Abstract In many developing countries, women are poorer than men. To address this inequality, NGOs operating in these countries have introduced microfinance programmes towards women empowerment. However, little information is available on the effects of such interventions. The purpose of this paper is to fill this gap by examining the practices and strategies used by microfinance NGOs in empowering women for poverty reduction. The paper is based on a study that was conducted in Dodoma Municipality using a case of the Small Enterprises Development Agency (SEDA) whereby purposive sampling technique was used to obtain 80 respondents. Quantitative and qualitative data were collected through interviews guided by structured questionnaire. The study used case study and causal-comparative design. Empowerment was measured using six variables: contribution to household income, freedom to use own resources, ownership of assets, freedom of movement, involvement in business associations and trade fairs, and awareness of justice. Study findings show that, SEDA supported women micro-entrepreneurs had greater contribution to household income, more freedom to use money earned from their enterprises, owned assets, and were more engaged in long distance profit making businesses. However, microfinance NGOs seem to have no effect on women non-income poverty aspects such as injustice awareness, freedom for decision making, participation in business associations and trade fairs. It is concluded that Micro finance NGOs empower women entrepreneurs for income poverty reduction but not for non-income poverty reduction, hence the need to focus on non-income poverty dimensions as well.