The Minister upholds BoC initiative program for poor people

THE Minister for Community Development Ms. Sofia Simba has congratulated Barclays-Plan-CARE joint initiative program known as Banking on Change (BoC) that is aimed at penetrating financial services to poor people in Tanzania. The Minister gave the call last week in Dar es Salaam at a cork party organized by the Barclays Bank to celebrate the successes of the Banking on Change (BoC) initiative, saying that the program has brought significant improvement of the lives of the people in six urban districts in the country. BoC initiative has been implemented in Mwanza urban, Dar es Salaam urban, Geita, Kibaha, Kisarawe and Ifakara districts respectively being pilot projects since its inception in 2009. It has been going on for almost three years and aims to improve the quality of life of poor people by extending and developing access to financial services. Indeed it has brought together expertise, financial resources and independent interests for the common good. The Managing Director of the Barclays Bank Tanzania branch, Maina Kihara noted during the occasion that, “BoC initiative is an example of a PPP that is working and truly making a difference in households in Tanzania. The initiative according to him, seeks to address the concerns of financial literacy, entrepreneurship, and job creation so that people at grassroots level are learning to save, lend to one another and develop the discipline needed to be able to transition into the formal economy. According to him, the penetration of financial services in Tanzania has been limited mostly to the urban areas. And even in the urban areas, the percentage of the population accessing any form of formal financial system is wanting. Explaining into details essence of the program, he recalled the last study published by Financial Sector Deepening Trust (FSDT) in 2009, and the picture may have improved slightly today with the increased number of players in the financial system.

THE Minister for Community Development Ms. Sofia Simba He says the percentage of the bankable population accessing formal financial services is smaGll. Coupled with that, however he noted that, Financial illiteracy, lack of physical presence of financial institutions are amongst the barriers that have been listed to explain this state of affairs. Banking on Change, focuses on savings-led finance whereby savings groups known as Village Savings and Loans Associations (VSLAs) are established. Through training and support from the implementing partner, Plan, the members of the groups learn not only how to save but also how to lend to one another. The groups select their own leaders, determine their own rules, structure and interest rates. The group members keep each other in check – hence they are self-moderating and self-selection groups which has meant that the rates of default among the members of any one group is low. After two years, the VSLAs graduate and aggregate to form Input Marketing Associations (IMAs) for the purpose of strengthening their groups and accessing additional resources. The IMAs are structured, registered at the district level hence recognised by local government. Currently the bank has more than 1,800 VSLAs and over 60 IMAs operating. Maina noted that, the bank's target in Tanzania is to form 2,400 VSLAs and reach a minimum of 60,000 households.