President Benjamin Mkapa has applauded micro-finance institutions for improving the livelihood of the poor who are usually left out by big banks in provision of credit facilities.
The very small loan of only a few dollars can assist a rural resident to acquire farming implements like, say a water pump to improve the productivity of his land, President Mkapa said.
Speaking yesterday in Berlin, the president paid glowing tribute to Aga Khan Development network at a function to award His Highness The Aga Khan Die Quadriga, a United We Care Award.
According to him, small loans assist poor households to develop by expanding their homes, sending children to schools, starting up businesses and so on.
And the historic pay back rate on micro-lending has been close to 99 per cent, he added.
Mkapa noted that micro-finance was a tool of empowerment and self-development.
It is also a tool of inclusion, helping the excluded to gain access to the benefits of the broader economy such as health, education, decent housing and the means of generating new sources of income, he said.
According to Mkapa, micro-credit has been tested; it has worked in many places and there are enough cases of best practice to justify a major international focus and boost to it.
We have a policy in Tanzania on this and we are also currently working on a programme to formalise the assets and businesses of the poor such that they can leverage their participation in the economy and access financing more easily, he said.