East Africa Financial Review  |  Special Report

Microfinance  •  Rural Development  •  Tanzania

The Bank That Bets on the Poor

How VisionFund Tanzania is quietly dismantling a century of financial exclusion — one village savings group, one harvest loan, and one child at a time

By the East Africa Financial Review Desk  |  February 2025

Voices from the Field

What VisionFund Tanzania means to those it serves — in their own words

Original Swahili (Justine): “Miaka kumi ya uongozi wa Director Barry imeleta mabadiliko makubwa!”  |  Source: @visionfund_tanzania

Savetha remembers the moment she decided to borrow eighty dollars. It was not a decision she reached lightly. She had spent years watching her tomato stall in a dusty corner of a Morogoro market generate just enough income to feed her children but never quite enough to expand, to hire help, or to feel — as she puts it — like a businesswoman rather than a survivor. Then a loan officer from VisionFund Tanzania sat with her savings group under the shade of an acacia tree and explained a different kind of banking: one that began with trust, not collateral.

That eighty-dollar loan changed Savetha’s calculus entirely. She expanded her tomato and cooking oil operation, bought a pig and a goat as backup assets, and eventually installed solar lighting in her home. The change was invisible to the national banking statistics. But in her household, the effect was seismic: her children could study after dark. She put them in new school uniforms. She stopped choosing between food and medicine.

Stories like Savetha’s are the unit of measurement that VisionFund Tanzania (VFT) uses to define its success — not only the return on assets or the loan disbursement figures, but the 100 percent of parents in a 2022 client study who reported measurable improvement in their children’s well-being after accessing the bank’s services. In a sector dominated by institutions chasing urban middle-class deposits, VisionFund has spent nearly three decades doing something stubbornly countercultural: it keeps going deeper into the bush.

From Emergency Aid to Engineered Hope

To understand VisionFund Tanzania, you have to go back to 1950 — not to Dar es Salaam or Arusha, but to East Asia, where an American photographer named Bob Pierce encountered an abandoned child and founded World Vision International. The organization that eventually emerged from that moment of conscience became one of the world’s largest Christian humanitarian organizations. But over time, its leadership confronted an uncomfortable truth: emergency aid, no matter how generously given, could not sever the intergenerational chain of poverty. People needed not just food and medicine but the tools to build lasting economic lives.

VisionFund International was created in 2003 as the microfinance arm of World Vision — a recognition that sustainable poverty alleviation required sustainable financial institutions. In Tanzania, the groundwork had already been laid seven years earlier with the establishment of the Small Enterprise Development Agency (SEDA) in 1996, a small lending operation quietly offering micro-credits to entrepreneurs shut out of the formal economy.

SEDA did what it could. But it could not take deposits. It could not scale. And without the regulatory credibility of a licensed bank, it remained a peripheral actor in a financial system designed to serve people who already had assets. In 2014, following years of preparation and relationship-building with the Bank of Tanzania, VFT crossed the threshold: it became a fully licensed Tier 1 microfinance bank, subject to the same capital adequacy requirements, reporting obligations, and supervisory oversight as commercial institutions.

The transition was not merely administrative. It was philosophical. As a licensed deposit-taking institution, VFT could now ask its clients to save before they borrowed — a deceptively simple idea that its leadership describes as the “save first and always” ethos. Saving before borrowing is not intuitive for households living close to subsistence. But the discipline it instils, VFT argues, is the difference between a loan that liberates and a loan that traps.

“Saving before borrowing is not intuitive for households living close to subsistence. But it is the difference between a loan that liberates and a loan that traps.”

The Architecture of Reach

VisionFund Tanzania’s headquarters sits in the Serengeti Wing of the Arusha International Conference Centre — an address that would not be out of place on the letterhead of a multinational firm. But its heartbeat is elsewhere: in 52 cashless branches and 46 offices spread across 22 of Tanzania’s regions, staffed by more than 500 employees, the majority of whom are field officers who travel daily into communities where no commercial bank has ever set foot.

