Perception Of The Effect Of Microfinance On Entrepreneurship Skills Development Of Women In Rural Malawi

Abstract

This study aimed at assessing the Perception of the Effect of Microfinance on Entrepreneurship Skills Development of Women in Rural Malawi by FINCA Malawi. The contribution of microfinance to entrepreneurship activities is increasingly being recognized as one of the primary drivers of economic growth (Cull & Morduch, 2018). Entrepreneurs are the link between new ideas and economic development (Monitor, 2016). Microfinance, created as an institution to enable low-income household individuals to access loans with specific conditions, enables low-income household individuals to develop business skills and generate high income from business (Hassan & Ibrahim, 2015). There is a direct relationship among the development of a community, availability of capital, and skills development of people in a given community. In developing countries like Malawi where capital for doing business is scarce, skills of people may remain hidden. For a community to realise its potential, it needs skills of the people as well as capital to start business (Mckenzie & Woodruff, 2006). Therefore, the role of banks and microfinance institutions is to provide capital stock which in turn may lead to the development of entrepreneurship skills. This study aimed at filling the knowledge gap on the perceived effect of microfinance services and entrepreneurial skill development of women in rural Malawi. Specifically, it sought to achieve three objectives, namely, to examine the perceived effect of loans on the development of entrepreneurship skills of women in rural Malawi, to examine the perceived effect of business training availability on entrepreneurial skills development of women in rural Malawi, and to analyse the perceived effect of savings on the development of entrepreneurial skills of women in rural Malawi. FINCA Malawi, was used as a case study. The population of the study was 1,986. The study had a sample of 85 respondents which was drawn based on Central Limit Theorem and was stratified from Blantyre, Thyolo and Chiradzulu. A closed questionnaire was used to collect data. Out of the 85 respondents, 80 respondents completed and returned the questionnaire. Using an ordered logistic regression model, the study concluded that microfinance services are perceived to have an effect on rural women’s development of entrepreneurship skills. This study recommends that future studies should involve multiple microfinance institutions rather than concentrating on one institution. It also recommends having control population for comparison with results obtained from the target population.