Microcredit application as development strategy: Case of Burundi

Microfinance has emerged as a tool in a field of international development policies that can make a decisive contribution to poverty reduction around the world. The sector of microcredit has evolved from traditional small savings and credit products to large organizations offering a wide range of services and products where the impoverished are provided loans use as capital in order to own business for example, saving services and trade development programs. Therefore, the performance of microfinance institutions has two components: a financial component and a social component. Burundi microcredit applications have contributed to promote urban and rural areas to fight against the poverty, special women's poverty, children's caring healthier lives and education improvement opportunities, also builds strength society. In addition, over the moment, May 2005 to January 2007, the number of microfinance institutions operators on the field has increased from 20 to 32, of which 21 are licensed and 11 are pending approval and waiting to grow his performance. In particular, the immediate causes lie in the socio-political crisis of the last fourteen years, which has deteriorated the living conditions of the population of Burundi. A deep analysis leads to far-reaching causes, namely, the structural weaknesses of economic policy, notably monetary and credit policy. The thesis aims to identify the determinants of microcredit application as development strategy in Burundi. The objective of this study is to analyze that Burundi microcredit can be one of ways with positive impact , increasing poor people income and raising living standard that responds as a way of fighting against the poverty. Also, the ability of microcredit institutions to play an important role to eliminate poverty and the socio-economic impact of microloans find a positive effect. As consequence, to respond to all questions, it has adopted a qualitative and quantitative approach. It has been used panel data from a sample of 500 operated customers who have an experience of two years from 2010 to 2015. The analysis revealed that the three institutions (FENACOBU, COSPEC, and CECM) which have a high growth, in terms of number of members, points of service, volume of savings and credit. The result reflects the understanding significantly from the financial services opportunities provided to poor people who almost do not exist in this finance sector as beneficiaries. Finally, poverty will not be and microcredit is an effective tool for alleviating poverty. In short, it may be contributed as an idea urgently, to support and regulate the operations of microcredit services to be as a tool which may react as tool to destroy poverty in Burundi. Successful world applications shall be followed closely and tried to be applied by taking into consideration the socio-cultural structure of Burundi , people and facts of Burundi economy. However, the real development of a strong microfinance sector may see the role in stability and development in business that will appear as an aim of reducing the poverty around the world. Keywords: Burundi, Development strategy, Microcredit, Microfinance, Poverty.