The Invisible Walls of Credit and the Institutional Determinants of Microfinance Access among Small-Scale Borrowers in Tanzania

This study examined the influence of institutional barriers on access to microfinance loans among small-scale borrowers in Kilombero District, Tanzania. The study was guided by a positivist research philosophy and employed a quantitative research approach with a cross-sectional research design. The target population comprised 1,378 small-scale borrowers, from which a sample was determined using the Yamane formula, and 299 valid responses were obtained. Primary data were collected using structured questionnaires. Data were analysed using Ordinary Least Squares (OLS) regression. The findings revealed that institutional barriers have an important role in explaining access to microfinance loans. Complex procedures had a negative influence on access, while weak institutional outreach also negatively and significantly influenced access. Limited product diversity showed a positive and statistically significant relationship with access, whereas weak regulations and rigid group lending did not have statistically significant effects. The study concludes that improving access to microfinance requires financial institutions to simplify lending procedures, strengthen outreach, and develop diverse and borrower-responsive financial products. The study recommends greater collaboration between microfinance institutions and local government authorities to improve financial awareness and facilitate small-scale borrowers’ access to appropriate financial services, particularly in rural communities.