Socio Economic Context
With three relatively peaceful elections since 1995, Tanzania remains a good example of a deepening and stable democratic political entity. The country has seen strong growth since the late 1990’s, much supported by international aid and economic reforms undertaken. Despite the economic performance, Tanzania remains one of the poorest countries in the world, per capita gross domestic product in 2009 was USD 1,421 in purchasing power parity and life expectancy at birth was 55 years. It ranks 151st in the UNDP’s Human Development Index out of 182 countries.
Micro and Small Enterprises in Tanzania represent an important part of the economic fabric of the country. Recent studies estimate the number of urban MSEs at 2.7 million, with an annual growth of 100,000 new urban MSEs per year.
The Tanzanian microfinance sector was a slow starter when compared with other countries in East African region. It is only in the last ten years that thanks to a new enabling environment a large scale development of the industry has become possible. However, only a few of the existing microfinance institutions have reached significant outreach and loan portfolio.
Micro and Small Enterprises hence represent an important potential market for credit and other formal financial services, which commercial banks seem unable to serve adequately. On the other end, commercial banks and other traditional financial institutions have kept away from the MSE sector.
In this context, Advans Bank Tanzania appears as a very singular player. It focuses on meeting the demand for micro credit and other simple financial services in Dar Es Salaam but plans to quickly branch out to other major urban areas of the country. In the meantime, once it has a better experience and understanding of the market, Advans Bank Tanzania will introduce SME lending.