New Tanzania Microfinance Bank Awarded With License To Boost Micro Credits And Loans

tanzania-microfinance-act-2015

The Bank of Tanzania (BOT) has recently awarded Hakika Microfinance Bank Limited with a banking license to carry out microfinance activities in the country under the Banking and Financial Institutions Act of 2006.

Hakika is part of the MFIs) that are currently serving Tanzania’s poorest with collateral-free and low interest micro-credits and loans.

Hakika’s headquarter and subsidiary branch will be located in Arusha region where there are currently according to the BOT.

According to the World Bank (WB), merely less than 20% of Tanzania’s working population or 13 million people have access to any type of finance product.

Traditionally lenders mostly focus on urban areas to minimize their costs and risks since the lack of infrastructure to access rural areas makes it more expensive to issue a loan for USD 50 there than one for USD 1,000 to urbans according to Microfinance Transparency Organization (MF Transparency).

According to Tanzania Association Of Microfinance Institutions (TAMFI), microfinance in Tanzania are NGOS which started to emerge in the mid 1990s.

However, informal microfinance services providers have been active in both rural and urban areas of Tanzania for years.

Still, Tanzanian MFIs only account for a total of 500,000 clients or 5% of the country’s real demand, with only 10 MFIs that account for more than 80% of the clients’ base totaling a loan portfolio of TZS 275.7 billion or USD 130 million according to MF Transparency.

Responsibility Investments AG, a private investment company in development projects, indicates that the microfinance industry in Sub Saharan Africa (SSA) is expected to grow between 10% to 20% per annum in the short term and ranks second after the Asia-Pacific region with an expected growth of 30% to 35% per annum.