The geographic strategy is deliberate. Tanzania’s financial sector has historically been an urban affair, concentrated in Dar es Salaam and a handful of regional capitals where incomes are higher and credit risk feels lower. CRDB and NMB — the two dominant commercial banks — together hold assets approaching TZS 39.4 trillion, nearly half the sector total. They are formidable institutions, but they are not the institutions that Savetha calls when she needs to expand her tomato stall.

Of VFT’s estimated 50,000-plus active clients, 60 percent live in rural areas, 58 to 60 percent are women, and 60 percent are engaged in agriculture-based activities. These numbers are not incidental; they reflect explicit targeting of populations that most financial institutions treat as credit risks too complex or costly to manage. For VFT, they represent an opportunity: an immense, underserved market of hardworking people who lack not the will to repay loans but the access to receive them.

The bank’s physical presence follows a hub-and-spoke model — central branches in regional towns supporting smaller outreach centres and field offices in surrounding districts. It is not glamorous infrastructure, but it works. And increasingly, it works in concert with technology that is changing what rural banking can mean.

The Technology Wager

In 2017, VFT launched its first mobile banking platform. It was a modest debut in the context of Tanzania’s mobile money ecosystem, already home to M-Pesa, Airtel Money, and Tigo Pesa. But it signalled a directional commitment that the bank has since pursued with increasing urgency.

The centrepiece of VFT’s digital transformation is its migration to the Temenos T24 Community Banking platform — a core banking system used by institutions around the world for its efficiency, security, and analytical capabilities. The results VFT reports are striking: customer onboarding time cut from three days to one hour; loan application processing accelerated by 61 percent; overall operational efficiency improved by 40 percent.

These are not abstract metrics. For a bank whose clients often travel long distances to access services — and who cannot afford to lose a day’s income waiting in a queue — the reduction in onboarding time is a direct poverty-reduction intervention. Every hour saved is an hour that a smallholder farmer can spend on her land, or that a market vendor can spend at her stall.

The “VFT Chap Chap” mobile platform integrates directly with Tanzania’s major mobile money networks, giving clients 24-hour access to their accounts. Loans can be received, repayments made, and savings deposited entirely by phone. For clients in areas where the nearest branch may be half a day’s travel away, the platform does not merely add convenience — it makes banking possible.

VFT is also rolling out tablet-based tools for its field officers that incorporate biometric identification and GPS tracking, reducing fraud and streamlining the verification processes that have historically made rural lending so administratively expensive. This combination of digital infrastructure and physical presence is what the bank’s leadership describes as their competitive edge — not any single technology, but the layering of tools that together make it cheaper, faster, and safer to serve people others have written off.

“Every hour saved in onboarding is an hour a smallholder farmer can spend on her land. Efficiency is not a corporate metric — it is a poverty-reduction tool.”

The FAST Experiment: Turning Village Savings Groups into Economic Engines

Perhaps no programme better illustrates VisionFund Tanzania’s approach than FAST — the Finance Accelerating Savings Group Transformation model. It is, at its core, a creative solution to one of microfinance’s oldest problems: how do you lend to people who have no collateral?

Tanzania has tens of thousands of Village Savings and Loan Associations (VSLAs) — informal collectives in which community members pool small amounts of money, make loans to one another, and build collective financial discipline over time. These groups have been an extraordinary grassroots achievement. But they have always hit a ceiling. The total capital available to any group is limited by what its members can save, and in poor communities, that ceiling is often painfully low.

FAST cracks that ceiling open. The programme targets mature VSLAs that have demonstrated financial discipline — groups that have been saving consistently, maintaining records, and repaying internal loans reliably. VFT then injects a direct line of credit into the group’s collective “cashbox,” allowing members to access capital beyond what their own savings would permit. The guarantee is social: group members collectively vouch for one another. If one member defaults, the group bears the consequence — which means the group takes the screening process seriously.

The results from a 2024 follow-up study conducted by the independent research firm 60 Decibels are remarkable: 95 percent of FAST members reported an improvement in their quality of life; 92 percent said they were in a better position to support children in their care; 93 percent reported diverting business revenue directly to childcare and food. Ninety percent found the bank’s accompanying financial training useful. Sixty-four percent used profits specifically for education expenses.

