The social impact of microfinance: what changes in well-being are perceived by women group borrowers after obtaining a group loan? : A participatory rural appraisal in Dar es Salaam Region, Tanzania

Abstract: Worldwide, poverty remains to be an obstacle to achieve sustainable development and improve the well-being of people. Microfinance has become a popular tool for poverty alleviation and it can now be found in poor countries across the world. Microfinance is based on the principle that poor people can initiate their own development out of poverty, given they have the starting capital to do so. The capital can be invested in income-generating activities and it is assumed that this will lead to a higher income and additional positive effects, like an increase in well-being, will follow. However others argue that the focus on income is only one aspects of poverty, other forms of deprivation and constraints are excluded. This thesis aims to address how microfinance, the provision of credit in particular, has an influence on the well-being of women. A participatory rural appraisal was conducted in order to explore how women define well-being. The perspectives of four women groups from the urban and peri-urban areas of Dar es Salaam, Tanzania were included in understanding the local definition of well-being, the developments in their lives and the changes in well-being they have perceived. The results show that the group loans may contribute to positive changes in the well-being of women, but these changes cannot be attributed to the loans alone. The changes in well-being caused by the loan intertwine with other factors like group dynamics and family life; therefore the results need to be interpreted considering the specific context. Furthermore the results show that the changes in well-being are not necessarily related to an increase in income, thus contesting the assumptions on which microfinance is based.