The role of informal microfinance institutions in saving

Year
Percentage of
Consumption
of lowest 20
Percent
households
Percentage
of income
Received
by lowest
20 Percent
households
Total
Normal
Household
Consumption
expenditure.
(Mill TZS)
Inflation
Normal
Households
Disposable
Income
(Mill. TZS)
Real
Consumption
Expenditure
of lowest 20
Percent
households
(Mill. TZS)
Real Private
Disposable
Income of
lowest 20
Percent
households
(Mill. TZS)
2000 5.4 3.9 6,069,576.0 4.9 5,247,878.0 58,636.30 41,768.8
Source: National Bureau of Statistics: Tanzania Statistical Abstracts and National Accounts of Tanzania (Various Issues)
Source: National Bureau of statistics: Tanzania Statistical Abstracts (Various Issues) for total Household Consumption
Expenditure and national Disposable Income; World Bank Development Indicators (Various Issues); Wagao, J (19
1.1.4: STATEMENT OF THE RESEARCH PROBLEM
Savings and Credit Cooperatives Society (SACCOs) in Tanzania have not performed creditably
well and hence have not played the expected vital and vibrant role in the economic growth
and development of Tanzania. This situation has been of great concern to the government,
citizens, operators and the organized private sector groups. Year in year out, the government
of Tanzania and even local levels through budgetary allocations, policies have signified interest
and acknowledgement of the crucial role of the SACCOs sub-sector of the economy and hence
made policies for energizing the same.
Just as it has been a great concern to all and sundry to promote the welfare of SACCOs, it has
also been a great cause of concern to all, the fact that the vital sub-sector has fallen short of
expectation. The situation is more disturbing and worrying when compared with what other
developing and developed countries have been able to achieve with their Micro-finance
institutions. It has been shown that there is a high correlation between the degree of poverty,
hunger, unemployment, and economic well being (standard of living) of the citizens of
countries and the degree of vibrancy of the respective country’s micro-finance. If Tanzania was
to achieve an appreciable success towards attaining the Millennium Development Goals for
2015, one of the sure ways would be to vigorously pursue the development of its SACCOs.
Some of the key Millennium Development Goals like having the proportion of people living in
extreme poverty, suffering from hunger, without access to safe water, reducing maternal and
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