COMMERCIAL OF AND POVERTY ALLEVIATION THROUGH MICROFINANCE

By KYANDO Eusebius1

Abstract

Commercial banks dominate the financial markets in most countries. They have finance and infrastructure. Therefore, it is essential that they should be involved in microfinance. Without Commercial Banks’ involvement in Microfinance Market, any impact that microfinance can have on global poverty alleviation will be negligible. The demand of funds in microfinance can be met if commercial banks will be willing to change their attitude towards microfinance market and hence become important actors. Some Banks in Tanzania such as CRDB , Akiba Bank, The Tanzania Postal Bank, The Mkombozi Bank and National Microfinance Bank have shown their willingness and interest in this market by offering Microfinance Services and products for the purpose of poverty alleviation. This will enable Microfinance to be a critical element of an effective poverty reduction strategy. Efficient provision of savings, credit, and insurance facilities in particular can enable the poor people in Tanzania to smooth their consumption, manage their risks better, gradually build their asset base, develop their micro enterprises, enhance their income earning capacity, and enjoy an improved quality of life. This indeed constitutes what is called poverty alleviation.

Key words: Microfinance, Poverty alleviation, financial exclusion/inclusion, Sustainability

JEL Classification: G22-23, H81, H132, L31, N86

1. Introduction

According to the World Bank reports about 1.1 billion people live in extreme poverty for less than US$ 1. The extreme poverty being in the developing countries of which 9% are from East Asia and the Pacific and 41% are from Sub-Saharan Africa2. Tanzania remains one of the 10

1 Eusebius Kyando is a lecturer in the Faculty of Business Administration at St. Augustine University of Tanzania in Mwanza-Tanzania

2 Deutsche Bank Research, December 19, 2007 poorest countries in the world. Poverty remains widespread and deep, with half of Tanzanians living under conditions of deprivation, concentrated in the rural areas. According to CGAP, extremely poor people who do not have any stable income such as the very destitute and homeless should not be clients of microfinance because they will only be pushed further into debt and poverty by that they cannot repay .

However, there is another group of relatively poor people. This group constitutes economically active people who can act in an entrepreneurial way but lack opportunities to explore their capabilities because governments and financial institutions such as commercial banks have been denying and leaving them without essential infrastructure and financial facilities. In some countries this group has become a prey of some grid money lenders and those engaged in usury. For instance, a shark in Philippine charges an annualised interest rate up to 1000% for a monthly loan.3 Microfinance has been the rescuer of this category of people in various places in the world including Asia, Latina America, Eastern Europe and Africa.

For more than 40 years now microfinance has been recognised worldwide as a tool for poverty reduction in both developing and developed countries. The main service of microfinance has been the provision of microcredit. The contributions of organisations like that of Grameen Bank, Accion International, and Opportunity International, have been impressive. However, the precise natures of contributions seem to be less clear. It is an area which requires more research.

Today there are more than 2,000 Microfinance Institutions in Tanzania which include credit unions, Cooperatives, NGOs, government agencies, private and commercial banks.

Despite the increase of these institutions, the demand for microfinance services and funds is still high. The demand of funds in microfinance can be met if commercial banks will be willing to change their attitude towards microfinance market and hence become important actors. Mr. Bill Clinton the former President of the United States of America had this advice to banks:

3 The Economist, November 5, 2005 “I think it is quite important to get more of our traditional banking institutions involved in bringing microfinance to the necessary level of density to have an impact on the individuals’ lives of those who receive the loans”.4 Banks are the key to economic development because they channel society’s savings to entrepreneurs. On the other hand, microfinance can play an important role in financial development by strengthening the link between economic growth and poverty alleviation (Bar, 2000).

2. Why Commercial Banks did not involve in Microfinance Market before?

Microfinance for most commercial banks was seen to be too risky because small businesses and microenterprises were perceived as bad credit risks. The perception is that small clients do not have stable, viable businesses for which to borrow and from which to generate repayment. Additionally, these potential clients lack traditional collateral to guarantee their loans. The size of loan required by micro-borrowers poses another obstacle. It is very costly to manage small loans because of absence of economies of scale. For instance, making a loan of €100 and €100,000 will require the same management costs but the latter will provide more return. This is the reason why MFIs charge high interest rates (15%-70%). Furthermore, most micro-borrowers cannot keep business records to demonstrate cash flows. Furthermore, Commercial banks are answerable to their shareholders, who demand maximum returns. Most do not feel that microfinance will guarantee them this. The organisational structures, procedures, products and methodologies of commercial banks are not suited to microfinance, and changing them can be difficult, time consuming and expensive. There are significant cultural barriers to be overcome; staff and managers of commercial banks often still perceive the poor as unbankable, and the ways of working required to reach out to them as unbecoming for professional businesspeople like themselves (Baydas, Graham & Valenzuela, 1997).

