This research project is concerned with the economic impact on the local economy of providing retail financial services in developing countries. Financial services affect economic activity and economic growth and it is often argued that a lack of access to financial services hinders the process of development in many countries. However, there is a gap in the literature on understanding about the actual mechanisms how financial services affect growth and development. In this research the economic impact of financial services provided by NMB Tanzania is assessed.
Deposits, payment services and credit as well as outreach and financial literacy are identified as important factors with respect to economic impact. Besides, financial services must have a significant impact on enterprise-, agricultural- and household development. Therefore, economic impact of providing access to financial services is assessed on the basis of these core concepts.
It is concluded that there is ample evidence that retail financial services in developing countries do have a positive impact on the local economy. In particular this is experienced in the field of enterpriseagricultural- and household development as they are positively affected by financial services. Outreach facilitates financial inclusion as well as a better ability to improve the quality of services to the already banked. Financial literacy is a key enabling factor in the adoption of financial services by both the already banked and the unbanked. Credit fosters enterprise growth and leads to increased income and asset accumulation. Having and using a depository account improves the quality of life and leads to more efficient spending, increased security as well as improved financial literacy. Payment services facilitate transactions, reduce cost and therefore, stimulate economic activity and growth.
Financial services are found to have a positive impact on family’s financial resilience, security, financial literacy, income and business growth, employment, productivity growth, access to education, access to healthcare and finally to economic activity and economic growth on household level. As for NMB Tanzania, this affects 1.4 million customers.