Rural Tanzania begs for financial services despite sector reforms

In the medium term, the aim was to provide a basis for local investment in ranch development by making it possible for the Maasai to secure commercial loans using the titles as collateral.

Apart from the asset formalisation programme, the Tanzanian government has over the last few years also pushed for the formation of savings and credit co-operative societies (Saccos) to help bridge the banking and financing gap among the rural population.

“Linking with intermediate institutions which are closer to the farmer clients reduces the cost of collecting and processing information about potential borrowers. Linkage to saccos and community banks has proved useful in cutting down administrative costs, enhancing loan recovery and improving reach without having to physically locate branches in all areas of operation,” Prof Wangwe said.

Remain dominant

The saccos remain the most dominant member-based organisations in Tanzania and have a common bond in residences and associations in that members of the schemes usually reside in the same villages and rely on the same cooperative societies for crop sales.

Farmers under this scheme open a group share account with a convenient bank catering for their needs in the area and crop sales are paid through the account.

Special passbooks are provided in which all the necessary entries are recorded.

The group share account is operated as a deposit account which earns interest.

Members in the schemes are allowed to make withdrawals from the accounts.

Members may be loaned amounts related to the size of their savings.

Normally, loans are paid during crop sales though repayments can be made any time. In saccos savings are linked to credit.

The saccos have helped to address the bias that often prevails against individual borrowers.