Improving the lives of the poor in Cities through Micro financing

Discussions in the on gone Habitat JAM forum that took place at Tanzania Global Development and Learning Centre (TGDLC), ranged from how poor families can achieve financial security to how a company can make a real difference in the environment and the community development. Analyses NYASIGO KORNEL.


Experts shared ideas on how to finance sustainable business and infrastructure projects and how to include social and environmental factors into investment decisions.

The JAM forum looked at how city governments plan and coordinate sustainable growth and the role of people, companies and other groups in making decisions that affect our communities.

It also explored how technology can help people in cities and discuss its affect on improving the lives of the poor.

According to the discussants, money and power are tools to help improve the lives of people in cities. The third session of the World Urban Forum will discuss the theme “Sustainable Cities: Financing Development for All,” looking at how local action and city-level decisions influence the environment and the role of private sector and technology.

Ideas from in the on gone forum of the Habitat JAM fed into and influence this theme.

Microfinance also emerged as an important component of improving the lives of urban slum dwellers and creating local economic opportunities, particularly in informal economies and developing countries that do not have well developed financial markets and abundant access to affordable credit. Internationally, microfinance institutions are playing a growing role in providing housing finance and micro-insurance.

Micro-credit is extending small loans to very poor people for self-employment projects that generate income, allowing them to care for themselves and their families. The Micro credit Summit Campaign brings together micro credit practitioners, advocates, educational institutions, donor agencies, international financial institutions, non-governmental organizations and others involved with micro credit to promote best practices in the field, to learn from each other, and to work towards reaching the goals.

Microfinance is an important component of improving the lives of urban slum dwellers and creating local economic opportunities, particularly in informal economies and developing countries that do not have well developed financial markets and abundant access to affordable credit. Internationally, microfinance institutions are playing a growing role in providing housing finance and micro-insurance.

Micro-credit is extending small loans to very poor people for self-employment projects that generate income, allowing them to care for themselves and their families. The Micro credit Summit Campaign brings together micro credit practitioners, advocates, educational institutions, donor agencies, international financial institutions, non-governmental organizations and others involved with micro credit to promote best practices in the field, to learn from each other, and to work towards reaching our goal

Research on Poverty Alleviation, REPOA, has recently published a research reports on microfinance in Tanzania titled “Assessing the Relative Poverty of Clients and Non-clients of Non-bank Microfinance Institutions in Tanzania: The case of the Dar es Salaam and Coast Regions.”

The overall objective of the study was to critically assess the relative poverty level of clients and non-clients of non-bank Microfinance Institutions (MFIs) using the Coast and Dar es Salaam as sample regions. The results were used to analyse the extent to which those MFIs which had a poverty alleviation related mission were reaching the poorest segments of their communities.

Since 1991, much of the financial sector reform agenda has been implemented and has had an appreciable impact where by CRDB, NMB, PBZ, NBFIs, SACCOS and NBC was underway.

A major constraint to the participation and contribution of poor and vulnerable households in economic growth is across to financial credit. Access to financial services permits individuals and households to better manage the risks and uncertainties they fact - to save in secure ways, to invest in a business or home, or to cope with or insure against unexpected shocks.

It has been estimated than more than 500 million people worldwide need access to financial services. However, formal financial intermediaries such as commercial banks often do not serve poor households for reasons that include the lack of traditional collateral, high costs of small transactions, and geographic isolation. Poor households’ access to financial services is generally limited to informal transfers or loans, either individually or through savings clubs, rotating savings and credit associations, and mutual insurance societies.
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Following the successes of some limited micro-enterprise credit programs supported by governments and donors from the 1950s-1980s, a more specialized micro-finance industry has gradually emerged. The institutions that provide micro-finance and credit services are diverse, including non-governmental organizations (NGOs), credit unions, non-bank financial intermediaries, and commercial banks. The loans and credit extended are typically small (“micro”). They are provided in varying contexts, either to individuals or groups, ranging from personal micro-credit, to small enterprise support and rural finance.

Among the continuing challenges faced by developing societies and the international community is to find ways to build the capacity of the micro finance sector to complement the existing informal and private institutions, promote access to those markets for the poor, and help ensure that they are sustainable.




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