The government of South Africa has seen many financial reforms in the finance industry since the attainment of freedom in 1994. Many microfinance institutions (MFIs) have emerged in the name of poverty reduction, however the impact of MFIs on poverty reduction in rural areas has not been significantly high. Poverty has been reduced but still the inequality gap has even widened (HSRC, 2004). The study is concerned with analysing the impact of MFIs in poverty reduction among the rural poor. Empirical evidence from many developing nations around the world has shown that microfinance is a tool that is relevant in reducing poverty within rural areas. This study investigates the impact of microfinance institutions on household income levels, education and business skills. The study followed a qualitative approach in terms of the research methodology and a survey research design. Data was collected using questionnaires, scheduled interviews, focus group discussions and key informants. Two sample techniques were used for the selection of the MFIs and the household respondents, that is purposive sampling and cluster sampling. In total, 150 households, 15 MFIs and five key informants were interviewed. Descriptive analysis methods were employed and the study showed that only 10 percent of the total households have been able to access microfinance. The number of people who gained business skills was also low (10 percent). The MFIs who provide financial services excluding the other services like business training programmes were 80 percent of the total number of MFIs interviewed. This data showed that only a few (20 percent) MFIs are willing to go an extra mile rendering business skills to their clients. Overally the major finding of the study was that although, MFIs are reaching out to the rural communities, their levels of outreach is still very low within the rural areas. However this does not mean that the impact of MFIs funding is not felt among the rural poor. The levels of income and educational benefits have been increased and felt by the 10 percent of the rural poor clients. This study advocates for an entrepreneurship development pathway to poverty reduction. Microfinance should be used as a source of finance to initiate entrepreneurial activities among the poor in order to generate income. In this study, the use of microfinance finance for consumption by the poor is discouraged because it depletes the funds that can be channeled for selfhelp projects within the rural communities. The study findings motivated the recommendations that encourage an inclusive financial system that is capable of reaching out to the rural poor.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:ufh/vital:11440 |
| Date | January 2012 |
| Creators | Mamutse, Zivai Tapfumanei |
| Publisher | University of Fort Hare, Faculty of Management & Commerce |
| Source Sets | South African National ETD Portal |
| Language | English |
| Detected Language | English |
| Type | Thesis, Masters, M Soc Sc (Dev) |
| Format | 166 leaves; 30 cm, pdf |
| Rights | University of Fort Hare |
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