The role of informal microfinance institutions in saving

minimum opening balance will attract more savers. Micro financial institutions should take this
opportunity for the purpose of mobilizing funds and helping the poor as well.
Furthermore, Micro financial institutions should improve the process of loans application,
delivery, repayment and monitoring. Reducing non-performing loans and default is important
for sustainability of rural financial markets.
Rural Poor and Micro-enterprises
Rural poor and micro-enterprises should organize themselves in groups in order to secure
micro financial institutions confidence. Micro financial institutions prefer lending to groups
rather than individuals. Above all, groups act as a good substitute for physical collateral. In
these aspect small farmers, the poor and micro-enterprises should organize themselves in
groups for both savings mobilizations, and increasing their accessibility to formal micro
financial institutions. The poor are most likely to influence the lenders through groups and to
secure loans for investment and poverty reduction.
Conclusions
The performance of micro financial institutions in Tanzania raises many questions than
answers. However, micro financial institutions have done their best to serve the poor and
small enterprises. It is important to understand that the Rural Financial Markets comprises
lenders, borrowers, savers and intermediaries. Policy makers and other stakeholders in
microfinance sector must focus on the development of overall rural financial markets.
Creating viable lenders, borrowers and savers is a prerequisite for micro financial institutions
better performance and the development of sustainable rural financial markets.
4.1.4: Research and Development support.
The study identified the public Research and Development institutions especially those
rendering support to SACCOs through their Research and Development programmes.
Research and Development programme is often carried out for SACCOs with the prime aim of
improving quality and standards of their products, applications of new process or techniques
to reduce costs and to increase productivity.
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