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KPMG Consulting Strategy & Transformation Partner and Globis Insights Contributor Cristian Vlad met with Erick Crispin Nyoni, Markets Engagement and Partnerships Lead at KPMG in Tanzania, to discuss cross-border business initiatives, resilience and sustainability strategy.
Vlad: I know how passionate you are about sustainability, social capital, and resilience. Can you please give us a bit of an overview? What is the situation like in Tanzania in comparison to other countries?
Nyoni: These days, social capital plays an instrumental role in shaping societal responses to change, resilience in the face of adversity, and financial inclusion. There is an emerging need for sustainability in social capital initiatives for social change.
For the sake of illustration, I would like to consider a comparative analysis of VICOBA (Village Community Banks) in Tanzania, family-based enterprises across Europe, and Japan’s culture of collective resilience.
As a community-based microfinance model, VICOBA has facilitated financial inclusion in rural Tanzania by providing access to savings, credit, and insurance to people who would otherwise have no information or access to any financial instruments. This model is deeply tied to social capital, relying on strong local networks, mutual trust, and communal solidarity.
However, while VICOBA has enabled financial empowerment, it also raises questions about the sustainability of these changes, especially in terms of fostering long-term self-sufficiency and avoiding new forms of dependency.
In contrast, Japan’s history of collective resilience—shaped by its response to natural disasters—offers a different model of social capital that fosters long-term community rebuilding. Additionally, family-based enterprises in Europe, particularly in countries like Italy, Germany, and France, demonstrate the significance of intergenerational networks and localized business models in promoting long-term sustainability and community resilience.
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Vlad: I understand that in Tanzania, there is some debate on whether VICOBA enables empowerment versus dependency?
Nyoni: VICOBA is a community-based savings and lending initiative, which has become a cornerstone of financial inclusion in Tanzania, particularly in rural areas where access to traditional banking services is limited. These informal savings groups are designed to provide financial services, such as savings, loans, and insurance, while being built on strong communal relationships and trust. VICOBA’s success has been driven by the social capital inherent in local communities—members pool their savings and lend to each other, often based on mutual trust and shared interests.
By 2024, VICOBA had significantly contributed to financial inclusion within the community, with hundreds of thousands of members, especially in rural areas, gaining access to financial services that would otherwise be out of reach. This system has empowered individuals, particularly women, to engage in entrepreneurial activities, access credit, and build financial security despite limited banking infrastructure.
While VICOBA provides a platform for financial empowerment, it also places a heavy emphasis on local trust and the social fabric of communities. This dependence on close-knit networks for access to services may exclude those without strong social connections, or may lead to unequal benefits for marginalized groups within the community. Furthermore, the sustainability of VICOBA systems can be jeopardized if external factors such as economic instability or changes in local leadership disrupt the social capital that holds them together.
The question remains: can VICOBA drive sustainable, independent development, or does it risk creating a new form of financial dependency that limits broader social change?
Vlad: How would that compare with similar initiatives in other parts of the world?
Nyoni: Well, take family enterprise initiatives in Europe, for example, at look at how their intergenerational social capital initiatives impact local resilience.
In Europe, particularly in countries like Italy, Germany, and France, family-based enterprises are a cornerstone of social capital, characterized by strong intergenerational ties, localized business practices, and a long-term focus on sustainability. These businesses maintain deep connections to their local communities and are driven by values of mutual support, shared risk, and long-term growth. The intergenerational nature of many of these businesses ensures that knowledge, wealth, and social capital are preserved and transferred to future generations, fostering resilience and continuity in local economies.
Family-based enterprises contribute to the local economy by providing stable employment, fostering innovation, and promoting social cohesion. In countries such as Italy, where small and medium-sized family businesses dominate the economy, these enterprises serve not only as economic engines but also as anchors of community stability. In Germany, the “Mittelstand” (family-run enterprises) forms the backbone of the country’s economy, supporting local communities and preserving cultural and social values.
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The social capital embedded in these businesses promotes a model of resilience that prioritizes long term sustainability over short-term profits. This contrasts with the corporate models seen in larger globalized businesses, where profit maximization often overshadows community welfare. Family enterprises leverage social capital to create competitive advantages, maintain a strong local presence, and adapt to evolving markets. By passing down not just assets but also values, family businesses ensure a sustainable model of development rooted in the community.
Vlad: How does this all compare with the situation in Japan?
Nyoni: When it comes to Japan, let’s consider how collective social capital has related to post-crisis resilience.
In contrast to the financial models of Tanzania and Europe, Japan offers a powerful example of collective social capital in action, particularly in the aftermath of disasters. Japan’s culture of collective action, solidified by its history of recovering from events like World War II and the 2011 Great East Japan Earthquake, highlights the importance of social capital for community rebuilding and resilience. The values of “wa” (harmony) and “kizuna” (bonds of friendship or solidarity) have shaped Japan’s response to crises, emphasizing shared responsibility and the prioritization of the collective good.
In the aftermath of the 2011 earthquake and resulting tsunami, Japan witnessed extraordinary national mobilization, where local communities proactively contributed to rebuilding efforts, organizing aid, and pooling resources. This collective approach to recovery reduced dependence on external assistance, with the strength of social capital playing a crucial role in fostering cooperation across local networks.
The Japanese model demonstrates that social capital, when nurtured through shared values and a strong sense of national and local solidarity, can be a powerful tool for sustainable recovery. Unlike the financial models in Tanzania, which may foster dependence on external systems, Japan’s emphasis on collective autonomy highlights the potential for community-driven change and long term development. The strength of Japanese social capital lies in its ability to transcend individual gain and focus on the greater good, ensuring resilience and self-sufficiency in the face of adversity.
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Vlad: What are the keys take aways from these comparisons?
Nyoni: Here are the three key insights:
1. Dependency vs. Empowerment: VICOBA in Tanzania has empowered individuals, particularly in rural areas, to access financial services and participate in local economies. However, its reliance on community networks raises questions about whether it fosters autonomy or perpetuates dependency on localized social systems. In contrast, family enterprises in Europe promote long-term self-sufficiency, with businesses passed down through generations, ensuring community stability. Japan’s model of collective action prioritizes empowerment through shared resources and resilience, reducing reliance on external aid.
3. Sustainability of Social Change: Family enterprises and Japan’s collective resilience offer models of social capital that emphasize long-term sustainability. While VICOBA has driven financial inclusion, its potential to create lasting social change is complicated by its reliance on local networks, which may not always be sustainable in the face of external pressures.
What I believe that we have discovered through this comparative analysis of VICOBA in Tanzania, family-based enterprises in Europe, and Japan’s culture of resilience reveals that social capital’s true sustainability depends on its ability to balance empowerment with autonomy. While VICOBA has contributed to financial inclusion, its long-term impact on sustainable development remains uncertain due to potential dependencies on external systems. Family enterprises in Europe and Japan’s model of collective resilience, on the other hand, offer insights into how social capital can drive long-term, community-driven development. Moving forward, fostering inclusive, autonomous, and resilient social capital frameworks—drawing lessons from these diverse models—will be crucial for promoting sustainable social change globally, and here is where I personally believe that the world still has plenty to learn from Japan.