Microfinance Scheme

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Our microfinance scheme, which was started in 2003, is based on the idea pioneered by and for women in Bangladesh. It is a ‘soft’ or ‘micro’ loan scheme in which small amounts of money are lent at a very low interest rate to enable borrowers to start their own small businesses or expand an existing small business. We lend in this way to residents of Changarawe in order to promote income generation and to encourage increased participation in the local economy. 

Many of these borrowers are excluded from formal banking services and lending for a variety of reasons including illiteracy, lack of an identification card or birth certificate (which is required by banks) or an inability to meet requirements for eligibility (such as demonstrated income, minimum assets, etc). Through the scheme, we reach the most isolated and vulnerable members of the community with an important service which has the potential to transform their lives.

Once per year, villagers in Changarawe are able to apply for a loan. The Loan Review Committee - comprised of staff members and a representative from the village government - reviews applications, which include details of business plans and guarantors. Approximately 75 loan recipients are selected each time - they then attend a seminar to learn about business development, financial management, bookkeeping and the terms of our lending system. 

Loans start at TSh50,000 (approx. £20) for first-time borrowers and can rise to TSh300,000 (approx. £70) for established borrowers. Loans are generally paid back over six months with an interest rate of 10%. A typical interest rate on a small loan from a bank in Tanzania is 25-30%. 

The interest paid on all of our loans helps pay the CDTFN staff salaries and administration costs.

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