Children's Village Blog
Our Microfinance Program

Our Microfinance Program at the Children’s Village
By Andy Bryant
Director of Microfinance 

(Image Below: Andy Bryant, Director of Microfinance, with clients in the training course)
I am often asked, “How do you select clients for your Microfinance Program?” It’s a great question because the population we target is as important as the services we provide. We choose our clients carefully. If we choose poorly, our loan funds and skills training may be wasted: alcoholism is pervasive in many communities. Conversely, if we choose our clients well, the benefits realized by them and their families can be momentous. 

In May we began distributing our first loans to 59 entrepreneurs. The response from our clients has been very positive. They are repaying their loans, anxious for new loans and more training courses: they are becoming more confident in themselves and their abilities to support their families.

September was a very busy month for our Microfinance Program. We are now expanding our operations to new communities and this entails many meetings and interactions with potential clients. When we select our clients (who will have access to small-business loans, financial and business management skills training, savings accounts, and other services) we use a number of criteria:

• Potential benefits: Simply put, will membership in our program improve the lives and livelihoods of potential clients? While difficult to discern, this is the paramount goal of our Microfinance Program so we try to predict potential benefits through proxies. These include the number of school age children in an applicant’s household, an applicant’s current economic status, and even marital status. (A single mother has an extremely difficult time accessing capital and opportunities for generating income for her and her children, so a loan can be tremendously beneficial.)
• Initiative: We seek out those individuals who have shown effort above and beyond what is required for membership in the program. Indicators include those applicants who have come to our office to seek help in filling out application forms, who help others to apply, and who help us to identify viable clients.
• Entrepreneurial: Experience counts. There is an immense amount of knowledge concerning business activities and local economies to be found amongst our neighbors. The key is to identify people who see beyond business-as-usual and seek to modify and enhance their businesses to maximize their profits.
• Reputation: As a foreigner in Tanzania, I realize my limitations when it concerns understanding the local people and environment. Even our Tanzanian staff, hailing from other regions of the country, is not fully aware of the intricate relationships and interactions of the local people. Therefore, we identify local leaders who are willing to advise us on the character, work ethic, and abilities of our applicants. We rely upon elected officials, clergy, respected Elders, headmasters, plantations owners and managers, and other legitimate leaders to help us select clients who fit our criteria.

The upshot of our efforts was the selection of 66 new clients from Oldeani Village and surrounding communities. Of these, 38 are women and approximately 150 children will benefit from profits of client businesses. In total as of September 2008, our 125 entrepreneurs support 334 children directly and hundreds more indirectly. To give you a better picture of the types of people we seek out, I’ll tell you about one of our new loan groups.

The Waridi Group is a collection of five women entrepreneurs from the Oldeani Village, (an hour’s walk from the Children’s Village). Each woman received a loan of approximately $100 to create or expand a business. This is roughly 3 months’ salary for the average Tanzanian so the opportunities such capital can access may be great.

(Image at right: New Microfinance clients filling in their business plans)

Victoria and Martina both raise dairy cows and sell the milk to local hotels and at weekly regional markets. Their milk sells for about 40¢ per liter (~$1.80 per gallon). Because they already own dairy cows, the women will be improving rather than creating their businesses. Upon receiving their loans they will use the capital to buy feed and mineral-nutrient supplements for their cows, pay transport fees to markets, and improve the pens for their stock. Between them, the women have ten children they support. While Victoria has her husband to share the burden of household expenses, Martina cares for her six children alone. Martina’s goal is to store enough in a savings account to pay school fees for her children and “to find a good balance for her family.” A primary challenge for our clients is the unpredictability of the rains and crop prices which affect the stability of income- and “balance” is very important.

Coletha plans to open a small store that which will sell cassettes of local Tanzanian music, Bongo Fleva- translated as Flavor of Tanzania. Her shop will blast the colorful sound into the streets of Oldeani and play the latest songs from artists in the capital, Dar es Salaam. She will also show American, Indian, and Chinese movies. To show the foreign films, she will hire a translator to stand next to the screen and create a storyline in kiSwahili. She will also take photographs and develop film. For most rural Tanzanians, these stores are the only option for photographs. These photographs are important for remembering celebrations like weddings and graduations (not so different from America). Although her husband runs a similar store in a neighboring town, this will be an opportunity for Coletha to gain some personal financial freedom. Like Martina, she plans to use part of her profits to pay school-related expenses for her four children. 

(Image below: New clients at their training course graduation, 
Oldeani Secondary School)
Yustina is a 54-year old divorced mother of one child. Her status as a divorcee makes it very difficult for her to access business opportunities afforded to men or married women. In rural Tanzania there is still social stigma attached to divorced women. However, Yustina is very smart and, perhaps more importantly, never stops working to support her household of four, including two extended relatives. In fact, she could probably teach the accounting sections of our training courses despite having never attended school. Yustina will buy maize, milk, and other commodities in villages and then transport them to larger towns for sale at the markets there.

Regina has a café she operates in Oldeani village. She serves meals, including rice, beans, fried bread, and occasionally, meat. The food is washed down with local tea, sweetened to the point of grimace with handfuls of sugar. Along with her husband and their five children, Regina hopes to “improve the quality of their lives.” Like Yustina, Regina keeps meticulous records of her business dealings. In the future, it may be possible to utilize the two of them to help other budding entrepreneurs to manage their accounts.

This teamwork is one cornerstone of our Microfinance Program. The members of small groups are tasked with helping one another to create or expand successful businesses and to repay their loans to us. We are also trying to facilitate linkages between groups, based on their common ties to us, in order to exchange ideas, to buy wholesale, and to rely on one another for business inputs or as markets for their goods.