira

1. Zviri pamusoro Pemupinduri

Makore ako (tika pane zera rako mubokisi riri pasi)
1.Makore 20-25
Makore 25-30

Makore 30-35
Makore 35 zvichienda kumberi

Muri mukadzi / murume here?.......................................................................

Makaroora kana kuroorwa here?....................................................................
Mune vana vangani?....................................................................................
57

Ndiani Mutungamiri wemba?........................................................................

2. Maererano nedzidzo yenyu
Makasvika padanho ripi pakudzidza kwamakaita?....................................................
Pane mabasa emaoko amakambodzidzira here? Hongu/ kwete
Kana Mati hongu, mumganyore here mhinuro yenyu mubhokisi riri pasi apa
Kosi Gore ramakaiita

Gwaro

Chikoro

yamakaita

chamakaiitira

kosi

yacho

3. Kubva pamakapiwa Loan, mungati pane chachinja here pamari yenyu

yamurikuwana(tikai pakakodzera mubhokisi riri pasi apa)
1.zvandinowana

hazvina

3. Zvandinowana zvakawedzera zvishoma

kuchinja
2.zvandinowana

4.

zvakadzikira

zvakanyanya

zvandinowana

zvakawedzera

4. Mungatsanangure here kuti kuchinja kwakaita zvamunowana zvakakonzerwa nei?

(tikai mubhokisi riri pasi pane zvakakodzera)
1.kukwanisa

kuwana

zvekushandisa zvirinani
2.
kuwanda
kweruzivo
maererarano

3.Kuwanikwa kwemari yekunze

4. Loan yamakapiwa

nezvebhisimusi

renyu
5. Makashandisha loan iyi mubisimusi renyu here kana kuti makashandisa
zvimwewo? Hongu/ kwete.........................................................................................
6. Makatora loan iyi kangani?.......................................................................................
7. kana makatora kanodarika kamwe, makazopiwa yakadarika yamakanga yatoora
pakutanga here? Hongu/ kwete.
58

8. Pane maAssets amakatenga here kubva pamakawana loan iyi?hongu/kwete/

.
9. Mungati makawana ruremekedzo here mushure mekunge matanga bhizimusi
renyu ? hongu/ kwete.
10. makakwanisa kuwanisa basa here kune vamwe vanhu mubhizimusi renyu kubva
zvamakaritanga?
11. Kana mati hongu, makapavanhu vangani basa?.....................................................
12. Musati mawana loan iyi, mainetsekana here kuti mubhadhare mari yechikoro
yevana nekutenga vakudya zvenyu? Hongu/ kwete?.................................................
13. Pamakazowana loan iyi, makange muchiri kungonetsekana here ne kubhadhara
mari yevana vechikoro ne kutenga chikafu chenyu? Hongu/ kwete?........................
14. Musati mawana loan iyi maikwanisa kubhadhara mari yechikoro yevana
nekutenga chikafu chenyu zviri nyore here?Hongu/ Kwete?...................................
15. Pamakazowana loan iyi, makangoramba muchikwanisa kubhadhara here mari
yevana vechikoro nekutenga chikafu zviri nyore?

16. Mungandiudzewo here kuti loan yamakapiwa iyi yakaita kuti busimusi renyu
ribudirire?

Magumo eimibunzo.

59

Appendix Four: Case studies of MFIs

1. Microking
MicroKing Savings & Credit Company (PVT) Ltd (Microking Finance) is a wholly
owned subsidiary of Kingdom Financial Holdings Limited (KFHL). MicroKing
commenced operations in 2001 with a mandate to provide tailor made financial services
to the grossly under-banked but rapidly growing Zimbabwean informal sector. The target
market is Micro, Small and Medium Enterprises (MSMEs) and lending is done both to
individuals and groups. The procedure revolves around easy access to financial services
and products, as a way to contribute to poverty alleviation and economic development.
Micro king has branches in Harare, Chitungwiza, Gweru, Bulawayo, Masvingo and
Mutare.
They offer maximum loan accounts of U.S $5 000 and minimum loans of $140. The
tenure is a maximum of three months, and repayment frequency is monthly. The

60

conditions of repayments are through monthly installments, and interest is calculated by

the reducing balance method. The security is pledge over business and households assets
plus a guarantor. The repayment is done through deduction from foreign currency
accounts and the interest rate is 0.5% per month of 6% per annum.
* Sources of data are from:
1. Company profile
2. Company Business conditions.

61