Collective schemes enhance financial inclusion growth

DAR ES SALAAM: THE Capital markets are increasingly emerging as a key channel for inclusive wealth building in the country, as ongoing economic reforms open up space for private sector innovation and wider public participation in formal financial systems.

What was once a niche segment, is now evolving into a more accessible platform for mobilising domestic savings and channelling them into productive investment.

Collective investment schemes sit at the centre of this shift. With a combined Net Asset Value (NAV) of approximately 5.0tri/-, the sector is drawing in households that were previously excluded from capital markets, offering structured savings options backed by professional fund management and regulatory oversight.

Zan Securities Chief Executive Officer Raphael Masumbuko said the expansion reflects a broader transition in how Tanzanians engage with financial assets.

“This growth directly aligns with Vision 2050, which emphasises building a strong, inclusive and competitive economy through diversified financing channels,” he told the Daily News.

The national development agenda increasingly recognises that long-term growth cannot rely solely on public borrowing and bank lending.

Instead, it requires mobilising household savings into capital markets, where funds can be deployed across government securities, corporate debt and other incomegenerating instruments. Policy reforms have sought to reinforce this trajectory.

Tanzania’s Financial Sector Development agenda, alongside market reforms led by the Capital Markets and Securities Authority (CMSA), has positioned collective investment schemes as a vehicle for broadening access to financial products, promoting a savings culture, protecting retail investors and channeling long-term capital into both public and private sector investments.

One illustration of this trend is the Timiza Fund, managed by Zan Securities.

The fund is set to distribute 10/- per unit to its unit holders today, a modest payout that nonetheless underscores the mechanics of pooled investment and return generation.

For many first-time investors, such distributions provide tangible evidence that disciplined saving through regulated vehicles can yield consistent returns.

“It demonstrates that ordinary citizens can access returns from a diversified portfolio,” Mr Masumbuko said.

“This includes treasury bonds, listed corporate debt, money market instruments and other income-generating assets, without needing large amounts of capital or technical expertise.”

The fund’s growth reflects a wider digital shift in Tanzania’s financial services sector.

Since its launch in July 2024 with 210 investors, Timiza has expanded to more than 10,000 participants, highlighting how mobile-enabled platforms and simplified onboarding processes are lowering entry barriers to formal investment products.

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As of April, the fund’s NAV stood at about 33.6bn/-, signalling steady asset accumulation and rising investor confidence.

The pace of expansion suggests that retail investors are increasingly willing to move beyond traditional savings methods, particularly where products offer liquidity, transparency and competitive returns.

Yet the broader significance of this growth lies in its alignment with national financing needs.

Tanzania’s Fourth Five-Year Development Plan (FYDP IV) requires an estimated 477tri/- in investment, with policymakers expecting the majority to come from private capital.

This place increasing emphasis on mechanisms that can mobilise domestic savings at scale.

Minister for Planning and Investment, Prof Kitila Mkumbo has said nearly 70 per cent of the required financing is expected to originate from private sources, underscoring the need for deeper financial intermediation.

Public-private partnerships (PPPs) are seen as a complementary channel, enabling the mobilisation of private capital for commercially viable projects while preserving public resources for social sectors.

Within this framework, the expansion of collective investment schemes, from 1.9tri/- in March 2024 to 5.0tri/-, signals early progress in building a domestic investor base capable of supporting long-term development financing.

By aggregating smallscale savings into sizeable pools of capital, such schemes provide an alternative to external borrowing and help deepen local capital markets.

Economist Leonard Joseph said the sector is playing a growing role in connecting households to the broader economy.

“More importantly, it is creating a pathway for ordinary citizens to directly participate in the country’s economic growth,” he said.

Even so, sustaining this momentum will depend on continued regulatory oversight, investor education and product transparency.

As participation broadens, ensuring that retail investors fully understand risks, returns and market dynamics will be critical to maintaining trust in the system.

The rise of collective investment schemes marks a gradual but meaningful shift in Tanzania’s financial architecture.

As capital markets become more accessible, the boundaries of wealth creation are expanding, bringing a wider share of the population into the orbit of formal finance and long-term investment.