Commercial Banks of Tanzania and Poverty Alleviation through Microfinance

This paper discusses how commercial banks could help develop the microfinance sector in Tanzania.

Commercial banks dominate financial markets in most countries. They have finance and infrastructure and should, therefore be involved in microfinance. The paper states that:

• Any impact that microfinance can have on global poverty alleviation will be negligible without commercial banks’ involvement;
• Microfinance can meet demand for funds if commercial banks are willing to change their attitude towards microfinance and become important actors;
• Tanzanian banks such as Akiba Bank, Tanzania Postal Bank, Mkombozi Bank and National Microfinance Bank offer microfinance services and products for poverty alleviation;
• Commercial bank involvement in microfinance in Tanzania will enable microfinance to be a critical element of an effective poverty reduction strategy;
• Poor infrastructure, lack of transparency and corruption are the main constraints to investing in microfinance in Tanzania.

Poor people in Tanzania can smooth their consumption, manage risks better, build assets, develop microenterprises, enhance their income earning capacity and enjoy an improved quality of life through the efficient provision of savings, credit and insurance facilities. This would help alleviate poverty in Tanzania.