Microfinance has been proposed as a tool for enhancing economic stability and poverty reduction among rural women entrepreneurs in Mozambique's coastal regions. A mixed methods approach combining quantitative surveys (n=200) with qualitative in-depth interviews (n=25). The survey results indicate that 65% of microfinance recipients reported improved financial health, while 40% experienced loan defaults. Microfinance significantly contributed to enhancing the economic stability and reducing poverty among rural women entrepreneurs in Mozambique’s coastal regions, with repayment patterns showing variability influenced by socio-economic factors. Policy recommendations include targeted support for microfinance recipients and improved credit scoring systems to mitigate loan defaults.