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Transforming National Microfinance Banks for Inclusive Financial Growth

This text discusses the pressing need for national microfinance banks to address the financial exclusion of underserved communities. It critiques the urban-centric focus of commercial banks that neglect rural populations, emphasizing the importance of a national banking system accessible to all. The piece examines common misconceptions about the poor, government support roles, and necessary legal and infrastructural frameworks. It highlights successful interventions, critical mass demand, and the operational performance of microfinance initiatives, leaning on collaboration with organizations like the World Bank and the Ministry of Finance.

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Transforming National Microfinance Banks for Inclusive Financial Growth

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  1. Transforming Public Sector Banks National Microfinance Bank

  2. Why Bother • Development stops at the major cities Commercial Banks focus on urban areas and more formal sectors, leaving the “underserved” • Critical to the financial network of the country Everyone uses a national banking system Government Banks Private Sector

  3. Misconceptions • Commercial loans are necessary • Expensive centralized bank operating systems are necessary • Foreign training is necessary • The Poor don't save • The Poor don't repay loans

  4. Enabling Environment • Business Law • Labor Laws • Courts • Government Support

  5. Political • Perseverance to maintain business principles

  6. Market • Critical Mass of Demand • Opportunity for Key Products Remittances Savings Credit

  7. Labor • Availability • Adaptability • Mobility

  8. Business Infrastructure • Management • Suitable Technology • Branch Network

  9. External Support • World Bank • DAI • Central Bank of Tanzania • PSRC • Ministry of Finance

  10. Banks Comparative Performance as of December 31 2002

  11. BRANCHES LENDING

  12. Staff Training Man-Days of Training Conducted 2001: 3,013 Man-days 2002: 5,506 Man-days Attendance 2001: 763 individuals 2002: 981 individuals

  13. INFORMATION TECHNOLOGY • 70 branches automated • Core Banking System Implemented by year-end 2003 • Centralized accounts payable • Increased centralization of branch accounting

  14. Tony Singleton tony_singleton@dai.com

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