Banks adapt to cater for the fast growing informal sector

Wednesday, June 22, 2005

It is evident from the Financial Times Banking Fair that banks are refining their offerings to small and medium-sized enterprises (SMEs) in Tanzania, the fastest-growing segment of the business market in the country.

The two-day Banking Fair was sponsored last week by this newspaper with an aim to bring together financial institutions and the public so that the lending-borrowing relationship is enhanced.

The government is also pushing for banks to increase access to finance for small businesses, which have been identified as a means of fighting poverty and to add momentum to economic growth.

The most recent initiative is the establishment of the Tshs. 2 billion SME`s Guarantee Fund by the government. The facility is intended to cushion against credit risk for SMEs, most of whom lack collateral.

However, limited access to information and credit, poor infrastructure and outdated systems often make it difficult for banks to lend to small business ventures.
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Source: IPP Media