The role of informal microfinance institutions in saving

15 TPB …
16 TGT …
17 IFAD-Mbeya 39
18 MEDA 96
19 PRIDE …
20 Nyanza 00
21 Iwindi 100
22 Wino 2
23 Mwanza …
24 Usafi …
25 Mkwepu …
26 Marangu West …
27 WETCU …
28 Juhudi …
29 Morogoro ---
Source: Oketch et al (1997, sheet 1)
Table 15 suggests that there is a serious problem of loans repayments in Tanzania micro
financial institutions, particularly in banks. Recalling the fact that banks extend loans in millions
to big borrowers, we can therefore argue that big borrowers are mainly responsible for loan
defaulting. This argument is supported by almost 100% of on time repayments of loans in
SACCOs and NGO’s. So long as NGO’s and SACCOs extend loans to low income earners and
the poor, we can therefore propose that NGO’s and SACCOs maintain relatively high
repayments rates. It is noticeable in the Oketch et al study, ‘’PRIDE Tanzania and four of the
SACCOs in the sample appear to have higher repayments rates. This is probably explained by
the group guarantee mechanism and peer pressure which is the hall mark of successful micro
financial across the World’’. (Oketch et al, 1997, p.23)
It is obvious that there is poor performance of loans repayment in micro financial institutions
in Tanzania. What are the causes of this poor credit performance? Of course there are different
answers to this question. According to Co-operative and Rural Development Bank (1991, p.27)
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