KNOWLEDGE AREA THREE: SPECIAL ASSIGNMENT MICROFINANCE OAF 313 NAME: AMRI AMRI BAKARI REG. NO: U20-118-0071 CENTER: KINONDONI QUESTION THREE: Corona virus disease (COVID-19) has attacked many countries in the world and disrupted economic and social development in different ways. As a scholar of microfinance, evaluate the effects which have been caused by this disease (COVID-19) to microfinance sector in your country. ANSWER Microfinance in Tanzania has had quite a comic inception as is its evolution; early in the 2000’s a national policy that aimed at alleviating poverty was formed, then to build on the good work initiated, the Parliament reviewed the National policy concerning Microfinance hence anew it was reborn in 2017. The plan was to be carried out strategically for almost a decade or so. A year later post the reviews, an Act was enacted to bind its functionality legally. It is important to notice that 4 categories were identified of entities that deal in servicing low-income earners, a unique combination that hypothetically makes up the microfinance sector: community groups, depository and non- depository institutions and lastly cooperatives. With the dawn of the year 2019, an overshadowing plaguelike pandemic of almost a biblical proportion hit the world at large scale, and Tanzania was as vulnerable as any other state be it developed or third world economy. Some of those effects induced by the pandemic are elucidated below: Barred the customer- officer interaction. Most microfinance institutions grow their customer base by foot soldiering into the vicinities to meet the locals and convince them as well as educating them on the opportunities available for local entrepreneurs and that their ideas can be monetized. With the COVID-19 most of officials have become weary of going out to seek customers and the locals are also dreadful of welcoming urban strangers into their homes and businesses. Selfimposed quarantine has taken its toll on educated middle income families. Increased Risk of default in Payments. Collection of debt has become hard to manage and hence most clients overpass the required deadlines for repayments, this intensifies the institution’s Portfolio at Risk (PAR) which is not a good thing for the prospective future of institution. Depreciating value of domestic currency. This has shackled the liquidity ability of microfinance institutions. The value of the Dollar has increased relative to the situation prior the Covid attack. For instance, according to some sites (i.e., exchangerates.org.uk), on average, the Tanzanian shilling has increased from Tshs 2276.8942 in 2018 to Tshs 2307.0643 and 2315.0386 in 2019 and 2020 respectively. Owing to the fear of the uncertain future that even developed countries like the United States face due to COVID- 19, grants and or aid in the form of disbursements have slagged immensely. As a solution to such problems, loans are being restructured, transactions are being highly digitized and Safe and precautionary initiatives have been taking place for instance the reduction of minimum reserve rates by central banks.
