Unit Trust of Tanzania Microfinance (UTT-MFI) has dished out over 400m/- loans in its two and half months after opening services, with competitive interest rates wooing more borrowers.The unit, which has been transformed into a full-fledged company, apart from charging competitive interest rates to borrowers, use advanced technology on acquiring and repaying loans—especially mobile money transfer platforms.
UTT Microfinance acting CEO James Washima said in Dar es Salaam on Tuesday that out of the issued loans, half of it went to three savings and credits cooperatives, with over 200 members.
“We have received an overwhelming response because of low and competitive interest rates on the loans we offer,” Mr Washima said as he introduced the company after its incorporation under the company laws.
Without revealing the rate of interest charged, the acting CEO said some microfinance institutions were charging interest rates of between 40 and 120 per cent to small and medium enterprises. “We cannot reveal ours because of competition, but we want to set a benchmark for micro-lending interest rates in the country,” Mr Washima said.
The ‘Daily News’ has however learnt from reliable sources that the firm charges 18 per cent. When the unit was launched in April this year, the UTT said the goal was to usher in a new interest rate era for micro-investors.
UTT Microfinance strived to introduce new products—Mshahara Loans that catered for civil servants and Mshikamano Loans that targets SMEs in groups of five—as they lack collateral.
“Our study shows that most SMEs have little if anything to save as they operate on a hand-to-mouth basis,” Mr Washima said, adding that the objective of the unit is to supplement and instill saving and investment culture among citizens through financing economic viable and bankable projects.
The UTT-MFI issues loans to all sectors of the economy under four products—Niwezeshe for UTT unit holders only and Nufaika for non UTT member but with sponsorship of the UTT member.
Others are Biashara for small and medium income businesses under self guarantee mode and Taasisi for SMEs and SACCOs that have proven performance record and registered in accordance with existing laws.
The UTT members 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 minimum lending amount is 50,000/- while 50m/- is the highest for individual but institutions go up to 2bn/-.
Source: The Daily News, reported from Dar es Salaam Tanzania
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