By Alawi Masare, The Citizen

Dar es Salaam. Tanzania’s microfinance institutions will be beneficiaries of technical and capital support that will see them expanding financial services with the launch of a new private equity fund.Progression Eastern African Microfinance Equity Fund (PEAMEF) which was launched yesterday in the city has a capital target of $40 million committed exclusively to equity investment in primarily eastern African countries including Tanzania.

The fund invests between $1.5 million and $8 million per investor for between 5 – 8 years through equity.
The government has welcomed the initiative and assured the partners that they will operate in “safe hands.”
“The fund is coming with credible investment for the microfinance institutions especially at this era where we are facing high lending rates and lack of long term loans. I hope it will reach MFIs in rural areas and help to alleviate poverty,” said Dr Ramadhan Khija, permanent secretary in the ministry of finance during the launching seminar.

However, there was a concern from microfinance practitioners that the amount is small considering available demand and the level of financial inclusion in many involved countries.

“We are now moving from depending on donors and debt to equity investment. $40 million is still not enough, but I expect it to be the start of more funds,” said Mr Rashid Malima, chief executive officer of Pride Tanzania.

But the fund partners said it was just the beginning and expected the cash to flow more as time goes on.
“We know that access to finance is still limited in most countries and that is why we came up with this initiative. We have started with $40 million and will be informing microfinance practitioners as the money comes in,” said Mrs Lydia Koros, the fund’s managing partner.