Pesa kwa Wote – Focus Note

Lack of access and take-up of financial services within rural communities can be due to weak infrastructure which limits banks, and even microfinance institutions (MFIs), from justifying the time and cost to provide in providing savings and loans to farmers. As a result, financial access in these areas can be as low as 10%.

To address this supply-demand gap, the Financial Sector Deepening Trust (FSDT) has been working with CARE Tanzania, partner organisations and franchisees to develop informal financial services in underserved areas using the Village Savings and Loan Association (VSLA) methodology. This savings-based model has proved to substantially overcome the limitations of existing financial services, particularly for the rural poor. It not only provides savings and loans in a sustainable manner but can be used as an entry point to build social capital and to work towards addressing other developmental issues.