AT Mtamba Village in Kisarawe District, Agatha Daniel, a mother of two is a happy entrepreneur who has benefitted from her agriculture project and currently building a permanent house for her family, thanks to a loan she got from the Jaribu Village Savings and Loans Associations (VSLA).
Agatha, at first, intended to acquire a 'small' loan from the Jaribu Savings and Loans Associations, to buy school uniforms for her children. But then, when she realized she was able to pay back her first loan of 80,000/- early this year, she decided to take up another loan of 300,000/- for another personal project. To her, it is this 300,000/- that turned her from a house wife with no income to the entrepreneur she is today, who gets over a million shillings annual profit from her agriculture business.
"For the 300,000/- I bought an acre of land where I cultivate maize and cassava twice a year," she says. She describes her agriculture project as a business venture that has guaranteed her improved income. Ms Daniel is one such individual whose life has been transformed by village microfinance schemes. The initiatives, run by ordinary individuals as members were established in Kisarawe and Kibaha coastal areas, some 50 km from the capital, Dar es Salaam.
In Homboza Village, another VSLA group has ventured into the art specializing in carving. The group produces art and craft products they sell locally. "We started by contributing as a group to start this business. We intend to teach young people art skills so that they can produce products and sell for a living. The cheapest carvings cost 15,000/-," said Kasmili Zanwali, a member who adds that a finished product can fetch up to 30,000/-.
"We hope to expand our business in future and sell our products to the international market," he adds. At inception, the members invested by purchasing initial 'shares' and participating in regular management meetings where additional shares were bought to increase savings. It was an idea fronted by Plan International, a not for profit organisation operating in Tanzania, structured with a common set of objectives that include groupbased farming activities, loan insurance and support to the poor and vulnerable children.
The members have also established Input Market Associations (IMA) as umbrella bodies that negotiate for loans on behalf of the members. The IMAs, operating as umbrellas of VSLA, work as financial negotiators able to mobilize for additional capital from member VSLAs, that can be lent to those that are short of loan capital at critical times (usually early) in the annual cycle. IMA and VSLA avail small loans from the invested monies to members for either education or business purposes which are repaid at reasonable interest rates.
At the end of every year, all shareholders receive their initial investment plus dividends based on the number of shares they own. The amount of savings is usually determined by the group. Through IMAs, the VSLAs are now providing members with a value proposition for loans that by far exceeds the rates charged by commercial banking institutions.
Like Agatha Daniel, a 37-year-old father of four in Kibaha District, Almasi Omari, admits that since he joined the VSLA, he has established a farming venture that has raised his profile to become a symbol of hope for many, including the youths in his community who are showing greater interest to pursue profitable business ventures that they erstwhile could not imagine.
"I am keen to educate the youths in my village to also get the knowledge about savings and loans for their own benefit. I have managed to get eight youths who assist me in the farm," said Almasi who has also constructed a 3-bedroom house and three shops. "I used to be a hawker on the streets and offices in Dar es Salaam selling cashew nuts. I would also trade in rice but with not much profit.
As I did this, I met people who asked me whether my business was able to sustain me and my family. Some of them advised me to start farming as they had seen the benefits of farming. Others talked about small village savings groups and encouraged me to join, but I was very doubtful that such groups were genuine," says Almasi. Armed with the right attitude and the dedication to succeed, Almasi says he left the city headed back to the village to try his hand in farming.
"When I went back to the village, I started planting tomatoes and onions, but there still was not so much profit. I used to see people meet in groups and I was keen to find out what they were about. I asked my friends, who explained and told me that I could join the groups." Almasi later realised the key to unlock his potential from groupings of people who - on enquiry - were already reaping the fruits of being members of village associations where they could attract loans, save part of their proceeds and make decent returns from their investments.
"I joined one group with my wife but we were not ready to take any loan because we wanted to study and see how they conduct business. I keenly observed how other members were able to save and improve their incomes from savings. This motivated me to buy shares and contribute to my savings. I invested the money in my small farm and managed to raise three million shillings in one year," says Almasi.
Ever since, Almasi has expanded his farming business to include capsicum and okra which he sells at the local market. Had it not been for the VSLA, he would not have achieved the success he enjoys today. Other than the high cost of bank loans, Almasi says he "could not meet the strict requirements of bank loans." "Because of the VSLA and IMA my family now lives a better life.
I don't think I would have managed to educate my daughter," says Almasi who is among the few who have managed to provide their children with the privilege of studying at a private English Medium school. Another VSLA member, Rajab Muhando, who is a widower and father of seven, is pleased that he made the right decision to join the VSLA in his locality. Today, he is a supplier of uniforms to schools in his village in Kibaha.
"I borrowed money from IMA and invested in my sewing business. I have bought another sewing machine and my business has expanded significantly. I have two shops now from where I supply uniforms to both primary and high schools in the community, says an elated Rajab. In a school term, he says he is able to supply about 25 uniforms for primary school and 20 for secondary schools.
The chairperson of Jaribu, Francis Mwanri, says that in 2010, they started the group to put finances together to support members in moments of emergencies. But when the group surpassed five members, they turned it into a microfinance group which could sell shares and loans to members as well. "We put in place a principle of each member being able to borrow three times the value of their savings," he says.
The project has helped them build a savings culture, they have been able to pay school fees for their children, building permanent houses, becoming entrepreneurs, increased family income and started income generating activities Plan Tanzania Country Director, David Muthungu said: "Plan started creating IMAs in Geita in 2009 and has spread this apex approach to other parts of the country, currently reaching 67 IMAs in place."
"Plan implements this project in three programme units across the country and is expecting to reach 32,000 clients through 120 IMAs by June 2015. Under the IMA strengthening project Plan aims to reach over 1,200 VSLA groups," he states.