4 It was cited from, “Moving on Up” by Jaime Pozuelo-Montfort, “Banking for the poor through microfinance”. 3. Why Some Commercial Banks are interested in Microfinance today?

A 2005 CGAP survey identified over 225 commercial banks and other formal financial institutions that are engaged in microfinance5. One of the reasons why banks have only recently focused on microfinance is that the strong and structured demand on the part of micro- borrowers has now come fully to the forefront; hence, banks are called upon to provide concrete responses by widening their scope of action. However, Glenn D. West (2006) provides other reasons for commercial banks entering into microfinance markets.6 These reasons include the following: The growing competition in the traditional banking market in serving large and medium size firms. The perceived profitability of microfinance due to some examples of profitable MFIS. For instance, according to Micro-banking Bulletin7 (Issue 11, August 2005) of 52 Latin American MFIs reporting for 2003, the median adjusted ROA was a very respectable 1.8 percent and the median adjusted ROE was 9.5 per-cents. In December 2004 the average ROA and ROE values of the 30 leading MFIs tracked in Latin America were 4.4 and 17.7 percent, respectively, while the maximum values were 17.5 and 48.7 percent, respectively. In Tanzania, according to a 2008 annual report, the CRDB Microfinance Services Company (CRDB MF8) made an annual profit, before taxes, of USD 192,000 Some Commercial Banks enter into microfinance as a diversification strategy. By making loans to thousands of small borrowers, the micro-lending portfolio itself achieves substantial diversification. In addition, the performance of the micro-lending portfolio may have low correlations with traditional bank business lines due to the very different

5 Isern, Ritchie, Crenn, and Brown, “Review of and Other Formal Financial Institution Participation in Microfinance,” 2003.

6 Glenn D. West, “Strategies and Structures for Commercial Banks in Microfinance”, Publication of the Inter- American Development Bank, August 2006.

7 The Microbanking Bulletin is the premier source of high-quality information on the microfinance industry worldwide and now covers over 200 MFIs (www.MIXmarket.org)

8 CRDB MF founded in 2004, is the microfinance division of CRDB Bank Tanzania nature of the clients and activities and the resilience of micro-entrepreneurs and micro- lending in times of economic recession. In some countries like Tanzania, banks have been compelled by their governments to provide , especially credit, to sectors such as small or agricultural enterprises that are considered social priorities. Using moral or legal compulsion generally has not led to sustainable models of service provision. However, increasingly, commercial banks are investigating for themselves potential market opportunities. The availability of free or cheap donor technical assistance to banks wishing to enter this field. By serving the poor, banks may burnish their public image. The rise of consumer lending in a number of countries has sometimes stimulated banks to enter micro-lending given the similarities between the two in providing large numbers of borrowers with relatively small loans.

Despite the impressive expansion of the microfinance industry since then, there are still vast pools of unserved clients in most Latin American, Asia and African countries. CGAP estimates that there are up to 3 billion potential clients in the microfinance market9.

Commercial Banks are involved in microfinance in four different ways. First, banks grant micro- loans directly to the poor. Secondly, banks provide funds to MFIs. Third, banks distribute microfinance investment vehicles (MFIVs). Some banks like Deutsche Bank or Citibank are active in securitisation of MFIs’ loan portfolio.

(a) Commercial Banks provide funds to MFIs Commercial banks work in a kind of partnership with microfinance institutions. Banks can lend to microfinance institutions in the form of wholesale banking, and in turn, MFIs can employ the capital to lend to the poor. In the partnership, the bank usually provides the loan funds, technology and evaluates the pricing and the levels of risk involved with the loans. On the other

9 See also in: www.cgap.org/commercialbanks/profiles.html hand, the MFIs undertake the origination, monitoring and collection of the loan. With the greater amount of capital comes the increase in loan sizes, and the more branches a bank has, the greater the outreach achieved through geographical expansion. Below is a good example of a typical loan structure given to MFI and MFI in turn provides the loan to entrepreneur: Figure 2: Loan Structure

