SIDO, with an office in 20 of the 21 regions of the mainland, is a large provider of financial and non-financial services to MSEs. They have 70,000 credit-delivery clients and reach 300,000 MSEs through their small business training and consultancy services.
The key informant from SIDO stated that there is a big gap in the capacity of the organization to meet the demand for credit – of the 71,000 credit applications they had in the system in November 2003 (for loan amounts totalling TShs 27 billion), they will only be able to fund about 10 per cent.
SIDO offers three levels of credit:
Level 1: Using the group-lending approach, members can borrow up to Tshs 1 million (US$1,000). Interest rates range up to 30 per cent per annum.
Normal repayment terms are 12 months, but food producers may qualify for a two-year repayment term.
Level 2: For loan amounts of between Tshs 1 million to Tshs 6.5 million, SIDO moves to individual loans.
Level 3: For loan amounts greater than Tshs 6.5 million, SIDO links the clients to a financial institution.
The organization appears to have an excellent process of providing business development support prior to and after the provision of credit.
In addition to its own loan fund, SIDO administers a micro-credit programme (to groups and individuals) under the Entrepreneurship Development Fund (EDF). Started in 1994 with funding of Tshs 8 million, the fund has grown to about Tshs 1.5 billion.
However, key informants from the MIT indicated that the recovery rate on loans has been low and the fund is now diminishing. Women receive lower amounts than men, and the SME Section is lobbying SIDO to ensure that women make up at least 50 per cent of the loan client base. The EDF has two sub-funds: the Women’s Development Fund (WDF) and the Youth Development Fund (YDF), both funded through UNIDO, but administered and monitored by MCDGC and MoLYSD respectively. Furthermore, UNIDO has been supporting the implementation of the WED project, being implemented by SIDO, since 1993. Women make up a reported 56 per cent of SIDO clients.
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