The Impact of Financial Inclusion on Poverty Reduction in Tanzania: Evidence from Mbozi District

Hasunga Japhet Ngailonga ,Zawadi Ally ,Don Prasad

doi:10.7176/ejbm/12-25-09

Abstract

The study assessed the impact of financial inclusion on poverty reduction among rural people in Tanzania; the sample of 541 was drawn from Mbozi distinct. The study used multiple regression analysis to analyse the data, poverty reduction was assessed in terms of increase in consumption expenditure and household income as outcomes of credit acquisition from financial organs. The findings showed a positive correlation between access to financial services and increase in consumption expenditure as a factor in poverty reduction. It concludes that, among other factors, consumption expenditure would be an appropriate measure upon judging and monitoring the poverty levels among rural households in Mbozi District. The policy implication is that microfinance organs should not turn to hard terms that can prevent that rural household from accessing services. Keywords : financial inclusion, financial institutions, financial services, and poverty DOI: 10.7176/EJBM/12-25-09 Publication date: September 30 th 2020

Highlights

Access to finance is widely seen as the major binding constraint on growth and on poverty reduction efforts
The Sustainable Development Goals (SDGs)’s report shows that one in eight people still live in extreme poverty, nearly 800m people suffer from hunger, the births of nearly a quarter of children under 5 had not been recorded, 1.1 billion people are living without electricity and water scarcity affects more than 2 billion people
The main theme of this study is to understand potentials of financial Inclusion on poverty reduction in rural area in Tanzania, and to what degree this will help to deepen the knowledge on economic policies designed to encourage financial inclusion in Tanzania

Summary

Introduction

Access to finance is widely seen as the major binding constraint on growth and on poverty reduction efforts. The SDG’s report shows that one in eight people still live in extreme poverty, nearly 800m people suffer from hunger, the births of nearly a quarter of children under 5 had not been recorded, 1.1 billion people are living without electricity and water scarcity affects more than 2 billion people. In this case all the nations in the world need to build sustainable development Goals into their national policies and plans. In Kenya, for example, SDGs are implemented through the Kenya's Economic Recovery strategy of 2003 and vision 2030, while in Tanzania; it is through the Development Vision 2025 and the National Strategy for Growth and Poverty Reduction (URT, 2014; Aduda and Kalunda, 2012)

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