“A Typical DB MDF Loan Structure”10

Donation, is another example where banks support MFIs. For example, -based CRDB Bank has offered in May this year over Tshs 200m/- loans to workers Savings and Credit Co- operative Society (SACCOS) in the Ministry of Health and Social welfare to support anti-poverty individual initiatives by employees11. In Asia, the institutions financed by Citigroup during the financial crisis have seen their reimbursement rate grow from 94% to 97%. Additionally, the bank’s personnel can also provide mentoring to MFIs in terms of improving the operational efficiencies of the organization and making it aware of standardized international practices in the world of finances if the bank has reached such a standard.12

10 Deutsche Bank Microcredit Development Fund, Report of Activities, page 3

11 http://allafrica.com/stories/201005171652.html cited on 14/09/2010

12 PlaNet Finance, the Microfinance Platform (http://www.planetfinance.org (b) Commercial Banks distribute MFIVs

MFIVs are special purpose investment vehicles with the aim of mobilizing funds from commercial, private, institutional and even social investors and run by professional managers to provide funding for microfinance institutions( MFIs), creating an otherwise unthinkable bridge between internal capital markets and financial entities in developing countries13.

Some commercial Banks distribute MFIVs. For instance, Credit Suisse offers the Responsibility Global Microfinance Fund and Deutsche Bank which was the first commercial bank to establish a vehicle for MFIs in 1998 through its philanthropic arm, Deutsche Bank Americans Foundation. It is estimated that in 2006 there were already about 74 Microfinance Investment Vehicles.14

(c) A bank downscales its operations to microfinance / SME Banking In this case a commercial bank grants directly micro-loans to micro-borrowers. In Tanzania, direct-micro loans to micro-borrowers are very rare as commercial Banks prefer group lending for loan security purposes. It can provide this service together with other traditional services or open a separate counter for this purpose but under the same management control or a separate management.

(d) Banks’ equity investment in Microfinance

There are two scenarios. In the first scenario, a bank normally creates its own subsidiary specialised in microfinance. Examples include: RealMicrocredito & ABN-Amro in Brazil; Bosnie : Procredit Bank & Commerzbank and Bulgarie : Procredit Bank & Commerzbank in Eastern Europe; Finadev & Financial Bank in West Africa.

In the second scenario, a bank participates in the running of the already established microfinance. For example, CRDB in Tanzania.

13 Ibid.

14 Deutsche Bank Research 2007. Figure 4: Commercial Banks in Microfinance Model

COMMERCIAL BANKS IN MICROFINANCE

BANCARISATIONN MICROFINANCE Get the basics right-core

Have finance, lending product, Integrate Strong on infrastructure, product offerings, build deep want to sell micro-lending multi-products distribution—branches, methods, Do not know partnerships, technology. Focus Strong micro-lending distribution in Need change in on outreach, innovation, the rural areas, attitude domestic financing new to savings, other asset products

• Nee d The figure above shows how a commercial bank involved in microfinance canstrat offer successfully egy, microfinance services by using its strengths of finance and infrastructure. Theprod commercial bank ucts, also depends on the microfinance skills from microfinance institutions. struc These skills include ture strong micro-lending methods and strong distribution channels in rural areas.s, man age men 4. The Need for Microfinance in Tanzania t for grow Tanzania is a large and populated country with underdeveloped financial infrastructure.th It has a population of about 43 million people, 75 percent of whom live in the rural• Nee areas and majority d of whom earn less than one dollar a day. There is a huge unsatisfied demanddom for financial estic services both in rural and urban areas of Tanzania. curr 15 ency The Fin Scope survey conducted in 2006 in Tanzania (21 million people) indicatedfinan that a large cing segment (54% overall; 45% of urban, 57% of rural) of the adult population had no access to financial services, either formal or informal (overall, 9% had a formal bank account (11% men,

15 Triodos Facet (www.triodosfacet.nl), Tanzania Country Scan Microfinance for Hivos/MicroNed, December 2007 5% women, 16% urban, 4% rural), 2% had access to semi-formal finance (NGOs, SACCOs) and 35% had access to informal finance like ROSCAs/ASCAs and moneylenders – these categories are mutually exclusive). Only 20% of the population had access to formal bank. Therefore, financial institutions which are inclusive are needed for poverty alleviation.

