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.
Source: The Daily News, www.dailynews.co.tz, reported by Orton Kiishweko in Dar es Salaam
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