Even the data points that seem discouraging tell a nuanced story. The share of members with enough savings to cover three months of expenses dropped slightly — a reflection of genuine macroeconomic pressure in Tanzania’s post-pandemic economy. But the proportion reporting improved ability to handle unexpected expenses rose significantly. What FAST appears to build, even in difficult conditions, is not just income — it is resilience: the capacity to absorb a shock without slipping permanently backward.

Impact Metric	Study Finding
Child well-being improvement (parents with children)	100% reported measurable improvement
Overall quality of life — 2022 study	90% reported improvement
Income level improvement	92% reported an increase
Financial control	89% reported improved control
FAST member quality of life — 2024 follow-up	95% reported improvement
Business revenue diverted to childcare & food	93% of FAST respondents
Education fee support via FAST profits	64% of members

Lending to the Harvest: The Agriculture Pivot

Agriculture accounts for more than 35 percent of Tanzania’s GDP and employs the majority of its rural workforce. Yet smallholder farmers have long occupied an uncomfortable position in the financial system: too risky, too remote, and too seasonal for commercial banks; too financially sophisticated for the most basic savings groups.

VisionFund Tanzania is betting heavily on this sector. Sixty percent of its borrowers are already in agriculture-based activities, and the bank has designed specific products to match the rhythms of farming life. Chief among these is the Agri Balloon Loan — a credit structure that defers principal repayment until after the harvest, recognising that a farmer’s income is not monthly but seasonal. Asking smallholders to repay loans on the schedule of a salaried civil servant has historically been one of the sector’s most self-defeating practices. The balloon structure corrects for this fundamental mismatch between loan terms and agricultural reality.

In early 2025, VFT secured a EUR 2 million senior debt investment from the AgriFI Tanzania Country Window — a development finance facility focused on expanding agricultural credit access. The investment was partly structured to de-risk the facility for other providers: a signal of confidence that VFT’s agricultural portfolio is robust enough to attract institutional co-financing.

Looking further ahead, VFT’s leadership has flagged the growing salience of climate risk in agricultural lending. Droughts, floods, and unpredictable rainfall patterns are no longer abstract environmental concerns for Tanzanian farmers — they are existential financial threats. The bank is exploring parametric insurance products, which would trigger automatic payouts based on objective weather data rather than requiring farmers to navigate a lengthy and often opaque claims process.

The Ledger and the Mission: Can Profit and Purpose Coexist?

The hardest question in microfinance is not operational. It is philosophical: can an institution simultaneously serve the poor and sustain itself financially? The sector has its share of cautionary tales — institutions that began with social missions and drifted, under competitive pressure, toward middle-income urban clients who were cheaper to serve and more profitable to lend to.

VFT’s answer to this question is embedded in its business model rather than its mission statement. The bank maintains a Portfolio at Risk (PAR) ratio below 2 percent — an impressive figure for an institution operating in remote rural areas, and significantly better than the sector average. This is not accidental. It reflects the quality of its client screening, the effectiveness of its training programmes, and the social accountability built into group-lending structures like FAST.

Microfinance institutions in Tanzania typically charge effective interest rates ranging from 3 to 20 percent per month — rates that look punishing in isolation but reflect the genuine costs of serving dispersed rural clients. Administrative expenses alone can account for two-thirds of the interest a borrower pays. VFT’s digital transformation strategy is, at its core, a cost-reduction exercise: every efficiency gain from the Temenos platform is a reduction in the cost per borrower, which means either more margin for sustainability or more room to reduce client rates.

The bank’s capital adequacy ratio of 21 percent — well above the regulatory minimum of 10 percent — signals a healthy balance sheet. The Tanzanian banking sector’s overall non-performing loan (NPL) ratio, which stood at approximately 9 percent in 2020, had improved to around 3.2 percent by early 2025. VFT’s numbers are better still, suggesting that lending to the poor, when done with the right structures and appropriate support, is not inherently riskier than lending to the wealthy.

“VFT’s PAR below 2 percent suggests that lending to the poor, when done with the right structures, is not inherently riskier than lending to the wealthy.”

