The role of informal microfinance institutions in saving

of financial systems. The success of any financial restructuring is enhanced when due political
recognition is given to ensuring that the financial institutions and markets being restructured
will remain competitive. Hence, political leadership must be shown in generating a concrete
regulatory framework that facilitates greater efficiency, confidence, and stability of the
financial system thereby limiting the need for future interventions and the related costs.
The challenge for Tanzania’s policy makers in developing an efficient stock market include
interalia setting up the infrastructure and building the human capacity required to support
stock market as well as the institutional framework. With regard to the legal framework a
significant stride has been made following the establishment of the Capital Market and Security
Authority Stock thrive in conducive environments which include suitable interest rate and
exchange rate policies, prudence in the management of the economy, politically and
economically stable environment and fiscal discipline. The quest for establishing a viable stock
market is inhabited in an environment which major obstacles to the evaluation of stock
markets such as high rates of inflation, fiscal deficits and excessive monetary expansion in much
the same way as financial repression. Despite the support of the World Bank and other donor
agencies for the liberalization and restructuring of financial sector in African countries, the
evidence points to markedly less success in many countries.
Consequently, useful reasons are to be learnt by Tanzania’s policy makers from the experience
in successful development and promotion of stock markets in some African countries like
Botswana, and Ghana as well as Asian and Latin American countries.
Tanzania and other African countries need to demonstrate confidence in their economy by
investing in Africa’s stock markets in order to instill confidence in foreign investors, for here
lays the key to the success of African stock markets in mobilizing resources for economic
development and promoting investments thus making Tanzania competitive in the global
market.
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