n Journal of Strategic Studies : A Journal of the Southern Bureau of Strategic Studies Trust - The impact of microfinance on rural household welfare in Zimbabwe : the case of Gokwe

Volume 3, Issue 1
  • ISSN : 2076-6645
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Poverty levels have been increasing in Zimbabwe against a background of declining economic activity in the past decade. One of the poverty reduction tools that have been adopted is the provision of microfinance credit to the poor. While participation in this initiative has been quite significant, even in rural areas, its impact on poverty reduction is not very clear. The objective of this study was to examine whether household access to microfinance credit reduces rural poverty. The Treatment Effects Model, a variation of the Heckman Sample Selection Model was used to estimate the impact of access to microfinance on household per capita consumption, the proxy for poverty. Results from an outcome regression showed that access to microfinance has a positive effect on per capita household consumption (the poverty indicator). The study concludes that microfinance credit can be used as a tool for poverty reduction since increased consumption implies reduced poverty.

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