Tanzania Country Scan Microfinance

This document identifies key features of the microfinance sector in Tanzania, and attempts to formulate a sector development strategy for the country.

There is huge unsatisfied demand for financial services in rural and urban areas of Tanzania. Key features of microfinance in Tanzania include:

• Low financial literacy;
• Dependence on agriculture for livelihood;
• Dependence on family and friends for credit;
• Savings mainly in kind;
• Use of personal contacts and couriers for money transfers;
• Increasing popularity of internet and mobile phone technology.

Key providers of financial services to the poor in Tanzania include licensed commercial banks, regional and rural unit financial institutions, Savings and Credit Cooperative Societies (SACCOs) and NGOs. The paper suggests steps to deepen the financial sector in Tanzania, and recommends developing:

• Rural financial services strategy and financial literacy strategy;
• Capacity of SACCOs;
• SACCO networking;
• Programs to support informal financial groups;
• Enabling environment for mobile phone banking;
• Agricultural finance;
• MIS support facility for MFIs and small banks;
• Banks and MFI capacity for lending to small and medium enterprises;
• Support to MFIs, banks, NGOs and SACCO networks to increase outreach.