Investigation of the impact of microfinance solutions on poverty reduction in Lusaka, Zambia

Abstract

This research aimed to investigate the impact of Microfinance solutions on poverty reduction in Lusaka, Zambia. The specific objectives include assessing the effect of Microfinance financial advice, analyzing the influence of access to Microfinance loans, and examining the impact of Microfinance savings services on poverty levels among different households in Lusaka. The study was guided by these theories: Theory of Empowerment, Financial Systems Approach and the Poverty concern theory. A mixed research strategy, incorporating both qualitative and quantitative approaches, was employed for this study. An embedded design was utilized to provide a comprehensive understanding of the research subject. Both Approach, inferential statistics and thematic analysis were integrated to compliment the mixed. Data was collected from 200 respondents analysed using theme analysis for qualitative information and regression analysis for quantitative data. SPSS v26 and Excel 2016 were utilized for the analysis. The study demonstrates the significant role of microfinance organizations in poverty reduction. Access to loans and financial counselling positively influences poverty reduction, with financial advice playing a crucial role in enabling informed financial decisions. While savings contribute to poverty reduction, their impact may be less than that of loans and financial guidance. The practical implications of these findings suggest that microfinance institutions should prioritize the provision of comprehensive financial advice and accessible loan services to effectively combat poverty. It was recommended that Microfinance institutions (MFIs) should enhance financial consulting services through ongoing educational initiatives. Capacity building, diversified loan offers, and careful interest rate management are crucial. Policymakers and regulators should create a supportive regulatory environment to encourage microfinance for poverty reduction. Implement rigorous monitoring methods and offer incentives for MFIs serving disadvantaged areas. Donor organizations and development agencies should support research projects maximizing microfinance techniques for long-term poverty reduction. Keywords: Poverty, Microfinance, financial advice, loans, savings