The first step in our process to select the women that are eligible for a microcredit is done together with a senior government official of the local community: the Village Executive Officer.
We work closely
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After that, our team takes care of the second step in our selection procedure, which is based on strict criteria. For example, women are not allowed to have other loans, a criminal record, or an addiction. In addition, we do not provide microcredits to the most deprived women, because they are focused on survival and not yet ready to start a business.
It is important that the women can clearly explain their idea for their business to our local Tanzanian team, and are willing to form part of a credit group.
Our procedures to help women
The training modules
The women that are selected for the microcredit receive basic training in entrepreneurship, financial accounting, and women health and family planning. Our team in Tanzania actively monitors and coaches the women throughout the duration of their loan.
By offering these trainings, Pamoja Nguvu intends to help these women not only by having a strong foundation after repaying the loan, but also by enabling them to maintain their improved living standards in the future
The starting entrepreneurs
Together with a social worker from Happy Watoto Homes and Schools, we select the starting entrepreneurs that are eligible for a microcredit. They need to be at least 18 years old and have a minimum of two years of work experience.
Besides that, the same conditions hold as for the women. The first group of starting entrepreneurs is expected in 2021.
How our microcredit works
After successfully passing our selection procedures and completing the training modules we first help with setting up a local bank account. All of our candidates own a mobile phone through which they can send their weekly repayments – payment by phone (Mpesa) is a coming payment method in Tanzania. The loans are always free of interest and split into three installments, so we can monitor the process adequately. After six months the loan has to be fully repaid.
The women form a credit group of five people, one of which, the chairwoman, is in charge. The chairwoman supervises the weekly repayments and, if needed, supports with financial accounting. She is also the first point of contact for our project manager. Our Tanzanian team frequently visits the companies of the women and reports to the board in the Netherlands on a weekly basis. They also coach the women to help make their company as successful as possible. In addition to the weekly meetings of the credit groups there are also larger meetings held, where all participants come together and share their learnings. Learning how to save, a very uncommon practice in Tanzania, is part of this.
After the repayment
Aside from repayment of the loan, important performance indicators for the success of our microcredit are also the degree to which the living circumstances and the daily disposable income improved. If the loan was successful, it is possible to receive a one-off funding for a new loan, provided there is a clear business plan. The same selection criteria apply; however, the repayments and financial accounting of the previous loan also need to have been performed in a proper way. In addition, the loaner needs to provide part of the requested amount herself. Subsequently, we offer the possibility to participate, for free, in an advanced entrepreneurship course.