9.1 Women’s access to micro-finance and other forms of credit: Support for Growth-oriented Women Entrepreneurs in Tanzania, 2005
9.1 Women’s access to micro-finance and other forms of credit: Support for Growth-oriented Women Entrepreneurs in Tanzania, 2005
The NISS (1991) showed that only one per cent of operators in the informal sector
could acquire capital from the formal financial sector.32 The rest had to rely on their own
savings or informal sources. An Economic and Social Research Foundation (ESRF)
study in 2000 found that 94.8 per cent of the households in their six-region review
indicated a demand for credit, but only seven per cent had access to formal credit.33 The
same study reported that loan amounts required by women and youth in rural and urban
areas far exceeded the loan amounts provided by formal financial institutions. SIDO
(2002) estimates that the current demand for MSME credit in Tanzania is 2.5 million
borrowers, yet, even in 2002, SIDO itself was only serving 50,000 – 2 per cent of the
potential market. The largest demand for credit is in the range of Tshs 50,000 to Tshs
500,000. The existing financing possibilities for MSMEs include personal savings,
money from family and friends, as well as credit from moneylenders, micro-finance
institutions (MFIs), government departments/agencies, and commercial banks.
MFI loan ceilings are reported to be capped at Tshs 5 million (for groups), and most
commercial banks are not inclined to grant credit facilities to individual MSMEs due to
high risk and high loan administration costs. Lending by private sector banks and nonbank
financial institutions is almost non-existent outside of major towns, municipalities
and cities. The low level of savings in the country, combined with a weak financial
infrastructure, invariably constrains the development of MSMEs.
91 Womens access to microfinance and other forms of credit Support for Growthoriented Women Entrepreneurs in Tanzania 2005 - To learn more about this author, visit International Labour Organization's Website.
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An unmet demand for credit
The NISS (1991) showed that only one per cent of operators in the informal sector
could acquire capital from the formal financial sector.32 The rest had to rely on their own
savings or informal sources. An Economic and Social Research Foundation (ESRF)
study in 2000 found that 94.8 per cent of the households in their six-region review
indicated a demand for credit, but only seven per cent had access to formal credit.33 The
same study reported that loan amounts required by women and youth in rural and urban
areas far exceeded the loan amounts provided by formal financial institutions. SIDO
(2002) estimates that the current demand for MSME credit in Tanzania is 2.5 million
borrowers, yet, even in 2002, SIDO itself was only serving 50,000 – 2 per cent of the
potential market. The largest demand for credit is in the range of Tshs 50,000 to Tshs
500,000. The existing financing possibilities for MSMEs include personal savings,
money from family and friends, as well as credit from moneylenders, micro-finance
institutions (MFIs), government departments/agencies, and commercial banks.
MFI loan ceilings are reported to be capped at Tshs 5 million (for groups), and most
commercial banks are not inclined to grant credit facilities to individual MSMEs due to
high risk and high loan administration costs. Lending by private sector banks and nonbank
financial institutions is almost non-existent outside of major towns, municipalities
and cities. The low level of savings in the country, combined with a weak financial
infrastructure, invariably constrains the development of MSMEs.
91 Womens access to microfinance and other forms of credit Support for Growthoriented Women Entrepreneurs in Tanzania 2005 - To learn more about this author, visit International Labour Organization's Website.
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