Enabling Environment for Financial Co-Operatives in Rural Tanzania: Beyond Co-Operative Principles

Abstract

Financial access is critical for the development of rural Africa including Tanzania. Huge numbers of rural inhabitants in Africa live in poverty and marginalized in all aspects of development. Besides, people residing in rural areas of Tanzania similar to other parts of rural Africa have been excluded over the years from access to financial services. The article mainly aims to ascertain enabling factors for financial co-operatives set up in rural Tanzania. This article employed qualitative methodology where critical review of secondary data was made and findings presented thematically. The analysis noted internal and external set of factors as enablers for financial co-operatives. The internal enabling factors include member empowerment, improved internal governance and innovation. On the other hand, external enablers include strengthened co-operative support institution, favourable policies, and regulations and finally stable economic, political and cultural environment. It is concluded that internal factors support both horizontal growth (new membership registration) and vertical growth (forming apex and networks) of financial co-operatives, while external factors mainly influence the set up of new financial co-operatives. It is recommended that all financial stakeholders and government to seriously invest resources in strengthening the internal and external set of enablers for financial co-operative set up.