Informal schemes can clearly benefit immensely from the experience of formal sector schemes in terms of improved data systems, fraud prevention, and supervision.
According to previous studies, the saving and sharing mechanisms associated with these formal and informal schemes have provided the members with an opportunity to raise and collect funds to be used for various purposes, including payment of insurance premiums and addressing emergencies such as hospital care or funeral costs [ 2, 11- 13].
Informal schemes (e.g., community-based savings groups-popularly known as merry-go-rounds) are formed on the basis of group solidarity mechanism where community members with common interests come together and pool funds by way of making contributions, which are then shared on a revolving basis.
The linkage of insurance schemes has also been recommended as a means of strengthening informal sector scheme management and administrative capacity [ 7, 8], reducing administrative overheads [ 9], increasing pooling [ 9] and coverage [ 10], and achieving universal coverage [ 11].
The Tanzanian context provides a unique opportunity for looking more closely at the merging of a formal and informal sector scheme, to assess if and how this might enhance progress towards universal coverage.
Informal sector schemes can benefit from merger with formal sector schemes through improved data systems, supervision, and management support.
The Tanzanian experience indicates that informal sector schemes, such as the CHF, can benefit from merger with formal sector schemes through improved data systems, supervision, and management support.
However, the Tanzanian example demonstrates that informal sector schemes can benefit from the support of management and reporting systems from formal sector insurance schemes, especially in cases where informal sector schemes are run by Ministries of Health or small non-governmental organisations that may lack health insurance expertise.
A survey in Uganda found that 99% of people using informal savings schemes had at some point lost some of their savings.
Yet a Shenmu merchant, who insisted on anonymity because of local tensions, said that he had a lot of sympathy for officials, who even put up banners on city streets last year warning residents of the dangers of participating in informal lending schemes.
