Mt Kilimanjaro, TZ – Village Community Banking has enough capital to start lending – 18 Apr 2016

The Lishe Bora Village Community Banking (ViCoBa) group in Kilema now has 1,389,000 TZS (US $661.42) in total deposits that they are using to circulate loans to each other. 13 groups members have now received loans of between 50,000 TZS (US $23.81) and 100,000 TZS (US $47.62).It has taken almost six months of weekly meetings and regular deposits and now group members are seeing the life improvements they were hoping for when they joined the group.

To receive a loan a group member must first find four other members willing to guarantee the loan. When they have at least four guarantors they can submit their proposal to the larger group for acceptance. Loan proposals are judge based on the following:

• Skills, experience and time: Do I have the skills, experience, and time to be successful with this project?
• Demand: Will I be able to sell the goods that I am producing?
• Profit: Will this project produce a profit?
• Capital: Do I have sufficient capital to start and run this project?
• Family expenses: Will the income from this project be enough to benefit my family?

Once a loan proposal is accepted the recipient pays 1,000 TZS to “insurance” – a separate fund to be used if a loan cannot be repaid because of fire, theft, or other extreme circumstance – and 5% of the loan amount upfront as interest for three months. At the end of three months, if the loan recipient cannot repay their loan in full they can pay another 5% for three more months.

After six months of meeting the ViCoBa group is beginning to show signs of organizational and financial self-reliance. The benefits group members are experiencing is further energizing the group.