People, poor and rich…

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“People, poor and rich, need reliable financing so that their ideas can be brought together with assets to generate long-run sustainable growth. The two key ingredients to a well-functioning market economy are competition and access, competition so that performance keeps improving and access so that everyone has a chance to participate and nobody’s talents are wasted”

(Raghuram G. Rajan, Economic Counsellor and Director, Research Department International Monetary Fund. Advisor for the International Year of Microcredit 2005 )

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The new beneficiaries

Mary William has been waiting for her first microcredit since the last month of May. It seems that she is going to get it in some weeks.  After some months that the few donors didn’t allow the foundation to include new beneficiaries, 2014 bring new investments and the possibility of increase the number of given microcredits.

Today we know two of the new beneficiaries, who live and work in Sala Sala quarter, in the north of Dar Es Salaam.

Mary William lives with her four children in their little house in Sala Sala and she’s known as “Mama Sambusa”, because she cooks sambusas, from the Arab cuisine, very well. She cooks sambusas and other aperitifs on the mornings and she sells it between her neighbors, and also in Mwengue and Tegeta markets, where she has two employees who sell them for her. She also makes juices to sell.

Her business is good, but sometimes she doesn’t have enough money to buy the material and ingredients, so she is thinking about investing her first loan in buy more things in order to cook more food, and also in buying a good fridge for the juices. She is thinking to grow up her business which at the end of the day is a better life for her family.

Her big children go to school, and the little one is at home with her. This little two years girl has a blood illness: “I spend a lot of money on medicines” Mary told us, while she gives the child at least three pills that she eats without doubts.

When the money is available and after a verification phase, Mary will receive her first loan. One of the top points for her is that she teaches her employees how to make the food, so they can cook for her in case she can’t do it because a sickness or whatever.

In the same quarter of Sala Sala we meet Christina at the stone quarry. She comes in boda boda from the market with a big bag of fruit. We meet her there because she wants us to see her business at the quarry, where she employs a man who breaks stone for her. After that, we walk for a while until we arrive at her house, where the charcoal is already extinct and the food is ready. This is her main business: she sells food in the afternoon for 1.500 shillings. Her two daughters help her cooking ugali or rice with beans and spinach every day. Sometimes there is also some meat.

She also wants the microcredit to increase her business. There are six people at home, and only her husband and she have a job, so she wants her daughters to take part in the mamantilie, as are known in Tanzania this kind of place where women cook.

In some days, after passing the verification phase, with a new visit to see if their businesses are going on, Mary and Christina will receive their first microcredit of 300.000 shillings (about 150 euros) each one.

The importance of group leaders

TEVI Foundation works with groups of women as a strategy to guarantee repayments. It is the only way to force some of the women to save money and use it correctly in order to make their business successful, generate more profit and be able to repay the given loan.

Therefore, women are put into groups of five, frequently according to a neighborhood basis. No family ties are allowed in the same group. Every group has a leader that has previously proved to be responsible, and who will be in charge of the rest of the group if something happens. When women have problems to make the repayments, these group leaders are the ones in charge of speaking with them and trying to solve the problem, many times based on their own experience.

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That is why most of the times group leaders are older than the rest because age has proved to be a key factor. Older women are aware of the importance of investing the loans in their business because it is the only way of making profit with them. When micro credits are spent in other things (such as clothes or accessory things) it is impossible for the women to repay on time, as the money that was supposed to be used to increase their business capital has disappeared.

The group leaders are also the ones in charge of regrouping the rest in order to make the repayments on a specific date. This day is normally one week after receiving the money, as this way they will have enough time to invest and get some money back. They are given a timetable, and they must adapt to it.

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Verification: Who should get another microcredit

The process of applying for a microcredit, getting it and repaying it is long, and most of the time takes some years. This is due to all the steps that must be followed, by the foundation and by the beneficiaries as well.

 We’ve already talked about the follow-up process that must be followed when the women are not able to repay the loans. But some of them perform really well and repay on a weekly basis: those are the ones that normally have access to the following microcredits. But before they get them, the field officers must go to the verification process, just to be sure that the women deserve the loans and that they are making the most of them.

Verificating the businesses of the women is a hard work, and is carried out without letting them know that they will be visited. As they have already proven that they are performing really well, most of the time this kind of visit is simple. The field officer gets there, checks how the business goes and has a little chat with the beneficiary. It is then when they are let known that they will be given another microcredit. It is also the moment when they congratulated for their performance, because not all of the beneficiaries –for one or other reason- are able to fulfill the repayments.

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Fatuma Uliza is one of them. 50 year old women, we find her close to the sokoni, where she lives and works. She has been a cook all her life, and now spends all her nights cooking rice, meat and beans in the street: from 8 p.m. until 4 a.m. It is a good moment to make businesses, as people still in the street and shops still open. Before her first microcredit she also used to cook, but she had less capital. That is why she decided to go for a microcredit, because she needed more money to cover her expenses. Now, she has been able to pay her young child’s school fees. She receives some help from her husband, who is a carpenter, but he does not always have a job.

