The state of women’s financial inclusion in Tanzania

By Anna J. Mushi, Contributing Writer

Tanzania’s smallholder farmers are the most underfinanced group in the country, but improved agricultural and financial sector policies, enhancement of capacity of financial service providers to appraise agri-related loans and raising awareness of farming technology could improve the amount of credit they receive and help them increase their production, says a recent report.

The agricultural sector in Tanzania contributes significantly to the economy, job creation and food security. However, despite the country’s steady economic growth, farmers still struggle to obtain sufficient credit because the agricultural sector is considered high risk by lenders.

A Credit Diagnostic report by the Financial Sector Deepening Trust (FSDT) says improved policies and raising farmers’ awareness of farming practices and irrigation technologies could improve productivity; henceforth, providing farmers a more credit-worthy reputation and open increased access to credit from lenders.

Demographics for women in Tanzania

  • 51% of the population
  • 54% of the population aged 60 and over and 62% of those aged 80 with life expectancy at age 60 and over of about 3 years greater than for men
  • 6% more women than men have no formal education leading to 18% who are non-formally educated
  • Lag behind men in their abilities to read and write in Swahili (67% vs. 78%) and English (22% vs. 31%) and their numeracy skills were significantly below national average (37% for division against the average of 46%)
  • Agriculture is the main income-generation activity for women (36%), closely followed by casual labour (16%)
  • 28% of women remain mainly dependent
  • 15% of women are business owners, mainly in non-agricultural trade and they account for 54% of all micro, small and medium-sized enterprise (MSME) owners (MSME Survey 2010)
  • Median income of women (TZS 36,667) who are involved in revenue generating activities is half that of men
  • 6 out of 10 women do not own a mobile phone

Taking the demographic data as a whole, it is clear that women face considerable challenges in accessing financial services due to their lack of literacy and numeracy and, despite their business activity, they face a wide range of social, cultural and economic challenges in accessing financial services. As digital financial services have made such an impact on the rise in financial inclusion, 40% of women are being excluded as they perceive mobile phones to be too expensive.

Women’s financial product and service usage

Women mainly use their income on household goods such as investing in their children’s education, nutrition and health, and, although they are able to cope with such responsibilities by using appropriate cash flow management tools, FinScope Tanzania 2017 shows that less than half of women (43%) in Tanzania have saved or borrowed in the past 12 months.

FinScope Tanzania 2017

The figure above shows the significant gender gap in the uptake of financial services by women. The gap is highest in the uptake of mobile money and banking services. Furthermore, the graph indicates that women are more likely to participate in savings groups than men.

Women are more likely to borrow and save for cash flow smoothing purposes and less for investment in productivity and asset building. The majority of women save at home (47%) or in savings groups (25%) and predominantly borrow from family/friends (63%) and savings groups (25%). In most cases, they receive money and make payments in cash, however 5% of women receive the money they spend through mobile money, which are mainly linked to domestic remittances.

Broader challenges facing women

Women face a complex mix of challenges in their day-to-day life at both household and community level as well as in major economic activities. Although some of these challenges might not have a direct link to women failing to derive value from the usage of financial services, they, in one way or another, play a major role in holding back women from optimizing their capabilities and opportunities. Addressing such challenges might result in a higher involvement of women in economic activities and, as a result of that, in the financial sector.

In order to unpack the problem statement, a list of specific barriers towards women taking up financial services and deriving value from using them is outlined below;

  1. High levels of financial exclusion
  2. Lower levels of confidence in dealing with financial service providers
  3. Less women access formal education and those who access have lower levels of literacy/numeracy
  4. Women are less likely to own a mobile phone
  5. Low levels of participation in revenue-generating activities
  6. Women’s workforce participation is leaned towards informality
  7. Social and cultural norms confine women to specific roles
  8. Huge wage/income gap with the median income of a women at 50% of that for men
  9. Preference towards informal financial transactions
  10. Lack of assets (e.g. land)

Financial service provision for women

All formal financial service providers require their customers to have a recognised form of identification. FinScope Tanzania 2017 found out that majority (84%) of Tanzanians have the voter’s card and there was no significant difference in the ownership of the voter’s ID among men and women.

Furthermore, asset ownership is key to accessing both long and short-term credit from a majority of financial service providers and a requirement for many financial services under Know-Your-Customer regulations. In order to assess whether Tanzanian women own assets and have a proof of ownership of those assets, FinScope Tanzania 2017 found out that only 28% of women claim to personally own land, while land ownership for men is at 47%. Further to that, only 2 out of 10 women who personally own land claim to have proof of ownership.

Constraints on Strategies to improve women’s financial inclusion

FSDT Women’s Strategy, 2018

The constraints facing women, service providers and policy makers to include women in the financial sector are complex and deep-rooted. The government of Tanzania has been working to address them through the National Financial Inclusion Framework and has set a target to increase the proportion of women with financial access from 63% to 71% by 2022. The framework, based on evidence from studies and reports, adopts a holistic approach to address challenges and barriers from the demand and supply sides and within the legal and regulatory environment to encourage new appropriate and affordable solutions to enter the market and to build women’s capacity to understand and derive value from financial services and products.


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