Met with microfinance firm here in Dar es Salaam called SAHEKO today. They have loans ranging in size from 50,000 Tanzanian Schillings (exchange rate is about $1 to 1,200 TS) to up to 500,000 TS. All loans are given to women in groups of five who serve as guarantors for others. The loans are only given to women who own existing businesses. Due diligence is done through site visits, the other four women guaranteeing the loan and letters from local government official (a street chairperson or perhaps a mtaa chair who can vouch for character). Loans are for two months and interest is 20% over that two months. So you borrow 50,000 TS on January 1st, you pay back 60,000 TS at the end of February.
Extensive business training is also provided in Swahili. There is a basic level training and a more advanced set delivered by the management team of SAHEKO.
Interesting contrast with what the Bustani Mtaa Chairperson said another local firm was offering:
• 50,000 Tanzanian Schillings go to the loanee (about $45)
• 6,000 additional is taken as a bond
• 30,000 is taken as profit
This amount is collateralized with the family’s furniture and is quite frequent that repossessions occur. The loan is repaid over a period of approximately 3 months.
Microfinance is clearly considered a huge part of the solution in Tanzania. It's mentioned everywhere, newspapers, street corner conversations, etc. (I heard Hilary Clinton has even been talking about it).