Access To Financial Services To People In Rural Areas: A Case Of Kilindi District In Tanga Region

ABSTRACT 

This study aimed at assessing people‟s access to financial services in rural remote areas in Tanzania by taking Kilindi district as a case study. The study specifically focused on the performance of financial services in rural areas; determining the factors affecting rural people to have access to formal financial services and the risks that rural people face through using informal financial service providers. The study adopted cross sectional design so as to get the desired data. Respondents such as rural households from the selected wards in the district were randomly selected, while Ward Executive Officers, Bank Officers and District Community Development Officers were purposively selected. Data were collected using the survey method where interviews were conducted to 110 households and 15 leaders from the group of informal financial service providers using structured questionnaire. Data analysis was done using SPSS where likert scale was used to analyze the criteria. The study found that formal financial service providers did not penetrate well in the rural areas, and if they were available to the nearby rural households, the service were not convincing to have access due to the complicated bank regulations, Bank terms and foreign language that is used in documentation . Based on the evidence on inefficiency of informal financial services, the study recommends that the government should impose policy to subsidize the commercial banks which serve rural people, hence leading to great expansion of formal financial services in the rural areas. Likewise, informal financial services should not be isolated, but need to be empowered in terms of capacity building and financial support as well as regular supervision from the Bank of Tanzania (BOT).