Informal Financial Services for the Rural Poor: Prospects and Challenges in Tanzania

Since the introduction of a cash economy, financial markets have been growing steadily in importance in all activities. Cash has displaced earlier in-kind transactions between individuals, and it has necessitated the services of financial intermediation between savers and borrowers. This has in-turn led to the emergence of financial institutions, which have evolved from being informal to being formal in nature. The former are generally considered to be rudimentary in nature and quite unlikely to spearhead any significant development.