Microfinance and Environmental Sustainability at Selected Sites in Tanzania and Kenya

This review analyzes microfinance schemes that focus on improving the livelihoods of rural communities living in bio diverse environments and facilitating environmental governance. The review examined programs that supported environmental conservation projects at six locations in Tanzania and Kenya. It focused on two models, namely, the Village Savings and Loan Association (VSLA) and Financial Services Association (FSA) models. Performance varied across different models. The VSLA stood out in its performance across all three sustainability criteria, namely, financial, social and environmental. There is, however, a need to consider further design improvements to improve performance. Lessons and recommendations emerging from the review include:

• Microfinance model design is critical to its performance;
• Microfinance should be integrated into other development and conservation activities to enhance its contribution to environmental governance;
• Ongoing and long-term arrangements need to be developed for support, motivation and financial regulation;
• Efficiency of the FSA model can be improved by reviewing, adjusting and increasing support;
• Importance of initial training input in establishing microfinance projects must be understood;
• Role of start up revolving loans for group formation must be further examined.