Our Savings and Loan Programme
We all crave financial independence and the women in Babati are no different. Trouble is when you have no assets to your name to offer as collateral to banks or other finance houses they are not going to give you a loan to invest in your own business. To a bank you are a faceless number and a high risk - the higher the risk the higher the interest rates. To LTT you are a person needing a helping hand so that you can improve your standard of living and overcome the challenges you face on a daily basis. You are still a risk, but one with a face and a support network.
So back in 2013, with the financial backing of a donor we consulted two communities (Sawe and Waangwaray) and eventually established a Community Loans Programme to which we later added a savings component. Loans are made to the group who collectively have to repay the loan on the agreed date. An individual may receive between £50 and £200 depending on how long they have been in the group. While the majority are women men are not excluded. The groups provide their members with business and enterprise training as well as access to loans at agreed interest rates, enabling community members to take full advantage of the opportunities they identify.
So far the loans have been invested in all sorts of ventures, including renting extra land for farming, buying better seeds, buying a dairy cow for milk production, buy and selling goats, setting up a catering business, adding new stock lines to existing shops. One shopkeeper now employs someone as a direct result of her success
For many of the group members the most significant effect of the programme has been the ability to increase their disposable income so that they can improve their homes, send their children to school ensure food on the table each day. At a recent meeting one member excitedly explained that her daughter is completing her certificate in Community Development, funded from the profits from her business. Yay!!
As well as being able to run a profitable business the groups also create space for members to come together, sharing ideas and new insights and gaining courage form the support of their peers. This is particular important for those members who struggle with their business or face competing priorities when it comes to investment, not all business will make a profit every year which is why LTT commits to supporting the loans programme for a minimum number of years, enabling people to build up their business until they no longer need a loan from us. As the founder of the Sawe group said ‘the loans group brings “Unafuu”’ (a Swahili word meaning a sense of ease), creating space to learn from each other and exchange ideas’.
As well as accessing loans from LTT the programme also enables members to put savings contributions into the programme. These are then loaned out to the group and the interest generated through re-payment goes back to that person which of course increases the value of their savings. As the savings pot increases in size the loan pot from LTT can reduce, with the ultimate aim that the group can function on loans from its member’s savings, completely independently of LTT – Sustainability in action.