Assessing the impact of government initiatives on small-scale investors' participation in mutual funds in Dar es Salaam-Tanzania: A case of Unit Trust of Tanzania

Resumo

This study assesses the impact of government initiatives on small-scale investors' participation in mutual funds in Dar es Salaam, Tanzania. The main objectives were to analyse the effect of government financial literacy on investment behaviour, evaluate the influence of regulatory reforms, and assess the role of financial incentives in increasing participation in mutual funds. This study was anchored by diffusion of innovation theory and behaviour-funded theory. A mixed-methods approach was employed, collecting data from 399 small-scale investors and 10 key informants through structured questionnaires and semi-structured interviews. The study used descriptive analysis and thematic analysis to analyse the study objectives. The study finds that financial literacy programmes significantly enhance small-scale investors' understanding of investment concepts, with 45.4% of respondents agreeing that they have a good understanding of financial concepts like interest rates and inflation (mean score = 4.07). Furthermore, 43.9% strongly agreed that these programmes boosted their confidence in making investment decisions (mean score = 3.59). Regarding regulatory reforms, 43.9% of respondents were aware of recent regulatory changes, and 45.4% stated that these reforms positively influenced their investment decisions (mean score = 4.07). A mean score of 4.07 indicates that 38.3 per cent of investors strongly agree that they will adhere to the new limits. This indicates that the adjustments also improved investor compliance. Following participation in incentive programmes, 38.3 per cent of respondents reported that they were more likely to invest in mutual funds (mean score = 3.91), indicating that financial incentives had a significant role in the decision-making process. In spite of these positive results, the research reveals that there are ongoing obstacles, such as restricted access to information and a reluctance to engage in investments that involve a higher degree of risk. According to the findings, in order to boost the level of small-scale investor participation and financial inclusion in Tanzania, the government and non-government organisations should ensure targeted government policies, improved financial literacy, and more easily accessible financial incentives for the investors.