Microfinance brings hope

Supporting a microfinance cooperative in Tungamalenga is one of several ways our partnership has worked together for economic development.  Rural Tanzanians have typically had little to no experience with banks or loans until the recent development of locally owned Savings and Credit CoOperatives (SACCOs).

Most Tanzanians in the rural areas like Tungamalenga and Makifu are subsistence farmers.  They grow enough each year to feed their families, sometimes earning enough to pay a child's school fees.  There is usually not much left over to set aside for long term savings.

Ottavina leads a microfinance training session

Here's where Iringa Hope is helping to bring about change.  Iringa Hope is a nonprofit organization based in Minnesota and working to provide small loans in rural Tanzania.  (Iringa Hope has some close ties to Shepherd of the Valley -- SOTV members Ben Kilgore and Tim Campbell are board members.)  Iringa Hope operates in Tanzania as an umbrella SACCOs, providing training, tracking, and funding for 20 local SACCOs based in Iringa Diocese congregations.

the safe for the rural SACCOs

In 2007, SOTV provided a $6500 gift to start the Tungamalenga SACCOs.  A portion of that money went toward start up costs like registration, buying a safe, and training for the members and officers. The bulk of the funds, along with the savings of members, became the starting capital for making loans.

SACCOs member signs her loan papers

The local SACCOs elects officers and establishes a loan committee to approve loans.  Our friends in Tungamalenga report that there are many more people who would like loans than there are funds available for loan.

Since its start, the Tungamalenga SACCOs has done well, with a nearly 100% repayment rate and new members each year.  The assets available have grown to about $15,000.  Most loans are paid for agricultural projects, better quality seed and fertilizer, or for small business ventures. Most loan recipients report increased income of 2 to 3 times their normal yearly income.

In Tungamalenga, as in many villages, the success of the microfinance program is tied closely to the success of crops each year.  Tungamalenga was involved for several years with the university's agricultural demonstration plot program, where university staff came out to demonstrate improved farming techniques.  As a result of what they've learned, the farmers are seeking loans for fertilizer and for better quality seed.

fertilizer purchased in bulk and resold to SACCOs members

Last year, Iringa Hope advisors suggested that the SACCOs purchase fertilizer and seed in bulk, and then sell to the SACCOs members at a small profit.  Tom and Sandy Hendrickson went back to Tungamalenga this month and found this pile of bags of fertilizer ready to be distributed.  They said Tungamalenga was one of two SACCOs that follow through on the suggestion.

It's a win-win for both the SACCOs and the members -- farmers get good quality fertilizer at a fair price, and the SACCOs earns a little more capital for the next loan cycle.

Tom and Sandy report that the Tungamalenga SACCOs leaders are hoping to have enough capital to fund a purchase of good quality seed for next year's growing season, along with the fertilizer.

Twandisyege Ambele uses profits from her loan to support her family of 11

Many of you will remember Twandisyege Ambele -- she was among our first guests from Tungamalenga to Shepherd of the Valley back in 2006.  She still teaches at the local primary school, and she and her husband support 11 family members. The increase in their family income allows them to pay their own children's school fees.

Iringa Hope leaders Tom and Sandy Hendrickson are in Iringa for about a month, visiting a different village SACCOs every day.  They report on their adventures at the Iringa Hope blog.

We're grateful to Iringa Hope for its leadership in this part of our ministry with partners in Tungamalenga.