Providing small loans to growing businesses.
In 2002, TCBA launched a micro-finance program in Arusha, Tanzania providing affordable loans and training to local businesses. The objective of the program is to allow the businesses to grow through investing in stock and/or business assets. This opportunity is normally not available to small businesses through banks and existing financial channels.
How the program works?
Each business that applies for a loan is interviewed regarding their business and their requirements. Each applicant must meet the following requirements;
1. They are already running a business.
2. They are able to read and write.
3. They must be deemed to be honest and reliable.
4. They must be deemed to be hardworking.
5. They must submit a profit and loss account.
6. Form a group of five businesses.
7. Attend seminars on introduction to the program, marketing and finance.
If the loan is approved, the person is arranged in groups of five businesses who are given credit together. No member of this group may be related to another member. Should any member of the group default, the other members are responsible for repayment. This reduces the risk of the loan and increases the business communities shared responsibility for success. This is called the group guarantee scheme.
Successful applicants must also do the following;
1. Pay for and attend three seminars over the first three weeks of the loan;
a. Introduction to TCBA.
b. Marketing skills.
c. Bookkeeping skills
2. Pay 20,000 Tsh as insurance in the fourth week of the loan (later converted to a component of the loan.
The amounts of initial loans range from 50,000 Tanzanian Shillings (Tsh) to 100,000 Tsh, equivalent to approximately US$50 to US$100. If the loan has been successfully repaid, the applicant may apply for subsequent loans up to 500,000 Tsh (US$500). Loan periods range from 25 to 50 weeks.
Results
In 2002 the micro-finance program was launched with 45 local businesses. Review of the first batch of loans showed an impressive 90% repayment rate. Many of these businesses requested loans of higher amounts, further indicating success of the program.
In response to the overwhelming success and popularity, TCBA completed a second program in May 2003 with 80 local businesses. The program also went through review and refinement in order to maximise the chances of success.
TCBA now works with more than 300 businesses who have applied for and been granted loans. The original capital amount has been recycled more than two and a half times, indicating strong financial management and a high repayment rate.
Tanzanian businesses have been able to grow and expand through the acquisition of additional stock and business tools. This has lead to increased well being of the families of the business owner and also the families of employees, some of who were employed because of the growth.
Some of the local businesses are;
• Hairdresses
• Business services
• Tourism operators
• Farmers
• Market stall operators
• Shuttle bus owners
Case studies are available upon request.
Other programs
• Disabled - supporting disabled businesses owners.
• Training - developing business owners and employees.
• HIV/AIDS - helping families affected by HIV/AIDS.
How you can help?
• Volunteering – by volunteering, you can provide advice and support to businesses in this program.
• Providing funding – by providing funding, TCBA are able to support more businesses in this program.