SAHEKO Microfinance in Dar es Salaam

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. 

However, it's tough to make an apples to apples comparison, since we don't know what the collateral structure was for those loans and how much training they were getting.

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).

Also met with an AMAZING band today in Dar that has an educational message (speaking out against HIV, drugs, drinking, etc.).  Think a guy playing two flutes at the same time using his nostrils.  I took some great video of our MIT G-Lab team dancing with them and will post when I get back to the states.   

Yes Man on East Africa's Largest Movie Screen

It just so happens that Wista’s Chalet is about a five minute walk from the largest movie screen in East Africa.  The Century Cinemax at the Mlimani City Mall was showing Jim Carrey’s Yes Man in Theater One, so I went to check it out.  

Just some observations about seeing a movie here:

• The selection itself was interesting – a documentary about Barack Obama, High School Musical, Australia and Yes Man.

• An absurd number of previews – probably around 10 (Seven Pounds, Twilight, Bangkok Dangerous, Underworld: Rise of the Lycans (need to remember to look up who the very attractive actress in the movie is), Transporter 3, a Clive Owen movie, Bride War and a few others.  The movie was supposed to start at 7:30 and didn’t until 8:05.

• The sound system had a few glitches, but overall the quality of the experience was no different than seeing a movie at the Boston Common AMC Loews. 

• Seating is assigned, and prices are flat at $8 for all seats.  No student, senior, children or other second degree price discrimination discounts from what I could see.

• The attendance was tops 15 people.  Not a good sign.  

• Yes Man itself was a pretty mediocre movie, but it served its purpose – getting out of the hotel room for a few hours and being mildly amused.  One thing I noticed were some pretty blatant product placements – especially the Tempurpedic mattress…

The mall where the theater is located is a strange experience in some ways.  It has a supermarket that’s equally expensive as the US – in many cases 10 or 20 times more expensive than buying things on the street.   One observation from the supermarket is that generic products really appear to stink here.  Bokomo Maize Flakes from South Africa are just dreadful – they taste like unprocessed corn meal.  

It’s quite a melting pot as well – Indians, Arabs, Tanzanians, white Americans, black Americans and Chinese are all packed in at Mlimani City.  I also met an Angolan at the money change.  

The bank line wait yesterday must have been 2 hours long.  I thought it was a bank run – but I think it was just another Saturday in a cash economy.   I saw a security guard hold up traffic until there was an actual backup all the way across the giant parking lot.  It also has four restaurants that are outside and are generally quite terrible.  It doesn’t appear that any restaurants have learned to differentiate on service here in Dar es Salaam from my experience.  

Ranking the beers in Tanzania I’ve had so far:

Castle

Ndovu 

Serengeti

Tusker

Safari

Kilimanjaro

I haven’t had anything better than a Heineken yet, never mind the microbrews I normally like. What I wouldn’t give for a Cisco Brewers’ Moor Porter or Bailey’s Blonde right now to go with my ugali roast.  

 

Meeting with a local official in Tanzania and the exploitative side of microfinance

Today, I met with Iddi Ngandari, the Bustani Mtaa Chairperson here in the Temeke District of Dar-es-Salaam, Tanzania.  I was surprised by how articulate this local leader was.  A member of the opposition party in Tanzania, he spoke strong English and discussed what ails his people, including what he perceives to be exploitative microloan providers.

Poverty continues to be the main driver of problems in communities like Temeke.  This leads to risky behavior such as prostitution that drives HIV/AIDS and other serious problems in the community.   While microfinance has been proffered as a solution in many cases, prohibitive rates offered by for-profit organizations are causing more trouble than they are worth.  Meanwhile, non-profits may have lengthy training or screening processes that preclude people on the margins like the ones in Temeke.  

The chairman refused to name the banks, but indicated that a typical structure for a loan looks like this.

• 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.   Understandably, the chairperson feels this is exploitative and is not allowing this in his community.  Bad loans are not good for the community.  Instead, they cause stress among families, including divorce and domestic violence, and drain resources out of the community.

Furthermore, these banks are not providing much in the way of training or support for the enterprises that are being funded.  Hence, many of the enterprises are not sustainable – sometimes before the loan is paid back, some times in the months after.  As such, the benefits to the community are minimal.

We’ve been asked to structure a training and microfinance program here, but I’m not sure that there’s enough money flowing around in this somewhat isolated part of Dar-es-Salaam to support many profitable enterprises.  I encouraged Mr. Ngandari to focus efforts on increasing access and awareness of jobs outside his impoverished district.  There seems to be no easy spigot to get liquidity into this economy though.  It seems that Tanzania is lacking in the way of remittances by nationals working abroad, and most residents of Temeke eat what little they earn almost immediately.  Non-profit microfinance may help by making loan terms less onerous and injecting some capital, but this community needs a more comprehensive strategy to get the economic gears greased.  

The project with MaDeA has gone fairly well so far – I’m certainly learning a lot here about the HIV/AIDS, domestic violence and poverty.  I’ll provide more updates later.

Toilet disaster in Tanzania

At the Springlands Hotel in Moshi, a ridiculous toilet disaster happened.  Some type of shelf (we never did figure out what it was for or how it was attached) crashed off and landed on the toilet and broke it in half.  Good thing I'd avoided the buffet and was sitting on my bed, or I literally could be dead.  And that would not be a proud way to go out.  The joys of third world travel...LOL.  And this is supposed to be a pretty nice hotel run by the Zara Adventures tour company.