REPORT__Evaluating_the_potential_of_microfinance_for_sanitation_in_Tanzania_May_2013

3. Sources of funding
The micro-credit sanitation project is a component of the SECO-funded programme
entitled "Improving Water Supply and Sanitation Services in Dodoma and Tabora".
Funding for the microcredit project was generated from the contingency line (DUWASA
component) of the main project budget. Total project budget was set at USD 50,000
(equivalent to TSh 62.5 million if converted at the rate applicable at the start of the project,
i.e. TSh 1,250 to the USD).
Of this budget, 73% was assigned to seed money for microloans and the rest is used to
pay for staff and travel costs of MAMADO and EAWAG/SANDEC. Project funding was
split into two phases. A pilot phase, with funding of USD 10,000 for about 50 to 70
microloans was initially supposed to last for 10 months. Depending on the success of this
phase, the rest of the funding would be allocated for scale up.
Conditions specified in advance for deciding on the scale-up included:
• MAMADO and the HCES Committee in Chang'ombe can prove that sufficient demand
for microloans exist beyond the trial phase, to further expand the microcredit project
• Repayment of the microloans attributed in 2010 meets the donor's requirements (< 5%
loan defaults), and
• MAMADO's management of the repayment process meets professional accounting
standards; this will be evidenced by the financial audit of the project account.
If the conditions are not met or if the Consultant provides another valuable reason not to
continue the project, the project could be stopped with no further payments.
At the start of the project, SECO stated that it had no intention to extend its financial
contribution beyond the project. Part of the project activities will therefore consist of
defining the future ownership, use and management of the seed and reinvested funds;
this needs to be done 6 months before the termination of this project. Final decision on
the future of the project (and residual funds from the seed fund) will be formulated by the
Project Steering Committee.
4. Overall assessment of their sanitation microfinance experience
As of July 2011, 20 toilets have been constructed which were in use, as opposed to the
original target of 50 to 70 toilets. Fewer toilets were constructed than it had been
anticipated because of higher costs than anticipated, such as for making tools for brick
making, watering of bricks, payments for people who watered bricks, monitoring and
supervision, transportation of bricks and other building materials from the production
centre to individual households where the structures are to be constructed. Two
households among 20 households attempted to change the technology by applying tiles
on the floor. They thought that they were decorating while unknowingly affecting the
intended technology. They wanted to use both toilet rooms as a bathroom; they were told
not to alter the original design.
Repayment has been good: most households are paying in a timely manner, others need
some follow up and a few are not repaying in a timely manner due to deaths or disease in
the family. They have not faced the challenge of someone refusing to pay as yet.
Collecting repayment involves a MAMADO staff physically visiting the community with the
assistance of the Community Project Committee (made up of street leaders). In addition,
they have received 180 loan applications, which they are currently unable to serve as they
are still waiting for the funds for the scaling-up phase.
As the project started about a year ago, it showed that demand is very high and higher
than expected, as demonstrated by the high number of applications received by the office.
5. Recommendations for future development of their sanitation microfinance programmes
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