Now she is waiting to receive a second microcredit, and is thinking of investing it in a fruit business to be run during the day by her children. She knows she is going to be able to repay it because during the weekend she also cleans clothes for other people. She knows that working hard is a key to be able to repay.

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Husna has been a tailor for all her life. She decided to apply for a microcredit because she wanted to improve her life standard and couldn’t think of a better way. Having had access to credit has changed her life, and has allowed her to increase her number of businesses.

With her first microcredit apart from increasing her capital, she decided to go for school bags and uniforms, and now this has become her most successful business. And that is very important for her, because her four children depend on her, and although she has her husband’s help this is not always enough to cover the expenses. She has performed really well and has become an example for many of the beneficiaries. That is why now she is waiting for her second microcredit.

These two women are two examples not only for the rest of beneficiaries, but also for their communities: a chance was given to them, and they have known how to take advantage of it.

Follow up: Problems that the women face to repay the loans

Having access to a microcredit implies also the responsibility of being able to repay it back. Not all the women are able to make the correct repayments due to a lot of different circumstances, like diseases or problems related to the weather, for example. This week we focused on the follow up process, and therefore visited some women that were not able to perform well their business and because of that have not been able to fulfill the repayments. Some of them require an advise from the field officer that is in charge of them, while other just need more time.

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Rose Jackson lives in Mtongani and is a second credit beneficiary. She has three children: the eldest, a very young girl of about 17 or 18 years old who is expecting a baby, and two twins who are five months old. Her husband died suddenly last spring and she had to take care of all the family. She used to break stone at the quarry, but she had to give it up because now she has two very little babies to take care of and one of them is sick.

All these problems didn’t allow her to repay weekly the agreed amount of 23.000 shillings. The field officer that went with us to make the visit listened to her problems, understood the situation and encouraged her to go on with her business and pay back the money whenever she cans: “When you have 10.000 tsh, you can bring them; if other week you earn less, for example 2.000 tsh, you can repay that amount as well”. It is the only way she can detain the debt from increasing.

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 We then moved on to Kunduchi Pwani, where we would meet the rest of the women. When we arrived to the first house, the beneficiary that we were supposed to meet wasn’t there, so we walked some streets further and found her in another house. Fatouma, a second credit beneficiary as well, cooks samaki (fish in Swahili) in her house, but today she is not working. She tell us that it is not a good season for the fishermen, that are the ones who sell the fish in the district, and that she´s not feeling well today either. Almost all of the women who are dedicated to cook fish in Kunduchi Pwani explain us that they depend too heavily on fishermen for their business, and that now it is not a good moment for fishing.

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The field officer that goes with us, Haika, proposes her to start a new business so that she can earn money and be able to repay the debt, and she says that she is thinking about buying dela (a typical local clothe) and selling it among her neighbours, house by house. Fatouma assures that the little amount of money that she has earn in the last days has been invested to pay the house’s expenses, as well as to buy food for her family, and that she has saved a little part to repay the loan. Our colleague tells her that it is a good idea to think about undertaking a new business and repaying the loan little by little.

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We then approach the part of the neighborhood located in front of the beach in order to find Mwambua Rajabu, who is sitting next to another neighbor. She is a third microcredit beneficiary, and usually cooks chapati and fish, but now she can not do much: the fact that there is not enough fish does not even attract fishermen to eat her food, and these are her main customers. She has a debt of 20,000 shillings, and assures that she may be able to return it back this week, because she is participating in a community group of loans where money is lent to her. These groups of people, known in Tanzania as “saccos”, help each other by putting money into a pot weekly, and this money is used by a different person each week, depending on the needs. It is really curious how microloans are distributed and used individually, but debts are shared.

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The last woman that we visit feels sick, and therefore is lying in the entrance of her house. She tells us that although she promised to repay her debt today, she felt ill and had to invest the money in medicines.

In microfinance projects, not all the stories are successful stories, because although women make an effort to go ahead with their business and to make them profitable, unexpected problems, such as illnesses, can appear, and have an influence in their repayment capacity. And of course, in their quality of life, which is a priority for everyone all around the world.

Giving out the microcredits

The delivery of microcredits to women who have shown to make good use of them is subject, first, to the availability of credit that the foundation has. Being an entity that depends on private donors for its operation means that it is not always possible to make a periodic payment of the loans. In addition, due to the large number of beneficiaries who reach the foundation, it is necessary to make a selection of the women that must receive the microcredits according to different aspects, especially the proper repayment of the loans as well as the achievements in their businesses.

