Rural Tanzania begs for financial services despite sector reforms

It’s fast approaching midday and Mathias Kingi, a livestock trader at Dar es Salaam’s main Pugu market, is striving to seal the last deals for the day under the sweltering heat of the sun.

Trading on this day doesn’t seem vibrant, but Mr Kingi and scores of other traders seem to have already made some earnings ahead 2pm when the market closes.

Conspicuous bulges around Mr Kingi’s shins, however, betray a serious problem among traders at this key secondary livestock market — lack of access to banking and other financial services.

Neatly tucked into Mr Kingi’s socks and partly covered by a pair of aging khaki pants are wads of currency notes he has just earned from the sale of several heads of cattle.

“What do I do? The banks are far away and I have to devise ways of getting my money there safe,” he said.

A quick glance around the market reveals a similar predicament among Mr Kingi’s colleagues who have also devised innovative ways of keeping their money safe.

While a majority prefer stuffing wads of notes into their socks and trouser pockets, others resort to hiding the money in other undergarments.

“Safety of money is a big issue here and each of us has to find a way of keeping our money safe until it gets to the bank,” Juma Mgasa, a 55-year-old trader at the Pugu livestock market said. “Several of us have been targeted by robbers in the past and we are highly vulnerable because we have to use public transport.”

On an active trading day when returns are good, Mr Kingi even hires a policeman for TzSh 20,000 (Sh1,250) to provide escort to the nearest banking hall in Dar es Salaam, about 22 kilometres away. Shaban Karamba, a dealer in goats and sheep said: “Pugu is tucked in a fairly remote area and we know the dangers that come with ferrying money to Dar es Salaam. Its not just us facing this problem. Many in rural areas have a similar experience.”

Samwel Wangwe of Dar es Salaam based Economic and Social Research Foundation (ESRF) said though reforms were underway in the country’s financial sector, there was concern that majority of the rural population (which constitutes 70 to 80 per cent of the population and comprises 90 per cent of the poor in Tanzania) have not benefited from them.

Bypassed by reforms

“They (rural population) have largely been bypassed by these reforms. The need to enhance accessibility of financial services to the rural poor in Tanzania deserves high priority on the agenda of the on-going financial sector reforms,” Prof Wangwe said in a recent report titled Innovation in Rural Finance in Tanzania.

Mr Mgasa said access to credit facilities remained a tall order for the rural population.

“Finding access to credit facilities is quiet difficult here because most institutions fear the risk of dealing with us. Our occupation is weather related and we are many a times turned away on the grounds of the risks that livestock trade would have on loan arrangements,” he said.

He said that most banks and other financial institutions insist on assets such as land as collateral — a position that locks out most of the rural poor.