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The Caritas-DSM Savings and Credit Scheme (SCS) is aimed at poverty alleviation to the poor and low-income families through women in remote areas under the Archdiocese of Dar Es Salaam. The Needs Assessment Survey carried out in both Coast and Dar es Salaam Regions identified informal women and youth who are engaged in self-employment income generation activities, as most vulnerable and constrained by lack of capital and inadequate business management skills to improve their small-scale businesses. These poor people have no access to financial services from formal lending institutions. Our program’s goal is to enable them through organization; savings mobilization, business management training, and credit support to improve their small-scale businesses as well as household income. Caritas-DSM offers savings and credit services to eligible clients who have viable micro business and who cannot access credit from other sources. A group based lending scheme is used for savings and credit operations.
The
SCS started in a pilot scale in Kibaha district at Mlandizi and Kibaha area since early 1999. It has since expanded to Mbagala, Changombe, Mbezi Luis,
Kimara, Mtoni, Mavurunza and Yombo Dovea. All these additional Centers have been established in low-income areas of Dar es Salaam. So far we have
disbursed over 2105 loans worth Tshs.385,820,000/-. Interest generated and reinvested in the loan fund is TShs.32,000,000. Our loans start from not more than Tshs 175,000 at level one to Tshs 1,500,000 at level four in a graduation basis to an individual within a group. After level four a client graduates and can borrow as a private individual. The interest is 15% for six months or 25% per year. The overall progress of the SCS operations is still good. The average rate of loan repayment is 98 %. The default rate is about 2 % but is mostly recovered. The program is able to reach the poor that are excluded from other credit programs. The SCS has also been able to promote self-employment for 80% of the needy women who participate in our program. In addition, the activities we support generate surplus income, which has a very positive impact in improving the client’s social and economic status. This program allows women to acquire and own their own property, either as individuals, single parents or married. Since the program began in February, 1999 a number of women have been able to build residential houses, buy plots of land for housing, sent their children to good schools, pay school fees, pay for medical expenses, acquire leadership skills and knowledge about their legal rights, own a significant amount of personal savings in the program and improve their personal status (health, clothing, appearance, as well as social status) Those married have become more respected and hence increased their marriage bonds.
Our Savings Component has demonstrated that we enable clients to protect against risks ahead of time and cope with economic loses resulting from crisis shocks and down ward pressures. It thus enables our clients to move from a reactive mode to one that offers them more choices when faced with a crisis. So far the clients have accumulated savings worth over TShs.51,929,209/- through our scheme.
During all this time Caritas-DSM has been accumulating experience that will help in managing a bigger project portfolio. Our SCS staff has participated in various workshops facilitated by the renowned K-REP in Best Practices of Micro-Financing. Our biggest problem is inadequate capital that prevents us from expanding and increasing the number of borrowers so as to achieve both operational as well as financial sustainability. The objective is to have a minimum of at least 5,000 clients and maintain a client level of about 15,000. The long-term objective is however to become a bank that provides credit to low-income borrowers and offer other products.
NB:The exchange rate as of January 27, 2004 is Tanzanian Shilling 1095/- = US$1.00
Created
by Interactive Palette
