Altemius Millinga, TAMFI board member

The Tanzania Association of Microfinance Institutions (TAMFI) has appealed to its members to extend their services to rural areas to help the country’s fight against poverty.

TAMFI board member Altemius Millinga made the appeal at a two-day training attended by leaders of various Microfinance Institutions (MFIs), which ended in Morogoro recently.

He said it was of paramount importance to reach the majority rural people in the provision of financial services to enable the country realise its national goals of speeding up rural development, especially in the agriculture sector.
“It is very important for MFIs to look at ways of reaching the rural population.  At TAMFI we’re looking at ways of building the capacity of MFIs to spread microfinance services to people in rural areas,” he said.

He said available research shows that only three percent of the population in the rural areas has access to financial services.

The workshop’s facilitator, Peter Mukwana of the Kampala-based SkyMark Consulting Limited, told the participants that one of the most important elements of agri-finance was granting of loans and provision of savings mechanism for agricultural production.
The workshop’s theme was ‘Enhancement of Rural Outreach through Branding and Product Development for Microfinance Institutions (MFI)’.

 He said despite employing about 80 percent of the active labour force in Tanzania and its relative importance, agriculture has never reached its economic potential. One of the reasons for the failure, he said, has been the model used to finance agriculture whereby agri-loans are inappropriately structured or a replica of ordinary business loans.

He said microfinance institutions should offer agri-loan products subdivided into four categories:  specific enterprise agricultural loans, agricultural input loans, general agriculture loans and agricultural asset loans.
According to Mukwana, farmers have to be highly organised so as to attract agri-finance.  “The producers, most of whom get loans through groups, are chocking with uneconomical loans as they lack the relevant support to make informed choices,” he said.

To change the tide, MFIs must develop relevant agri-finance products that will steer agriculture sector to new heights.
 TAMFI executive secretary, Winnie Terry, said that Tanzania boasts of over three hundred microfinance institutions but most of them are providing services to the people in urban centres.

“The rural communities mostly lack financial services - loans, deposit, advisory services and so on,” she said.
The majority of Tanzanians lives in the rural areas but are left out by the mainstream financial institutions while the microfinance institutions have also not spread out wings to the rural people adequately.

 “TAMFI is encouraging microfinance operators to take services to the village, for the good of our motherland, and also it makes business sense in the long run,” she said.
Terry said TAMFI is providing this training to the microfinance institutions so as to enable them improve their services, especially in rural areas.
“We want to make rural outreach possible for microfinance,” she said.

Teddy Sanga, chairperson of Utulivu Village Community Bank (Vicoba) in Makete District, Njombe Region, said that poor infrastructure was a major obstacle to microfinance institutions’ desire to expand services to rural areas.

She urged the government to improve roads in agri-rural areas that are very attractive to microfinance operators.
More than 50 participants from MFIs, non-governmental organizations, community banks, commercial banks, microfinance services providers, savings and credit societies and Vicobas attended the training sponsored by the Bank of Tanzania.