UTT throws its weight on microfinance

Unit Trust of Tanzania (UTT) has launched a microfinance unit to usher in a new interest rate era for micro-investors. 

The unit, UTT Microfinance (UTT-MFI), apart from changing competitive interest rate to lenders, would also use advanced technology on acquiring and repaying loans —especially mobile money transfer platforms.

The UTT Microfinance Chief Operating Officer, Mr James Washima, told reporters in Dar es Salaam yesterday that application process and receiving loan takes merely a day for the fund investors with very low interest rate charged.

“The interest rate is only 18 per cent compared to other microinstitutions that charge up to 48 per cent,” Mr Washima said. He said the objective of the unit is to supplement and fast track savings and investment culture through financing of economic viable and bankable projects.

The UTT-MFI issues loans to all walk of the economy under four products, namely Niwezeshe designed for UTT unit holders only and Nufaika for non UTT member but sponsored by a member. 

Others are Biashara for small and medium income businesses under self guarantee mode and Taasisi for SMEs, Saccos and the like that have proven performance record while registered in accordance with existing laws.

The UTT members will use their units as collateral to borrow up to 75 per cent and 85 per cent of their value of live units for Niwezeshe and Nufaika loans, respectively. “The return period is between six to two years, with the loan repayment being on monthly basis,” Mr Washima said.

He added: “Access and repayment will be conducted through mobile money transfer platform. We don’t want our clients to travel all the way from upcountry for either looking or paying for loans.” 

However, he said all loans issued by UTT-MFI have to be channelled to productive sector and not in leisure activities like wedding or private cars.

The minimum lending amount is 50,000/- while 50m/- is the highest for individuals while institutions can get up to 2bn/-. 

The UTT CEO, Dr Hamis Kibola, said the microfinance is a stand alone unit of UTT with own capital and will not use the fund money for its activities unless by borrowing and paying interest.

He said the unit holders have advantages and opportunities as they could borrow against their investment and continue getting same returns while using the loan to generate additional income.

“The advantage of the unit (UTT-MFI) is that it will not only issue loans but also conduct education to potential borrowers on how to conduct and keep business prior of getting money,” Dr Kibola said. 

The idea behind UTT-MFI is to contribute towards stability and maturity of the microfinance subsector in the country by easing loans’ obtaining ways.
Source: The Daily News, www.dailynews.co.tz, reported by Abduel Elinaza in Dar es Salaam
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