Rural Women in Tanzania Build Financial Resilience Through Groups

For Mama Aisha*, every day on her one-acre farm in Kilosa, a remote village in Tanzania, is a balancing act. She juggles the demands of farming, household duties, and community roles, all while working her one-acre farm to feed her family. She grows maize and tomatoes, keeps poultry, and sells any surplus to keep her two young children in school and cover other essential expenses. 

Yet finding the financial support to purchase inputs for her agricultural activities is a constant struggle. Traditional financial institutions are distant, expensive, and often do not engage with women like Mama Aisha, and a lack of hard collateral makes obtaining loans very challenging. Additionally, in the last few decades, farming has become increasingly difficult. Unpredictable, heavy rains destroy crops and wash away inputs, resulting in unexpectedly high costs for herbicides and pesticides. The volatility of weather and commodity prices can either make her farming business profitable one season or push her household into complete debt. 

Women like Mama Aisha, who live in rural and underserved areas, represent a frontier for financial inclusion. Microfinance has long been a tool for empowering women in developing economies. Organizations like BRAC Tanzania Finance Ltd (BTFL) with over 350,000 active clients, 96% of whom are women, are reaching remote communities and adapting to the needs of rural women. 

The dynamics of women’s groups in BTFL     

BTFL operates across 27 of Tanzania's 31 regions, including both the mainland and Zanzibar. Unlike many microfinance institutions that focus on urban and peri-urban areas, BTFL focuses on serving women clients at the last mile. This requires innovative strategies to engage women who are less digitally connected, highly vulnerable to climate shocks, and often reliant on informal support systems.

Mama Aisha is one of those women. She is part of a BTFL microfinance group that meets monthly to repay or request loans and to share strategies for overcoming challenges. Through the group, she receives guidance from BTFL credit officers to better understand how to track her financial habits, particularly with the increased volatility in farming. When women in the group struggle to pay back their existing loans – as Mama Aisha and others are currently experiencing – they can seek extended grace periods, however, this is not guaranteed.

Desperate to not default on their loans, women will informally borrow loans outside of the MFI, which puts them under additional financial pressure. This highlights a need for data-driven customer insights that allow for tailored and flexible financial products catering to the risk profile of women. MFIs like BTFL are conscious about not putting additional pressure on their clients by emphasizing income diversification and financial literacy. With the prevailing climate volatility, and the risk this presents to the livelihoods of women in agriculture, there is a need for increased holistic financial and non-financial interventions to help build rural women’s resilience. 

"The loan (from BTFL) has supported me in many ways. It has enabled me to pay school fees for my children and generate enough profit to sustain my family." - BTFL Client

Resilience through community 

BTFL’s women’s groups also provide a place for members to bolster their resilience capacities by exchanging ideas about diversifying incomes (Mama Aisha, for example, uses any surplus from her poultry sales to help repay her loans), improving farming techniques, and supporting one another in times of need. The group's community-centered structure also enhances the members’ confidence and encourages active participation. Knowing that she has the mentorship of her peers and the institutional support of BTFL allows Mama Aisha to take calculated risks, whether that be investing in better farming techniques or diversifying her income streams. 

"I have successfully expanded my business to include a food grocery store in addition to growing maize." - BTFL Client

Bridging the physical and digital divide

BTFL aims to integrate digital tools and literacy as well as tailored products and services to better serve members like Mama Aisha. The organization is scaling mobile money loan repayment for clients and combining this with the support of its large network of in-person credit officers, especially for their less digitally integrated clients. This phygital (physical + digital) approach seeks to increase access to much-needed financial products and services, while recognizing the systemic digital challenges that exist, especially for women. This phygital approach builds on the valued relationship that clients have with the credit officers, while allowing BTFL to improve their operational efficiency by bridging the digital divide. 

However, clients like Mama Aisha are highly sensitive to fees. To address this, BTFL is embracing digital solutions while still offering options for physical collections, giving clients the flexibility to choose the method that works best for them. At the same time, BTFL plans to scale digital and financial literacy to help clients make informed financial decisions. Clients often choose cash because of the high transaction fees in Tanzania. For example, given the current Tanzania mobile money tariffs, a client paying monthly installments of TZS 25,000 (9.80 USD) must pay an additional TZS 1,000 (0.39 USD) as transaction fees, which makes up 4% of their cost excluding the loan interest. 

BTFL plans to explore solutions to enhance the resilience of its clients by tailoring financial products to address climate volatility. Agrifinance loan payments can be aligned to crop cycles, for example, and offer grace periods where relevant. In the longer term, BTFL will also be considering products and services that can help de-risk and smooth clients’ incomes – like contingent lines of credit, for example. 

ABERA, a collaboration between CGAP and IDH, first carried out an inclusive business analysis exercise and focus group discussions with BTFL customers to articulate the challenges and opportunities of serving rural women farmers. Currently, ABERA has engaged Dalberg to explore financial solutions for BTFL’s agrifinance product using a human-centered design approach. These solutions will help to better serve rural women like Mama Aisha and build their resilience to climatic shocks. Stay tuned as we continue this journey!

*Name changed to protect privacy. "Mama Aisha" is a fictional name used to represent an ideal rural woman, illustrating the common challenges faced by many women in rural agriculture.