The role of informal microfinance institutions in saving

1.1.14.3: DONOR COMMUNITY
Currently donors are the main sources of capital, particularly start-up capital, for the provision
of microfinance services to NGOs. They also provide funds for capacity building. The
Government expects all donor programs supporting microfinance in the country to comply
with this policy. Donors will coordinate with each other and with the Government to ensure
that their programs embody common standards and complement other Government and
donor activities. Care will be taken by donors to ensure that NGOs that they support develop
sustainable operations so as to ensure the latter’s existence after donor support ends.
The International donor agencies will provide not only substantial financial resources to serve
as loan investment capital for microfinance NGOs but, even more importantly, technical
assistance for staff capacity building and technology transfer of regional and global best
practice in microfinance to an even broader range of institutional providers of microfinance
services. In this context they comprise a significant and influential stakeholder group in
Tanzania microfinance.
The Tanzania microfinance industry continues reliance and dependence on donor funds and
assistance is not viable, and that this particular resource is more likely to dwindle down and be
exhausted at an earlier period rather than later. While it may be true that, in a comparative
sense, microfinance under private initiative is a relatively new development in Tanzania (in
comparison to other countries), it may be prudent for the different stakeholders in the private
sector, in government and among the donor community to take on a sense of urgency with
respect from putting into action the different components that are available to place
microfinance development on a sustainable path. For instance, advisers and consultants can
assist in the construction and crafting of a legal and regulatory framework for microfinance but
the primary responsibility for understanding the requirements and incorporating these into the
design of the framework must belong to local stakeholders, and cannot be assigned to advisers
and consultants.
62