The role of informal microfinance institutions in saving

1.1.3: WHY IS THIS THESIS UNDERTAKEN?
This thesis targets Savings Mobilization, Investment and poverty reduction in Tanzania
and other places where income for households are low. The thesis plays a great role in
diversify production and services where financial and banking sector reforms are
undertaken for economic development.
The Bank’s experience from its interventions in the financial sectors of the country has
shown that targeting the use of resources of technical assistance for financial
intermediaries, including microfinance institutions (MFI’S) can improve their institutional
performance and the social-economic impact on the clients they serve.
Greater capacity allows MFIs to expand the outreach of needed financial enterprise
development services to the poor. Such assistance also permits the same institutions to
become autonomous and financially self-sufficient. Outreach in providing MFIs services
such as loans, savings and business development support are likely to increase the
performance and growth prospects of the enterprise served and consequently, raise the
incomes, social welfare and wealth of the poor(improve the standard of living).
From this fact, Savings and Credit Cooperative Society (SACCOs) were used to designate
institutions and networks that developed as alternatives to commercial banks and the
informal structures for offering financial services close to the people.
Delivering financial services through Savings and Credit Cooperatives Society (SACCOs),
may essentially classify the needs to grant loans oriented towards social needs and small
business. The members become the beneficiaries, sole savers and sole decision makers,
which makes them integrated and effective tools for rural development.
The establishment and growth of SACCOs should be regarded as one of the important
instruments for economic, social and cultural development as well as human
advancement in Tanzania and other developing countries.
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