The role of informal microfinance institutions in saving

3. Most activities operated by local entrepreneurs are viewed as not bankable projects
by banks. This makes them to be considered too risky. Furthermore, these
enterprises owned by local people are viewed to be unable to provide proper
accounting records as needed by banks.
4. In most cases, small and medium scale entrepreneurs are viewed to have
low credibility by banks.
5. Lack of proper legal framework in the country for settlements of commercial
disputes. However, this is expected to be reduced after the commencement of the
commercial court.
6. Information for credit analysis is still very limited. In most cases, SACCOs find it
difficult to accesses credits from banks since banks lack proper customers credit
information. Furthermore, this makes the discipline of credit analysis to be lost, as
banks are forcing themselves to rely too much on collateral to mitigate their
collateral risks.
1.1.2: HISTORY OF COOPERATIVES MOVEMENT IN TANZANIA.
The United Republic of Tanzania covers a surface area of 945,203 square kilometers. It has a
population of 36 million with 80% of the population living in the rural areas and solely
depending on small-scale farming. Its per capital GDP stands at $279 and more than 51% of
the populations live below the poverty line. The GDP growth as of December 2002 was 6.5%
was 4.2 by March 2003.
Agriculture dominates the economy, accounting for 55% of the GDP and 80% of the
recorded total foreign exchange earners while providing employment for 70% of the labor
force. Out of labor force of 13 million, 30% of the workforce is either underemployed or
unemployed.
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