The role of credit facilities and investment practices in rural Tanzania: a comparative study of Igowole and Ilula emerging urban centres

Marianne Nylandsted Larsen and Torben Birch-Thomsen

Journal of Eastern African Studies, 2015, vol. 9, issue 1, 55-73

Abstract: Small urban settlements or small towns in rural areas represent the fastest urban growth in most of the African continent. Along with a renewed political interest in African agriculture, the role of urban settlements has gained a prominent position in poverty reduction in rural areas and as an alternative to out-migration. Based on data collected between 2010 and 2012 covering more than 60 business operators in two emerging urban centres (EUCs) and their rural hinterlands, the article explores development trajectories in two EUCs in Tanzania, both of which have experienced rapid population growth and attracted new investments in business by both migrants and the indigenous population in an effort to exploit new opportunities in the centres. The initial urbanization has not been driven by the state or by new institutional interventions such as microfinance but rather by ‘the market’. This paper argues that microfinance plays a role in facilitating possibilities for some businesses to sustain, expand or diversify their businesses once the business is well-established in the EUCs. Migrants play a pivotal role for the early development and later diversification of business activities within both EUCs. They have been attracted by new investment opportunities and bring capital and knowledge from previous experiences with economic activities.

Date: 2015
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DOI: 10.1080/17531055.2014.985808

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