MICRO ENTERPRIS DEVELOPMENT

THE NEED FOR MICROFINANCE IN TANZANIA AND ITS IMPORTANCE;-
For the majority of Tanzanians, whose incomes are very low, access to financial services offers the possibility of managing scarce household and enterprise resources more efficiently, protection against risk, provision for future and taking advantage for investment opportunities for economic returns. For house holds, financial services allow higher standards of living to be achieved with the same resource base, while for enterprises and farmers’ financial services can facilitate the pursuit of income growth.

Savings services are among the most beneficial financial services for the low income people. Nearly all households need to serve to protect themselves against periods of low income and to cover large anticipated expenses (like school fees). Enterprises also need to store the value they accumulate from their profits until they can invest them to earn a higher return. More over, savings in financial form provide fund for investment by others. Thus, savings services can have a very broad outreach and value.

Credit services can perform some of the services as savings and can allow enterprises and families to make some important investments sooner. Enterprises uses credit ad a source of short term working capital and longer term investment capital. House holds use it to meet consumption needs, particularly during periods when income flows are low, such as during the off season before crops are harvested, and to make investments such as housing improvements.

In short, micro-finance addresses the financial needs of major sectors of the Tanzanian population. They are primarily facilitators rather than creators of the underlining economic opportunities that lead to widespread economic prosperity. Micro-finance services are financial in nature. They differ materially from social welfare and resource transfer policies, although they can contribute to the reduction of poverty and improvement of income distribution.