Where We Work : Tanzania : Microfinance

Microfinance is at the heart of BRAC’s integrated approach to alleviating poverty and helping poor Tanzanian women realise their potential. More than 111,500 women are members of 6,376 community-based microfinance groups throughout Tanzania. They gather weekly in villages, towns and city neighbourhoods to make repayments on their loans and apply for new ones. Their loans can often lead to very swift changes in their livelihoods.

BRAC's microfinance programme has been designed to serve large numbers of poor people with reliable access to cost-effective financial services.

Programme Components

Women's Groups: Community partnerships and institution building are essential for poor people if they are to change their economic, social and political conditions. We deliver our microfinance and other programmes through organising groups of poor women who come together to improve their socioeconomic position.

BRAC microfinance branch offices conduct area surveys and consult with community leaders and local elders to select the 15-30 members of each group. The group is then subdivided into smaller groups of five, each with their own elected leader. The members of the small groups take co-responsibility to solve peer repayment problems.

New borrower groups meet three times before any loan disbursement takes place. After that, they meet weekly to discuss credit decisions with their dedicated BRAC Credit Officer and make their loan repayments. BRAC provides training and technical assistance to its members and others in the community, empowering them to earn more income from existing activities and start new ones.

Microloans

At the core of the programme are microloans, which are exclusively for the women participating in the group process. Borrowers range in age from 20-50 with little or no education. BRAC lends to women who are not served by other microfinance institutions. Borrowers typically operate businesses that provide products or services to their local communities. Women with seasonal businesses, such as farming related activities, may also be eligible for shorter term loans.

Key Features of a Microloan

• Loan repayments in small weekly instalments
• No physical collateral needed
• Competitive interest rates
• Death benefit provided
• Services delivered to member's village
• Available in rural and urban areas

Small Enterprise Loans

BRAC offers small enterprise loans to entrepreneurs seeking to expand small businesses. The loans enable owners to create new employment opportunities and provide new services. Typically loans are given for trading, agriculture, livestock, fruit production and other types of small enterprises. These small entrepreneurs would otherwise have limited access to the formal financial system – too large for microloans but with not enough collateral for commercial banks. The small enterprise loan is offered to an individual rather than to a group and is available for both male and female entrepreneurs. Some members of the microloan groups will become eligible for this scheme as their businesses expand and their investment needs grow.

Key Features of a Small Enterprise Loan 

• Available to both male and female entrepreneurs
• Loan range: USD800-5,000
• Competitively low interest rates
• Repayment mode: equal monthly instalments

Most popular loan uses 

• Grocery stores
• Beauty parlours
• Tailoring
• Clothing retail
• Restaurants
• Agriculture
• Agro-based enterprises
• Poultry, livestock and fisheries
• Cottage industry
• Hotel and restaurants / food processing
• Wood products
• Transportation
• Plastic and rubber industry
• Stationery shop