REPORT__Evaluating_the_potential_of_microfinance_for_sanitation_in_Tanzania_May_2013

groups are also encouraged to conduct socio-economic surveys about how to improve
living conditions for the community as a whole (this is referred to as “enumeration”) with
respect to issues such as housing, water or sanitation. The groups can therefore act as
“agents of change” by using this information to advocate for changes and improvements
with government officials.
To date, CCI has supported the establishment of 52 saving schemes throughout Dar Es
Salaam; 37 in Arusha, 40 in Dodoma, 3 in Morogoro, 31 in Mara and 11 in Mwanza. The
saving schemes in each town join together to form a Federation at town or city level.
These city-level Federations then joined to form the Tanzania Federation of the Urban
Poor.
The Tanzania Urban Poor Fund or “Jenga Fund”
With support from CCI, the Tanzania Federation of the Urban Poor has developed its own
funding mechanism, the Tanzania Urban Poor Fund, or Jenga Fund (meaning “let’s build”
in Swahili) which is used to mobilise savings from the Federations, combine them with
other sources of funding (presently from SDI and Homeless International) and give loans
to a variety of programmes. The Jenga fund has evolved organically since it was started in
2006.
At the time of its creation, members used to save in their respective savings accounts.
Regional Jenga funds accounts were opened in 2011. Since 2008, CCI has supported the
coordination of the donor funds for housing and sanitation to the groups.
Saving and credit schemes formed at the local level can be used to make two types of
savings:
Small savings into a local saving scheme, into which they save anything they can
spare (it could be as low as 50 or 100 TZS per day. These funds stay with the
community and can be used to carry out their own lending activities. Group members
need to have been saving for 2 to 3 months before they can access a loan.
Savings into the Urban Poor Fund. Group members are expected to save 500TZS per
month into the Urban Poor Fund: these funds are contributed as a
donation/subscription which entitles them to receive loans. There are then internal
rules to Jenga that organise how the pooled funds are then distributed between the
different Federations and their members.
Jenga Fund contributors can obtain loans for water connections, sanitation and housing.
Members can obtain other small loans for livelihood activities from their own savings
schemes.
Members can obtain one-year loan at a flat annual interest rate of 10%, with values
ranging between TZS 150,000 and 200,000 (between USD 110 and 150). The interest
rate is equivalent to 0.83% monthly, when other MFIs would typically charge much higher
rates (FINCA, for example, charges 3% per month for individual loans and 4% for group
loans). This comparatively lower interest rate is due to the fact that they have their own
sources of funding from member savings and donations from international organisations. If
they were borrowing from a bank as other MFIs do, they would need to charge a higher
interest rate.
The Jenga Fund is managed as a slightly separate entity from the rest of CCI, with a
separate manager (whose costs are covered by CCI’s general budget). However, CCI is
on the Board of Jenga, together with a few community members. The separation is clearly
explained to the communities so as to avoid confusion between the two. Funds that are
lend for water and sanitation activities are meant to be revolved within the community and
are not necessarily paid back to the Jenga fund.
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