Trias saves microcredit for the Maasai in Tanzania
In Tanzania roads have been improved, each year more tourists visit this country. But not everyone benefits from these positive developments. In the poor and arid north of the country the Maasai barely survive.
© Trias
Two years ago, this population group almost lost the advantageous credits for their enterprising people. Trias stepped in the breach just in time.
Despite the revival during the former years, nine out of ten Tanzanians today still live on less than one euro per day. 35 percent of the population is underfed. The worst poverty is concentrated in the rural areas, where most people are dependent on survival-agriculture. Underfeeding affects mostly youth and woman.
In the rural areas, starting a micro-undertaking often is the only possibility to keep ones head above water. In total the country has 2,7 million companies with less than five employees. 43 percent of these small enterprises in Tanzania are managed by women.
Wedac counters usurious interests
Through poverty and the isolated location of these enterprises, their working capital quickly diminishes due to their family expenditures as school fees and hospital bills. Loans can help spread these expenditures, but traditional banks are put off by the high transaction costs in rural areas. Consequence: private money lenders use this to ask interests as high as fifty percent.
Women especially have difficulties to obtain a loan, because they seldom are able to produce ownership papers. In the northern part of Tanzania Wedac created a bright spot. This organization provides since 2000 affordable microcredit to small entrepreneurs in the poor rural areas. Remarkable: 98 percent of the clients of Wedac are women.
Bailout for microcredit
Two years ago, Wedac suddenly got into trouble. Trias rushed to the rescue. "We had a major crisis", coordinator Raphael Ami of Wedac admits. "The technical and financial support of Trias ensured that we could turn the tide step by step. The operating result of Wedac has become positive again."
Since Trias cooperates with Wedac, the number of clients has grown from 500 to over 1.800. By 2013 this number has to grow to 4.850. "This large client portfolio will not harm the quality approach", guarantees Toon Rottjers, regional coordinator of Trias in Tanzania. "Therefore we will provide an extra budget to monitor the loans. Furthermore we are ensuring that Wedac will continue in the future to focus on the poorest population groups."
Integrated approach
Trias will ensure that, in the years to come, that the clients of Wedac will have access to more specialized business services. The female entrepreneurs will for instance learn how to prepare a simple business plan and how to draft a simple accounting. Also Trias will familiarize them in the existing legislation for micro-enterprises. Today many of these small businesses are operating illegally, which slows down their growth.
Studies show that, for the moment, only one percent of the small enterprises in Africa grow into an established company with more than ten employees. Strikingly is the fact that this small group of companies contributes more to the national growth rates than all other enterprises together. This determination has inspired Trias to accompany fifty female customers of Wedac intensively so they can obtain larger credits.
Microcredit works
That this approach can provide great results, has been proved by the 37-year-old Manana Sailepo. As a young woman she married a man older than her father. She became the ninth of in total eleven wives. But Manana kept on dreaming of owning a real mattress and a roof in corrugated iron. When she had been married for five years, this woman went to Wedac to obtain a loan of 100.000 Tanzanian shilling, converted about 55 euro.
Manana turned out to be an exemplary entrepreneur. In her village Arkatan she has a mill that she manages together with her mother. Furthermore she exploits several grocery stores. She also owns a popular bar and a teahouse. And because there is no gas station, Manana sells diesel in jerry cans to the local farmers. Her current loan at Wedac is about 1.600 euro. This one also she will – as always – repay in a punctual and trouble-free fashion. When the right framework is provided, microcredit remains a major lever for development.