Following the World Social Summit held in Copenhagen in 1995 with an agenda of poverty eradication, Tanzania developed plans to support the Summit’s agenda through its Development Vision (2025). However, the government of Tanzania recognises that the provision of sustainable, all inclusive financial services in one of the critical ingredients in achieving the poverty eradication goals. Therefore, initiatives for the financial sector reforms started in 1986 whose implementation commenced in 1991. The financial reforms inter-alia included liberalisation of interest rates, elimination of administrative credit allocations, strengthening of the ’s regulatory and supervisory role and allowing entry of privately owned financial institutions. Public awareness with respect to microfinance was initiated by the of Tanzania. This resulted in some of the commercial banks and non-banks financial institutions reaching the lower end of the financial market. As a consequence the range of service provider institutions widened including both regulated and non-regulated institutions, NGOs, Savings and Credit Cooperatives Societies (SACCOS), and the growing money transfer facility offered by Vodacom Tanzania-the M-pesa (mobile banking). Recognising the importance of microfinance, during 2000 the government of Tanzania developed the National Microfinance Policy with the aim of enabling low-income earners, who suffers from financial exclusion, to access financial services through microfinance institutions16. According to Rubambey G.C (2005), the salient features of the National Microfinance Policy relevant to the regulatory and supervisory framework include the following: a) Microfinance will increasingly be an integral part of the financial system, hence the need to adopt a financial systems approach;

16 Wangwe and Semboja, 1997; Toroka and Wega, 1997 b) Microfinance is part of the country’s financial markets whose behaviour is governed by market forces; c) Microfinance is a line of business that can be undertaken by diverse institutions (including commercial banks) applying a variety of service delivery methodologies; d) Microfinance service providers should be at the centre of the implementation of the policy; and e) The government’s role is creation of an enabling environment, not provision of financial services. By February 2007, there were already about 3500 SACCOS country wide, 72 Financial NGOS and 11 banks with microfinance window17.

6. Commercial Banks that accommodate microfinance operations in Tanzania Once the National Microfinance Policy was implemented in 2001, microfinance was officially recognized as a tool for poverty eradication and with its increased use and exposure to the country; commercial banks have taken an interest in offering microfinance services. The National Microfinance Bank (NMB), the , the CRDB Bank, the Tanzania Postal Bank and the new Mkombozi Bank are big supporters of microfinance in Tanzania.

6.1. The National Microfinance Bank NMB currently has 104 branches and agencies in nearly every district of Tanzania (currently only 12 branches accommodate microfinance operations). It plans to add 16 more branches and offices that can offer microfinance services. Aside from being a large bank, its microfinance operations are of considerable stature. NMB’s outstanding microfinance portfolio stands at Tshs 907.5 million (693,000 USD) at the end of 2001, with an average of Tshs 323,000 (246 USD) per account18. NMB encourages and expands microfinance in three ways:

17 Tanzania Bankers Association Newsletter, Sept 2007, Vol.2, issue 3

18 http://en.wikipedia.org/wiki/Microfinance_in_Tanzania, cited on 17/11/2010 a. Loans to micro and small enterprises for the purchase of inventory and supply of goods b. Collection and payment services to large corporate clients to/from micro and small enterprises c. Add-on services such as money transfers and payroll services to both the large corporate clients and micro and small enterprises19

6.2. AKIBA Bank (Akiba is a Swahili word for savings) AKIBA has taken a relatively risky approach to microfinance by embracing and expanding it within their practices. The microfinance products offered at AKIBA are savings deposits, group and individual micro enterprise loans. It is the first commercial bank to pioneer microfinance in Tanzania and has seen a great amount of success with outstanding loans at Tshs. 18 billion (13.7 million USD), 4 billion of those being individual micro loans and the remainder being loans to groups or businesses. The minimum loan is Tshs. 200,000 (150 USD) and the maximum loan remains at 10 million Tshs. Women create over 50% of 12,200 borrowers and generally borrow between Tshs 20,000 and 500,00020. Being a bank without as much outreach as a bank such as the National Microfinance Bank, AKIBA has an easier time focusing on its microfinance operations. 6.3. CRDB Bank PLC CRDB stands for Cooperatives Rural and Development Bank. However, it is not a cooperative. This privately owned bank is one of the oldest banking institutions in Tanzania. CRDB Bank is different from the other banks in that it primarily provides loans to microfinance institutions such as SACCOS (the largest type of MFI in this program). CRDB Bank as a more conservative bank has taken this approach in order to reduce their risks in microfinance by loaning to groups such as SACCOs instead of micro and small enterprise borrowers. CRDB Bank provides SACCOs with financial stability. CRDB’s total assets were as of June 2003 US $370 million. Its total customer deposits accounted for US$ 330 million. Its pre-tax profit was US$ 7.4