Women, Children, and the Unit of Change

If there is a single thread that connects every product, every programme, and every strategic decision VisionFund Tanzania makes, it is the primacy of children’s well-being. The institution is part of a global network that reached 5.2 million children in 2023 alone. It measures its success not only in loan disbursements but in child outcomes: nutrition, education access, health service utilisation, safety.

The emphasis on women as the primary entry point for this change is not merely ideological. It is empirical. Research conducted in Morogoro Municipality found that when women accessed VFT’s services and diversified their income through business, farming, and livestock keeping, the household’s ability to afford nutritious meals and medical care improved measurably. Women, the data suggests, are more likely than men to direct household income improvements toward children.

The bank’s microinsurance products extend this logic. Credit life insurance — which writes off a borrower’s remaining loan balance in the event of their death — ensures that a family does not inherit debt along with grief. The Enhanced Credit Life product covers loan installments if a client or family member is hospitalised, preventing a medical emergency from becoming a financial catastrophe. These products are simple, affordable, and designed for people whose financial safety net consists of whatever they have managed to save.

Alongside credit, VFT delivers training in financial literacy and basic business management. Ninety percent of clients who received this training found it useful — a figure that reflects not just the content but the delivery: accessible, practical, and pitched at people who have never kept a formal accounting record. Thirty-one percent, notably, requested refresher courses — an indication that demand for financial knowledge among VFT’s client base significantly outpaces the supply.

The Road to 2030: Scale, Consolidation, and the Promise Kept

Tanzania has set a target of 90 percent financial inclusion by 2030. By most measures, the country is on a promising trajectory: the banking sector’s total assets reached TZS 79.4 trillion in early 2025, and the sector’s net income after tax rose by 21 percent to TZS 2.62 trillion. The macro indicators look healthy.

But macroeconomic aggregates have a way of concealing the texture of exclusion. Tanzania’s population is projected to double by 2050. A large proportion of that growth will occur in rural areas, where formal financial services remain scarce and agricultural livelihoods remain precarious. Meeting the 2030 financial inclusion goal will require not just expanded digital infrastructure but institutions willing to go where the need is greatest — and to go there with products that fit the lives their clients actually live.

VFT’s strategic framework through 2030 — the “Livelihoods Promise” — envisions scaling both its agricultural portfolio and its group-lending model, while deepening its digital integration across the region. An upcoming technology upgrade will harmonise banking systems across Kenya, Tanzania, and Zambia, pointing toward a broader regional ambition: a network of interconnected microfinance institutions operating to a common standard, sharing knowledge and potentially sharing risk.

The bank is also undergoing a leadership transition, with active recruitment underway for a new CEO to guide the next phase of growth. The role specification is instructive in its priorities: Christian values, deep knowledge of the Tanzanian regulatory environment, and a demonstrated commitment to both financial sustainability and social impact. It is a rare combination in any industry. In microfinance, where institutional drift toward more profitable markets is a constant temptation, it is rare indeed.

What VisionFund Tanzania represents, at its most essential, is a wager — a bet that the forgotten populations at the bottom of the economic pyramid are not a risk to be avoided but an opportunity to be honoured. The institution’s nearly three-decade record suggests that this wager is not naive. It is, in fact, hardheaded: serving the poor well, with the right tools and the right structures, generates repayment rates that commercial banks would envy.

Back in Morogoro, Savetha is thinking about her next loan. Her pig has grown. The goat has produced a kid. Her children study under the solar light every evening. She is not, by any conventional measure, wealthy. But she is, by every measure that matters to her, free — free from the paralysis of capital scarcity, free from the fear that a single illness could undo everything she has built.

In the language of microfinance theory, she has crossed the threshold from vulnerability to resilience. In Savetha’s own language, she has simply become who she always knew she could be.

Sources: VisionFund International Annual Reports  |  60 Decibels Microfinance Index 2024  |  Bank of Tanzania  |  AgriFI Tanzania  |  EY Tanzania Banking Sub-Sector Report 2024  |  IMF Article IV Consultation 2025