The role of informal microfinance institutions in saving

TABLE 9: Percentage of Income and Consumption Received by Lowest 20 percent Households
in Tanzania: 1961-1988.
% 1961-64 1965-68 1969-72 1973-76 1977-80 1981-84 1985-88
Percentage of
Consumption Expenditure
Received by Lowest 20
Percent Households
Percentage of Private
Income Received by 20
Percent Households
1.30 3.70 5.72 7.45 9.12 9.20 9.70
2.15 2.09 2.68 4.25 6.50 6.02 5.31
Source: Bank of Tanzania (1981): Tanzania, Twenty Years after Independence: 1961-1981., World Bank (Various Issues):
World Development Indicators; and estimates from National Household Budget Surveys (1957/58, 1968/69, 1976/77),
Ramadhani, S (2004); Growth, Income Distribution and the Living Standard of Average Households in Tanzania, PhD Thesis
Washington International University-USA.
(ii)Post 1989 Period
From the economy is characterized by high level of unemployment and poor redistributive
policies. Wage increase has been in favor of the top class rather than increasing the share of
wages and salaries accrued to lowest class of workers. Monetary agriculture in the post 1990
has also been declining due lack of micro-credits to small scale farmers, poor infrastructure,
lower producer prices and high cost of inputs. Though there has been fats growth of informal
sector, it has failed to increase substantially the share of income received by the lowest class of
households in the post 1995 period. Further, the poor redistributive policies in the post 1990
period have contributed to reduce the share of private income and consumption received by
the lowest 20 percent households.
While real GDP increased from an average of TZS 945,128.0 millions in 1986-89, to an
average of TZS 1,239,166.0 MILLIONS IN 1990-93, TZS 1,425,249.2 millions in 1994-97; and
TZS 1,621,306.2 millions in 1998-2001; the share of private income received by the lowest 20
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