In an effort to propel digitalization within Tanzania's microfinance sector, the Tanzania Association of Microfinance Institutions (TAMFI) has partnered with the United Nations Capital Development Fund (UNCDF). TAMFI is a membership-based organization that has supported Microfinance Institutions (MFIs) since its establishment in 2001.

The partnership aims to address the disparity between the significant growth experienced by the banking sector in Tanzania and the slower progress of the MFI sector. A recent case study conducted by UNCDF revealed the need to support MFIs in their digital transition, in alignment with the government's broader digitalization initiatives. By embracing digitization, integrating with the national payment system, and leveraging digital financial infrastructure, MFIs can enhance operational efficiency and introduce innovative products to better serve their clients.

As part of the collaboration, TAMFI and UNCDF organized a successful half-day workshop on May 25, 2023. The workshop provided an opportunity to update MFIs on progress towards shared systems, share the rationale behind the initiative, and assess interest among MFIs for future collaborative efforts in pursuing digitalization.

Winnie Terry, the Executive Director of TAMFI, emphasized the importance of embracing digital technology within the microfinance sector, stating, "The initiative could not have come at a better time. Digitalization has become an integral part of life. The Microfinance sector is not and should not be left behind." She highlighted that digitalization is essential for improving efficiency, reducing costs, and increasing outreach.

With the increasing prominence of digitalization in the financial services industry, TAMFI and UNCDF's partnership focuses on accelerating MFI/SACCO digitalization through capacity building and evidence-based policy advocacy. This collaboration will ensure the sector's readiness to integrate with the upcoming Tanzania Instant Payments Systems (TIPS) established by the Bank of Tanzania (BoT).

The TAMFI-UNCDF partnership signals a significant step forward in driving the digital transformation of Tanzania's microfinance sector. By embracing digital technology, MFIs can thrive in an inclusive digital economy, ensuring greater efficiency, enhanced outreach, and improved client services. The initiative recognizes that digitalization is not just an option but a necessity for the continued success and relevance of microfinance institutions in today's evolving financial landscape.