REPORT__Evaluating_the_potential_of_microfinance_for_sanitation_in_Tanzania_May_2013

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
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