Tanzania
The Microfinance industry in Tanzania is relatively young. Individual players have been trying to deliver financial services to low-income communities since late 1980s and early 1990s but their efforts have been thwarted by lack of skills and experience, inappropriate methodologies, and above all difficulties in access to sources of funding. The World Bank estimates that less than 20% of Tanzania's working population in both the rural and urban economies has access to the mainstream banking, which translates into 13 million people not having access to the banking services. It is estimated that 80% of the 13 million are informal sector players i.e. micro and small entrepreneurs (SME) and their number is growing by 4% annually. In general, the microfinance industry in Tanzania faces a tremendous challenge in developing an efficient and effective micro financial system that is capable of delivering appropriate, affordable, quality services to such a large sector with diverse economic undertakings.
It is estimated that there are around 800 institutions providing some kind of financial service to low-income groups in Tanzania.
Generally speaking the composition of the industry's service providers can be divided into three categories. The first category consists of commercial banks that are under the banking regulations and supervision by the Bank of Tanzania and which are down streaming. The second category of microfinance service providers in Tanzania consists of institutions that are not currently regulated by the Bank of Tanzania. These include NGOs, SACAs SACCOs. These microfinance institutions provide financial services to the SMEs mainly in the form of micro credit with an exception of cooperative based microfinance institutions, which are predominantly savings based. The financial NGOs numbering between 80 and 100 out of which 42 are registered members of the Tanzania Association of Microfinance Institutions (TAMFI), the local microfinance network. A final category of Tanzanian microfinance service providers consists of non-institutional actors who generally operate in the informal sector. These include rotating savings and credit groups, rural savings and credit schemes, and moneylenders. There are no statistics for the actors that fall into this category, but there are numerous entities, which operate informally and provide valuable, but limited and often expensive microfinance services. Since year 2003 positive developments have been noted in the industry whereby a number of banks and financial institutions have developed interest in the provision of funding to the industry either directly to beneficiaries or through intermediary institutions.
It is roughly estimated that microfinance service providers have a combined outreach of around 500,000 clients, which is only about 5% of the estimated total demand.
The MicroNed members active in Tanzania in 2009 are Cordaid (3 projects), Hivos (1 project) and Rabobank Foundation (4 projects). Cordaid is the general MicroNed country coordinator for Hivos.