19 Ibid

20 Ibid million. And its total loans and advances (including microfinance loans to smaller microfinance institutions) was US$ 60 million. Microfinance services offered by CRDB Bank PLC include the so called Safirisha TM Pesa (Send money safely, faster, anywhere). This is a service of transferring funds from MFI’s accounts to beneficiaries in and out of CRDB Bank’s network safely and fast. Other products are MF Juhudi21 Account which allow withdrawal and overdraft facility. However, the targeted clients are only the Affiliate Microfinance Institutions. The account may be accessed through CRDB Bank’s country wide branch network, Internet banking and CRDB Bank’s Mobile (cellular phone) banking22. By 2007 CRDB was already working with more than 350 local partner intermediaries in Tanzania mainland---in all the regions and more than 71 districts Individual beneficiaries are more than 220,000 of which 48% are females Partner institutions have been able to disburse more than 200 billion to their members The bank has cumulatively disbursed loans amounting to Tshs 104 billion and have an outstanding loan amounting to Tshs 55 billion23

6.4. Tanzania Postal Bank (TPB) The Tanzania Postal Bank is the 4th commercial bank that is involved in microfinance. The main advantage of TPB is that it offers convenient savings services to those in rural areas due to its widespread presence throughout the country. The Tanzanian Postal Bank also offers various types of loans ranging from personal, instalments, short-term and micro-credit (offered to groups). TPB’s loan portfolio mainly consists of working capital financing, bridging finance, commercial transport loans, crop financing, export-import financing, guarantees and bonds, direct personal loans, employer collective guarantee scheme and group-based loans24.

21 Juhudi” is a Swahili word for efforts

22 http://crdbmicrofinance.co.tz/ cited on 17/11/2010

23 Tanzanian Bankers Association Newsletter, Sept 2007, Vol.2, Issue 3

24 http://en.wikipedia.org/wiki/Microfinance_in_Tanzania, cited on 17/11/2010 6.5. Mkombozi Commercial Bank (Mkombozi is a Swahili word for saviour) Mkombozi Commercial Bank is a bank owned by the Catholic Church in Tanzania. It was launched recently on the 15th of May 2010. Among its financial services the bank offers also microfinance. The main microfinance products include the following25: 6.5.1. Solidarity Group lending This product targets micro and Small Entrepreneurs operating in formal and informal sectors. This facility is characterised by social collateral because majority of small entrepreneurs lack physical collateral to pledge against their debt. The minimum loan amount for the group is Tshs 200,000/=. 6.5.2. Jumuiya Account (Jumuiya is a Swahili word for a community) The target group for this product are the Small Christian Communities, Choirs, and Vocational Associations under the Catholic Parish Jurisdiction. The Jumuiya Account offers deposit facility with a minimum amount of Tshs 50,000/=. 6.5.3. Business Loans This product targets small and medium size enterprises. It offers a minimum loan of Tshs 500,000.

7. Conclusion

The current growing trend of commercial banks down-scaling and entering into microfinance (both at the wholesale and the retail level) is both socially and profit oriented. Microfinance has proved that the poor people are bankable in Africa, Latina America, Asia and Eastern Europe. There are successful microfinance banks like ASA, BRAC and PROSHIKA26 in Bangladesh. For instance, ASA up to June 2008 its cumulative Loan disbursement has been TK. 284,686 million (US$ 4,126 million) while loan outstanding (principal) is TK. 29,182 million (US$ 423 million)

25 http://www.mkombozibank.com/ cited on 17/11/2010

26 PROSHIKA is a Bangladesh NGO aiming at creating group self development processes in rural poor through self organizing, becoming critically conscious of their position and making united and collective efforts to improve their socioeconomic condition. among almost 5,675,784 borrowers. At the end of 2007 ASA's Operational Self Sufficiency (OSS) was 175.51%, Financial Self-sufficiency (FSS) 121.44% and rate of loan recovery 99.32%.27

Microfinance has shown that it is also possible to profit in investing/banking in the poor. The demand for microfinance services is still high. These are opportunities also for commercial banks taking initiatives in banking at the bottom of the pyramid. The poor need also other services from microfinance not only micro-credits. They need services such as savings and insurance which commercial banks are well versed.

Commercial banks may work efficiently in poverty alleviation if they work in partnership with local Microfinance Institutions which have the skills of working with the poor. Their participation in microfinance also requires that they first and foremost have an extensive network of branches, an understanding of local cultures, make use of economies of scale and train their credit agents for a successful monitoring of a loan.

