Govt commends Finca for pivotal role in driving financial inclusion

08Mar 2018
The Guardian Reporter
The Guardian
Govt commends Finca for pivotal role in driving financial inclusion
  • • The primary objective of microfinance is to provide poor individuals and households with access to affordable microloans and other financial solutions for self-employment through which poor households can boost incomes and generate wealth

Tanzania has an ambitious financial inclusion agenda which without support from sectoral stakeholders and adequate investment in fintech innovation cannot be realised, the government has said.

The Chief Executive Officer of Finca Microfinance Bank Tanzania, Issa Ngwegwe (left), addresses a press conference last week in Dar es Salaam on the bank’s 20th anniversary fete. With him are the President and CEO of Finca Impact Finance, Andree Simon (right), and board Chairman Mike Gama-Lobo. Photo: John Badi

A senior Treasury official said last week that the role Finca Microfinance Bank has been playing in that regard does not only deserve to be commended but should also be emulated by its peers in microfinance and other banks doing business in the country.


According to the Deputy Permanent Secretary in the Ministry of Finance and Planning, Amina Shaaban, Finca’s time and resource investments to serve economically unprivileged and monetarily excluded Tanzanians has been decisive in driving the government’s financial inclusion agenda.


She said that for the country’s dream of improving and ensuring access to impactful monetary services for all becoming true, the contribution of key sectoral player is of utmost importance especially in serving underserved parts of the country and sidelined communities.


Gracing Finca’s 20th anniversary, the technocrat said the bank is currently Tanzania’s leader in microfinance, which is globally appreciated and accredited for its pivotal role in fighting poverty. She added that the primary objective of the service is to provide poor individuals and households with access to affordable microloans and other financial solutions for self-employment through which they can boost incomes and generate wealth.


“As such, microfinance presents itself as a viable solution against poverty for the poor (especially those in rural areas and mostly women) who are often excluded from mainstream banking on the pretext of being unbankable,” she noted in a speech she read on behalf of Treasury chief Dr Philip Mpango.


“Finca is one of the biggest microfinance banks in the country with presence in international microfinance business. The bank is in the forefront of embracing technology and innovation in increasing financial inclusion in Tanzania since it was established 20 years ago.


The bank was established in 1998 as a microfinance institution providing loans to SMEs and entrepreneurs and early this decade it evolved into a full-fledged bank that offers innovative products and services. Since then, it has managed to increase its service outlets from 29 in 2013 to 151 by December 2017, with 25 branches across the country.


Finca services urban and rural clients through provision of agricultural loans and savings products for adults and children, insurance, payroll and money transfer services.


Its clientele base stands at about 152,891 today compared to 100,629 in 2013. Finca started operations in Tanzania as an NGO serving women in Mwanza under Finca US. Men were incorporated in its services in 2006.


Since its inception, the bank has served 1.2 million people disbursing about 1.1trn/- loans to micro entrepreneurs in the last 10 years. Currently it has a network of 148 agents across Tanzania, who are currently processing 15bn/- a month and providing services free of charge.


As a bank, its loan book increased from 47bn/- in 2013 to 66bn/- by January 2018. Deposits increased from 4.9bn/- to 48bn/- during the same period.


“I am convinced that these 20 years of existence of Finca Tanzania will build impetus for further growth of the other microfinance service providers and increase the level of financial inclusion in the country,” Deputy PS Shaaban said. “The Ministry of Finance and Planning counts on the collective efforts of all banks and financial institutions to serve more rural community households,” she added.


According to her, the current high level of financial exclusion in the country is due to several factors, including low penetration of banks and microfinance institutions due to inadequate supporting infrastructure, as well as low and irregular incomes resulting from high dependence on low productivity and seasonal agricultural activities for livelihood and employment.

Other factors are inadequate knowledge about financial institutions and the products offered, low level of financial literacy and lack of suitable products addressing the needs of consumers. There is also lack of innovation and weak capacities in terms of human and technical financial service providers as well as high interest rates.

Shaaban also said that this year the government launched the Second National Financial Inclusion agenda in order to address challenges of availability, supply and use of financial services in the country. The programme seeks to bring financial services closer to the people, strengthen infrastructure to facilitate provision of financial services and improve infrastructure around availability of financial education and information.

According to the FinScope Survey 2017, the level of access to formal financial services for the working labour force increased from 15.9 per cent in 2009 to 65 per cent in 2017. The increase was largely due to higher access to non-bank financial services, notably introduction of mobile financial services.

“Despite the significant increase in the numbers and type of banks and financial institutions, access to formal financial services in the country is still low,” Deputy PS Shaaban said.

“This was depicted from the 2017 data in which 28 per cent of the labour force was financially excluded, whereas 34.9 per cent was in rural areas and 14.8 per cent in urban areas,” she noted.

The President and CEO of Finca Impact Finance, Andree Simon, said the local bank and its shareholders are committed towards providing responsible financial services to low-income individuals and their communities, helping people to build assets, create jobs and raise their standard of living.

Board Chairman Mike Gama-Lobo said they will soon be rolling out a new high breed digital business model that will bring banking services to customers throughout the country reaching the underserved and rural communities. He added that digital technologies have spread rapidly in Africa and Finca is at the forefront in leveraging these technologies in order to provide financial services to more people and support the continent’s financial inclusion drive.

On his part Chief Executive Officer of Finca Microfinance Bank Tanzania, Issa Ngwegwe said the bank was committed to its mission of alleviating poverty through lasting solutions that help people build their assets, create jobs and raise their standards of living.

Speaking at the event, the Deputy Governor, Bank of Tanzania, Financial Stability and Deepening, Dr Bernard Kibesse, underscored the important contribution made by Finca in driving financial inclusion in Tanzania. He further said that the government will continue to strengthen policies and the regulatory framework aimed at promoting inclusion and responsible banking services.