The role of informal microfinance institutions in saving

Primary Education (UPE) in 1977. Universal health was adopted and resulted into the
expansion of rural health centers all over the country. More population became covered by
improved water sources. Aggregate cash crop growers’ income increased substantially partly
due to improvement of rural/urban terms of trade over 1967-1970 and in 1974-1084.
On the basis of wage distribution in formal sector during the 1967/1970-1994/1995 period,
Government and parastatals wages and salaries (by that time the Government and parastatals
were main employers) were relatively evenly distributed, with reduction of inequality coming
through substantial increase at the bottom; and application of modest progressive tax of wages
that take into account the cost of living (Bank of Tanzania, 1981). The ratio of average salaries
between top 10 percent employees to bottom 60 percent employees fell from 10.9 in 1965 to
8.6 in 1969, 4.7 in 1976, 3.5 in 1981 and 3.1 in 1985. Likewise, in parastatal sector, the ratio of
top 10 percent to bottom 60 percent employees fell from 6.8 in 1974 to 6.0 in 1981, 5.7 in
1985 and 4.8 1n i990.
These redistributive measures (in both rural and urban areas) in the 1967-1989 period enabled
to increase sustainability the share of private income and consumption expenditure received
by the lowest 20 percent households, in line with GDP growth. While real GDP grew to an
average of TZS 5,335.0 millions in 1968-71, TZS 6,488.3 millions in 1972-75, TZS 7,866.0
millions in 1976-79, TZS 8369.0 millions in 1980-83; and TZS 10,541.0 Millions in 1984-87;
the share of private income received by the lowest 20 percent.
Households were recorded at an average of 2.09 percent in 1965-68, 2.68 percent in 1969-72,
4.25 percent in 1973-76, 5.50 percent in 1977-80, 6.50 percent in 1981-84 and 5.31 percent in
1985-88. The share of private consumption expenditure received by the lowest 20 percent
households increased from an average of 3.70 percent in 1965-68, to an average of 5.72
percent in 1969-72, 7.45 percent in 19973-76, 9.12 percent in 1977-80, 9.20 percent in 1981-
84 and 9.70 percent in 1985-88.
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