A number of NGOs also do micro lending, some of them predominantly oriented towards women-owned MSE clients. During the Tanzania field visit, interviews were held with the Tanzania Gatsby Trust (TGT) and the Zanzibar Fund for Self Reliance, two examples of such NGOs.
The TGT is a registered charitable trust, focused on the alleviation of poverty in Tanzania through credit provision, marketing development, training and technology transfer to MSEs. It directly provides micro credit services in 10 regions of the country, and in an additional 11 regions through collaborators. Their wholesale group lending services are provided through NGOs and other third party re-lenders at annual rates of between 18 and 24 per cent, depending on the size of the loan.36 Their retail credit is delivered to groups of 5 to 9 members on a mutual guarantee, no collateral basis, at rates as high as 30 per cent. The minimum loan for a group is Tshs 100,000; the maximum is Tshs 5 million. When an individual member scales up to a Tshs 1 million loan, she may decide to leave the group and take an individual loan if she has been able to accumulate some assets for collateral. TGT also does individual lending up to a maximum of Tshs 5 million to clients who do not want to participate in a group. If the client is not able to secure bank financing at that point, the TGT can lend up to Tshs 10 million – but at interest rates of up to 30 per cent, this is expensive money.
Initially, TGT targeted certain sectors, like artisans, but has started to broaden its eligibility criteria. TGT credit is supported by business development services, including marketing support and training in financial management and business development skills.
Eighty per cent of their micro-finance clients are women.
The key informant from TGT shared her views on the barriers women face in accessing “growth” credit:
• Lack of business management skills, especially in rural areas; • Low level of skills that can translate to markets; • Lack of premises, raw materials and other resources required for growth.
She concluded by saying, “Being a woman in Tanzania is in itself a problem. They are poor, have low educations, and don’t have a voice.”
To address these problems, she recommended improving policies, improving the infrastructure for entrepreneurs, and forcing banks to contribute a certain percentage of their loan funds for small business financing in the local community.
The Zanzibar Fund for Self Reliance was established in 1991 to deliver the Presidential Trust Fund as a complement to the national priority of reducing poverty, promoting the informal sector and improving access to capital. Its target group is unemployed persons who want to become self-reliant through petty trading and hawking.
About 70 per cent of their 4,000 clients are women. Loans are made to individuals through the group guarantee approach. Initial loans are for amounts of Tshs 5,000– 10,000, but after seven rounds of financing an individual could borrow as much as Tshs 2 million. At that point, if the client wanted to continue to expand the business, the Fund would offer a loan guarantee so the client could access bank financing. Interestingly enough, only one woman so far has taken her loan to a bank (November 2003). In 2002, the Fund disbursed Tshs 39.1 million; its repayment rate is 87 per cent. To help clients develop their skills, the Fund offers training on how to identify opportunities for entrepreneurial projects and encourages borrowers to attend trade fairs and exhibitions.
PRIDE Tanzania, with 21 branches (16 in major urban centres), is also a major supplier of micro-finance. As of March 31, 2002, PRIDE Tanzania had more than 51,000
active clients, 68 per cent of whom were women.37 Contrary to popular opinion, women are not the major recipients of micro-finance in Tanzania. Due to their lack of collateral security, the low ceiling on micro loans, and their inability to access traditional bank financing, women are forced to start at the micro level and stay there. The objective of most micro credit programmes is poverty reduction rather than economic growth; therefore, even if a woman wants to expand her firm, she is severely constrained. A more diverse range of financial instruments is needed to enable women entrepreneurs to move from micro to small-scale, and from small-scale to medium size.
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