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It’s a Thursday morning and the office is full of women sitting on chairs that have been distributed by our colleagues around the main room. It is then also when some of them prepare the sheets for each of them, that are constantly renewed with photos and data that change in every release of a new microcredit. Others are in charge of the money and put it into envelopes with different amounts, depending on the loan each woman is about to receive. The first microcredit is of 300,000 Tanzanian shillings (about 150 euros), the second one 450,000, the third and fourth 750,000 and 900,000, respectively. The repayment that the women need to make is weekly, and begins two weeks after receiving the money. The interest rate is paid back with the same regularity, and it is of 20%, the lowest percentage legally accepted.

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When everything is ready, the women begin to move to a separate room in order of arrival, regardless of the credit they will receive. The process, which is carried out with five different groups, will be repeated with all of them. Our colleagues welcome the  women and invest much time, as it is tradition in the Swahili culture, in greetings. Then a colleague explains the process of obtaining a new microcredit and reads the contract for them, which is the same for all of them. Once all of them have understood it, a speech is given out. Here, women are warned that the money should be properly invested. This means that money should be used to improve their business and not for another type of needs, because if the business runs well they would be able to cover other needs.

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All of them accept the conditions and are aware what the loan must be invested in. Then, an exchange of proposals takes place, and it is then when the women express those improvements and changes that they believe the foundation could make. Some of them confess that Tevi is one of the best organizations focused on microcredits, while others ask for more time to repay the money, and some of them propose monthly loans instead of weekly.

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After the chat, it’s time to hand out the envelopes with the money and to sign the contract and a receipt with a copy for both parties.

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Each woman opens her envelop and counts the money to check that it is correct. Once these procedures are over, a date for the first repayment is set: two weeks are given to fulfill it.

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Before leaving the office, the book of records is given to them , where loans and repayments have been updated.

The process to obtain a microcredit

Women know about the existence of microcredit financing mainly thanks to other beneficiaries that often live in the same neighborhood. Those interested in having acess to a microcredit should meet other four women interested in order to form groups of five and register to apply for a loan. This is a strategy designed by the foundation to secure the repayment of the credits: if there are problems, they can help one each other. Also, because it is a way of counting with the pressure that the rest of the group can apply. The main requirement is that these women live in the same area and know each other, as well as their business.

Once registered, a field officer of the organization goes to their neighborhood to see how they live and how they run their business. It is in that moment when the first interview is done, based on a standard questionnaire. Women are asked about their lives in general: how many people depend on them, who else contributes to the family economy, what kind of business they conduct or plan to start running, their level of education… With all this information, an assessment of their capital need is made.

One or two weeks after the first interview, another field officer repeats the visit in order to check the answers that the group of women had given, evaluating if they were enough sincere. It is then when the officer decides if the microcredit is granted or not.

Once granted, microcredit repayments are returned on a weekly basis, and must be registered in a book that the foundation gives to the women, which must be constantly updated.

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Sometimes loans are denied because there is some irregularity in the initial questionnaire, or some kind of relationship among the women is found. Women from the same group are not allowed to be relatives, because if there is an economic problem in the family, all of them would have problems to make the repayment.

This is a short summary of the procedure followed to get the first microcredit . This week we went to see which are the steps followed to get a second loan. The first thing is a visit of the field officer, that goes to the beneficiaries’ home or business to speak with them about the evolution of their investment. Four main questions are made: how the first credit has influenced their lives, if then women have faced problems to return the money, how is the business running and what they intend to do with the next loan.

These are the stories of three of those women who will be able to access a second microcredit because they are running their businesses really well and are able of making  weekly repayments properly.

Mudanaibi Mameno lives in Bondeni, where she runs a guengue , a street stall where she sells vegetables. The first microcredit allowed her to improve the revenue of her business, as well as to start a new one based on selling kitengue, dela, and other local clothes, by cash or by credit. Now, she no longer sells vegetables , because it is not a business as profitable as the clothes. With the next loan, she intends to rent a room to sell different types of clothing, instead of visiting her neighbors’ house.

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In the same neighborhood, we also visited Rose Penti, who has always been dedicated to growing and selling her own vegetables. With the first loan she was able of increasing her  business because it allowed her to buy more fertilizer, which means to extend the crops, both in quantity and diversity. Furthermore, she also began selling granulated soap in the evenings. With the second microcredit she plans to buy more fertilizer and increase the sales, as well as to improve her way of life by building a new home for herself and her five children.

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We take a dala dala to Mtongani, where Mary Andrea Shirima receives us in her shoe store, located in one of the streets that has access to the soko, or local market. Mary has always sold shoes: she first sold plastic shoes (or yebo yebo), but credit allowed to enlarge the store where she sells, as well as to start selling rubber shoes. If she has access to a new microcredit, she wants to continue making bigger her business, which means also to increase her quality of life.

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