REPORT__Evaluating_the_potential_of_microfinance_for_sanitation_in_Tanzania_May_2013

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of products e.g. at some point FINCA Uganda had a solar loan product. Name of institution Tujijenge Tanzania Type of institution Company Limited by shares Interest in sanitation? Tujijenge Africa holds two MFIs in Tanzania – Tujijenge Tanzania Ltd and Tujijenge Microfinance Ltd. Tujijenge does not offer any sanitation financing but could consider the sector through medical insurance Name of contact and contact details scheme. Ms. Felistus Coutinho (Executive Director – Tujijenge Africa – the parent NGO) Mr. Shafi Nambobi (Managing Director – Tujijenge Tanzania Ltd) Website www.tujijengeafrica.org 1. Main characteristics of the institution General Tujijenge Africa was founded in early 2006 by a group of six microfinance experts committed to professionalise the sector in Tanzania. Tujijenge Africa has established 2 MFIs in Tanzania and plans to establish a third MFI in Uganda. The founders contributed their own start-up capital to form Tujijenge Tanzania (TTZ) hence taking a new direction in funding MFI operations in Africa. In 2008, TA acquired the second MFI from SEF, a local MFI, and named it Tujijenge Microfinance. Tujijenge Africa’s mission is to improve lives through provision of microfinance. TTZ therefore has the propensity to offer a variety of products that may improve clients’ lives. Below is a summary of the performance of Tujijenge Africa operations. Key parameters Values 1 Branches/Office 3 (1 in Dar, 2 upcountry) 2 Staff members 98 3 Borrowers 17,000 (300 as individual borrowers) 4 Client groups 800 5 Outstanding Loan Portfolio *US$ 2,589,645 (TZS 4 Billion) Individual loans portfolio of TZS 800 million 6 Average loan balance per borrower *US$ 167.7 (TZS 260,000) 7 Deposits (Cash collateral) *US$ 517,929 8 Repayment Rate 96 - 98% *Rate: TZS 1550 TA has made considerable growth. As of January 1st 2010 the total portfolio was TZS 3.08 billion, with 13,260 clients. As seen above, this has since reached TZS 4 billion. In 2011, Tujijenge Africa plans to open 5 branches for Tujijenge Tanzania and start another MFI in Uganda. Tujijenge Afrika will experiment with environmentally conscious programs to be introduced to clients and staff Product Types: TTZ offers both group and individual loans to its clients. Clients form small groups (10 clients), typically smaller than is typical in the microfinance sector. Borrowers deposit 20% of the loan amount in cash as part of loan collateral. However, individual borrowers pledge assets to access the loans. TTZ provides working capital loans to small enterprises. This forms the largest proportion 50
of the loan portfolio. The MFI recently introduced a solar rechargeable lamps loan. This was pilot tested for 3 months targeting 300 households. To their surprise, the take up was double – 700 lamps were sold. TTZ partnered with a distributor who provided the lamps, TTZ provided loans to the clients and receive repayment over time. Some clients use the lamps in their shops and trade stalls in the evenings. The impact includes, clients do not spend more cash on kerosene and improved health by reducing risks to respiratory infections related to smoke emitted by the kerosene lamps used by most of the low income households. The lamps price ranges from TZS 15,000 – 65,000, though the prices have increase with increased adoption and demand. Due to limited capital, TTZ has not expanded access to the solar lamp loan product. All loans attract 3% interest rate over 4 – 6 months. Borrowers pay application fee of TZS 4000. Maximum loan amount advance is TZS 500,000. The average loan sizes is about TZS 480,000 – this usually seasonal. TTZ targets the productive poor, majority of them living on less than one dollar a day with average loan sizes of about TZS 300,000 and daily revenue of about a dollar. However, TTZ has not done much research on poverty measurements due to limited capacity to develop social indicators and execute such assessments. But broadly, TTZ targets the lower/bottom of the pyramid. Funding arrangements: The founders of Tujijenge Africa put up their own start-up capital to invest in the Tujijenge Tanzania MFI operations. The share capital is about 11% of the liabilities. The organisation uses shareholders equity and debt financing to finance operations. Debt financing both from local and international banks as well as donor organisations. 2. Interest in microfinance for sanitation TTZ does not have a loan product for financing sanitation facilities or services. However, the directors feel that there is potential in Dar es Salaam since the city is spread out with few public toilets. There is a challenge however at the household level since most residents are tenants. However, with improved toilets, landlords would improve the value of their houses and therefore increase the rents. Upon further discussions, the directors noted that there could be opportunities in including sanitation in a medical insurance cover TTZ plans to pilot test. 3. Product development experience TTZ, being a company limited by shares, operates as a commercial entity despite having a social mission. Unlike most of the MFIs in the country, TTZ does not have an NGO background or an international parent organization. The directors also have a strong relationship with MicroSave Consulting Ltd and have attended some of MicroSave market research and product development trainings. As such TTZ has developed different products within the short time of its history. Besides its core working capital loans, it has tested the solar lamp loans and plans to pilot a health loan product. The health loan will be piloted in partnership with PharmAccess (Netherlands based development company focusing on health) to promote access to affordable health care. The partner is looking for an insurance company to provide the insurance cover. TTZ plans to provide clients with loans to pay for the insurance premium then repay the loan instalments over 6 months. The program has delayed due to limited insurance companies interested in the segment. However, TTZ is ready with a loan product and looks forward to offering their clients this product. TTZ considers the product as low risk with strong social impact as the package will cover hospitalisation with a combination of health education aimed at reducing incidences of primary illness which are largely malaria (70% of illness cases) and waterborne diseases (accounting for another 25 - 30% of the diseases among the low income people. In terms of funding for the product development, “PharmAccess 51
Page 1 and 2: RESEARCH REPORT Evaluating the pote
Page 3 and 4: Contents Abbreviations and acronyms
Page 5 and 6: Executive Summary This case study i
Page 7 and 8: Identifying the type of products th
Page 9 and 10: 1. Introduction 1.1. Case study obj
Page 11 and 12: sewers will fail if the sewers them
Page 13 and 14: In the 1970s, the high profile Mtu
Page 15 and 16: Table 1: Coverage and yearly capita
Page 17 and 18: 3. Evaluating the potential of micr
Page 19 and 20: Basic components that make up simpl
Page 21 and 22: Box 6: Revolving funds for water an
Page 23 and 24: When they were interviewed in mid-2
Page 25 and 26: Are household microfinance products
Page 27 and 28: 3.2 Microfinance for sanitation ent
Page 29 and 30: Could this segment be developed and
Page 31 and 32: of microfinance products could help
Page 33 and 34: Annex A: Overview of sanitation mic
Page 35 and 36: Within each group, there is a Jenga
Page 37 and 38: a position to absorb more external
Page 39 and 40: Sanitation Service Plan, which outl
Page 41 and 42: 3. Sources of funding The micro-cre
Page 43 and 44: Name of institution WaterAid Tanzan
Page 45 and 46: households to UMAWA for toilet empt
Page 47 and 48: provide entrepreneurship training a
Page 49: take business property, basic house
Page 53 and 54: Name of financial institution Mkomb
Page 55 and 56: Name of institution PRIDE Tanzania
Page 57 and 58: Annex C: List of people consulted a
Page 59 and 60: Commercial Bank Jimmy Ohanya KCB Ma

REPORT__Evaluating_the_potential_of_microfinance_for_sanitation_in_Tanzania_May_2013

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