Tanzania is a developing nation, and as in case of all the emerging nations, the financial industry has not penetrated well to effectively reach to the potential target group with customised products for the market. There are many efforts put forth by the government; however, the growth of financial sector is still quite slow.

Financial Sector Deepening Trust Fund (FSDT)

The Financial Sector Deepening Trust (FSDT) is one such initiative to boost up the financial sector of Tanzania, which is basically a consortium of five of the major development partners as

• CIDA - Canadian International Development Agency

• DANIDA
• DFID
• SIDA - Swedish International Development Agency, and
• Royal Netherlands Embassy.

This consortium had become a registered entity in July of 2004 and its operations were officially launched in October of 2005. FSDT had been established with the aim of properly channelling the development partner resources in order to boost the poor financial markets of the country in response to the National Microfinance Policy of the government as well as the National Strategy for Growth and Poverty Reduction.

These initiatives are called as "MKUKUTA" in the local Swahili language. By forming a united entity to co-ordinate this, the government ensured that these partners ensures to harmonise all their developmental efforts towards the deepening of the financial sector and offer a single associate for the Tanzanian government. Such an approach offers a greater efficiency for any counterparts seeking for support.

What FSDT does?

FSDT is ideally an investment fund which aims to gain a better access for more and more people, especially the rural sector to the financial sector of Tanzania.  When it comes to the real practice, this becomes effective in rightly identifying the funding investment opportunities and other similar projects, which aim to promote this objective.

Going parallel to its primary objective, FSDT also help the smaller financial entities as microfinance institutions and small banks to develop policies and financial products which are sustainable and credible for the local market. The body is also taking initiatives to gain creditworthy partners for commercial banks as well as larger global financial institutions.

Without such mediation, the flow of finance from where it is there in surplus to the under-served will always remain limited.  Adding to it, this trust also works towards building capacity of the service providers as educational institutions, auditing and accounting firms, as well as legal entities.

FSDT initiatives

Once factor which hold back the growth of financial sector in Tanzania is the gaps in knowledge and adequate information about the financial sector, and this is one area FSDT is ideally concentrating more. The trust support financial institutions for development of adequate policies for the local market, preparing regulatory and legal frameworks in light of the needs of the target group.

FSDT uses a wide range of funding instruments as;

• Grants for weaker clients and other
• Loans for more established financial institutions
• Debt-equity hybrids and convertible debt or a combination of these to the needed etc.

FSDT is committed to adopt a right market development approach, which aims to address the systemic constraints of the market and positively contribute toward achieving a significant growth in the financial sector overtime.