There are still some challenges in investing in Microfinance in Tanzania. The poor infrastructure, lack of transparency, and corruption are the main stumbling blocks. Some microfinance institutions are unsuccessful because of poor infrastructure, poor governance, unworthy intermediaries. There is a need to invest more in infrastructure and education in order to pave way for efficient and effective performance of microfinance services such as savings, insurance and micro-credits. For microfinance to bear the predetermined fruits needs a cost-effective and sustainable model. Therefore, Commercial Banks should not channel only funds to Microfinance Institutions but also banking skills.

27 Visit: http://asa.org.bd/ 8. References:

Baydas M, Douglas H. Graham, and Liza V. 1997. Commercial Banks in Microfinance: New Actors in the Microfinance World

Baue, W., 2005, Consortium Advances Microfinance, an Emerging New Asset Class, Social Funds, 9 November: cited in Pozuelo, J. Moving On Up: Banking for the Poor through Microfinance

CGAP, The Consultative Group Assisting the Poor (The Microfinance Gateway: Http://www.microfinancegateway.org cited on 17/11/2010)

DEUTSCHE BANK, Microfinance An Emerging Investment Opportunity, working paper, December, 2007( www.dbresearch.com cited on 18/11/2010)

Deutsche Bank Microcredit Development Fund, Report of Activities (2001), http://www.db.com/csr/de/docs/eng_csr-report-americas_2001.pdf cited on 18/11/2010

Glenn D. West, “Strategies and Structures for Commercial Banks in Microfinance”, Publication of the Inter-American Development Bank, August 2006. http://allafrica.com/stories/201005171652.html cited on 14/09/2010 http://en.wikipedia.org/wiki/microfinance_in_Tanzania cited on 17/11/2010

Isern, Ritchie, Crenn, and Brown, “Review of Commercial Bank and Other Formal Financial Institution Participation in Microfinance,” 2003

Micro-banking Bulletin (www.MIXmarket.org, www.cgap.org/commercialbanks/profiles.html: cited on 17/11/2010)

PlaNet Finance, the Microfinance Platform (http://www.planetfinance.org: cited on 17/11/2010)

Pozuelo-Montfort J, “Moving on Up: Banking for the poor through microfinance” (http://marriottschool.byu.edu/esrreview/standalone/Monfort_Moving_On_Up_- _ESR_Review.pdf cited on 18/11/2010)

Rubambey, G., (2001) “Tanzania National Micro Finance Policy”, A Paper Presented at the 5th Annual International Conference on entrepreneurship and Small Business Development (ICAESB), White Sand Hotel, Dar es Salaam. Tanzania Bankers Association Newsletter, September 2007, Vol.2, issue 3

The Economist, November 5, 2005, quoted in DEUTSCHE BANK, (2007), Microfinance an Emerging Investment Opportunity, working paper, December, (www.dbresearch.com cited on 18/11/2010)

Triodos Facet, Tanzania Country Scan Microfinance for Hivos/Micro Ned, December 2007 (www.triodosfacet.nl cited on 18/11/2010

Toroka E. B. and Wenga (1997) “Small Industries Development Organization: Tanzania Experience with MSEs Development”, A paper presented to the workshop on Micro and Small Enterprise Research, November, Dar es Salaam

Wangwe, S. and Semboja H. (1997) “Establishing Micro and Small Enterprise (MSEs) Research Programme”, A paper presented to the workshop on Micro and Small Enterprise Research, November, Dar es Salaam.

9.0. Appendix- Acronyms

ABN AMRO-Algemene Bank Nederland- Amsterdam-Rotterdam Bank

ASA Association for Social Advancement

ASCAS Association of Small Collectors of Antique Silver

BRAC Bangladesh Rural Advancement Committee

CGAP Consultative Group to Assist the Poor

CRDB Cooperative Rural Development Bank

DB MDF Deutsche Bank Microfinance Development Fund

FFS Financial Self-Sufficiency

JEL Journal of Economic Literature

MFIs Microfinance Institutions

MFIVs Microfinance Investment Vehicles

M-Pesa M-Mobile, Pesa-Swahili word for money

NGOs Non-Governmental Organisations

NMB National Microfinance Bank OSS Operational Self-Sufficiency

ROA Return On Assets

ROE Return On Equity

SACCOS Savings and Credit Cooperatives Societies

SME Small and Medium Enterprise

TPB Tanzania Postal Bank