Microfinance can be a critical element of an effective development intervention for poverty reduction particularly in rural areas to enhance access to financial services that could lead to improved living standards.
It is generally accepted that without permanent access to institutional microfinance, most poor households would continue to rely on meagre self-finance or informal sources of microfinance, which limits their ability to actively participate and benefit from development opportunities.
Improved access and efficient provision of savings, credit, and insurance facilities in particular can enable the poor to have smooth consumption, manage risks better, gradually build their asset base, develop micro enterprises and enhance income earning capacity.
Small Entrepreneurs Loan Facility (SELF) project has expressed its plans to transform itself into an entity so as to enable majority of the people particularly in the rural areas have access to microfinance services.
The project Manager Mr Abiah Kaaya said last week in Dar es Salaam that the plan is being implemented by the government and African Development Bank. A total of 90,637 people have benefitted from loans funds disbursed by SELF since when it became operational about a decade ago.
SELF focus at wholesaling loan funds to intermediaries such as Savings and Credit Cooperatives (SACCOs) and Microfinance Finance Institutions (MFIs) at market interest rates applicable to the relevant loan product.
The project scheduled to end in 2015 focuses on reduction of poverty through facilitation of sustainable micro finance services aimed at enhancing economic opportunity and welfare of entrepreneurs in rural and urban areas.
“The process to undertake the plan has already started and before the end of the project (2015) we are expecting to settle the plan,” he said adding that some of the procedures such as consultancy studies have been completed.
He was speaking during a ceremony to hand over 300m/- and 150m/- loans to Victoria Finance Limited and Mwanga Community Bank respectively.
The facility that was started in 2000 has issued loans amounting to 43bn/- to individuals and micro finance institutions including the Savings and Credit Cooperatives (SACCOS). Some 9,500 entrepreneurs and 361 institutions benefited from the loan (43bn/).
The facility implemented in two phases has planned to issue 18bn/- loans in the second phase, 2009/10 to June 2014. The majority of the beneficiaries refund the loans as required and thus enabling the facility to continue carrying out the services to the majority of people in need.
The Director of Mwanga Community Bank, Mr Abby Ghuhia said the loans acquired will help to benefit the customers of the bank mostly entrepreneurs and financial institutions.
SELF’s Promotional and Marketing Officer Mr Phares Lungu, said recently that reduction of poverty through facilitation of sustainable micro-finance services aimed at enhancing economic opportunity and welfare of enterprising rural and urban poor.
The facility strives further to enhance the rural people’s access to micro finance by way of credit and savings, sensitization and catalyzing the formation of the community based organisations.
More than 70 per cent of the 389 institutions loaned by SELF are SACCOs while above 50 per cent of the total number of beneficiaries are women.
In addition, SELF has been outsourcing institutional and business development services from viable service providers’ already available country wide in both the private and public sector.
The credit facility has injected 2,040 loans in view of supporting rural poor households’ access and tap financial resources and takes advantage of potentially profitable investment opportunities.
Ultimately, the project is expected to support at least 0.82 million clients and create an average of 1.5 million additional full time jobs in every new micro-enterprise established by the 2040 loans.
Apart from employment creation, SELF has contributed significantly to the improvement of people’s living standards, payment of school fees, better shelter. SELF partner MFIs that accessed loans have experienced growth in terms of number of clients and mobilized savings and improved quality of their loan portfolio.
MFIs gross profit margin, net profit margin and return on assets have consistently increased. The credit facility was currently implementing the second phase 2009/10 to June 2014 on the basic assumption that SELF II project will transform into a corporate entity during project implementation.
Source Tanzania Daily news
