SanFin Tanzania
Proceeding from the second working group meeting
of May, Dar Es Salaam
May 2014
1 Introduction
SanFin Tanzania is a working group focused on supporting microfinance for sanitation in Tanzania.
The wor...
discussions (FDGs) to extract data on customers demand for sanitation-related products. Participants
were given skills t...
Activities under SanFin Project
Two members of ECLOF-T received training with MicroSave in January 2014. Following the
Outside the SanFin project, CCI has been financing WASH activities in urban areas. In regards o
sanitation, a total of 9...
Box 1 – Discussion following CCI’s presentation:
Following Teressia’s presentation, the discussion was animated by two s...
 Staff selling the sanitation products must be groomed to be able to deal with sanitation-related
businesses as they ar...
K-Finance finds that there is a business potential in sanitation but there are other issues to overcome.
(1) The problem...
 Training of CEOs and senior management of microfinance companies: similarly there is a need
to raise the awareness of ...
Annex 1 – Agenda
9:00-9:15 Welcome and introductions Abel Eliezer Dugage,
Director of SSTZ,
9:15-9:45 Update o...
Annex 2 – Attendance
Institution Name Email
Mama Bahati Foundation Japhet Makau japhetmakau@ymail.com
ECLOF Davita Mtui...
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SanFin-Tz 15th of May: workshop report


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This report summarises the presentations and discussions, which took place during the second sanitation microfinance working group meeting in Dar Es Salaam on the 15th of May.

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SanFin-Tz 15th of May: workshop report

  1. 1. 1 SanFin Tanzania Proceeding from the second working group meeting 15th of May, Dar Es Salaam May 2014
  2. 2. 2 1 Introduction SanFin Tanzania is a working group focused on supporting microfinance for sanitation in Tanzania. The working group first meeting was held on the 3rd December 2013 with the support of a SHARE (DFID)-funded action-research for developing microfinance for sanitation in Tanzania. Following on from this first meeting, participants from eight microfinance institutions (MFIs) and NGOs took part in a two-week training on developing microfinance products for sanitation provided by MicroSave. Three of these organisations (Tujijenge, ECLOF and CCI) are currently developing financial products for sanitation. One main objective of the second SanFin working group meeting was to enable the three institutions currently developing sanitation microfinance products to share their experiences with a wider audience: what steps are they taking to develop sanitation products? Have they identified demand from their customers for sanitation-focused financial products? What challenges are they anticipating and what kind of support they would need? Another objective was to inform SanFin members on the next phases of the SHARE action-research. 2 Attendance The working group meeting was hosted at WaterAid’s offices in Dar Es Salaam and gathered representatives from Mama Bahati Foundation, ECLOF-Tanzania, Tujijenge Tanzania, K-Finance, YOSEFO, CCI, WAT-Human Settlement Trust, Habitat for Humanity, Tanzania Association for Microfinance (TAMFI), VKS construction support services, Trémolet Consulting and MicroSave. A full list of participants is available in Annex 2. 3 Proceedings 3.1 Introductory remarks Following introductory remarks by Abel Eliezer Dugange (Director of SSTZ) on behalf of WaterAid Tanzania country representative, Sophie Trémolet (Trémolet Consulting, Lead SHARE researcher) gave a brief background on the SHARE initiative behind the initial formation of SanFin. Sophie insisted that one legacy of the SHARE research would be the establishment of a working group dedicated to microfinance for sanitation, beyond the period of the action-research due to end in November 2014. Sophie invited local stakeholders, including WaterAid or TAMFI, to take the lead in carrying out this activity and creating a community of thinking and practice around sanitation microfinance. Such community could act as a focal point for external agencies interested in rolling- out sanitation activities through microfinance. 3.2 A recap on the SHARE action-research – George Mugweru, MicroSave George Mugweru from MicroSave gave the audience a brief recapitulation of the progress of the action-research since December 2013. Through the action-research 14 participants from 4 MFIs and 4 NGOs received training on qualitative market research for sanitation, i.e. conducting focus group
  3. 3. 3 discussions (FDGs) to extract data on customers demand for sanitation-related products. Participants were given skills to organise and lead the FDGs so as to extract appropriate data. During the training, they were also familiarised with sanitation issues through presentations from sanitation specialists, including from WaterAid, VKS and SAWA. This exposure to activities enabled participants to form the FGDs questionnaires. Participants were also exposed to sanitation business activities through a field visit to Kigamboni (in Temeke municipality in Dar Es Salaam) were they met the Director of UMAWA, a community-based enterprise which has received the support from WaterAid to deliver emptying services. After the training, ECLOF-Tanzania, TujijengeTanzania and CCI expressed their interest in taking part to the next phases of the action-research and receive further assistance from MicroSave to develop their concepts. From February to May 2014, ECLOF-Tanzania and CCI carried out market research activities. Tujijenge had already hosted market research activities during the January training. Following George’s intervention, three representatives from ECLOF-Tanzania, CCI and Tujijenge gave presentations, which provided some background information on their institutions and the outcome of the training they received. 3.3 ECLOF Tanzania, Dativa Mtui Background The Ecumenical Church Loan Fund Tanzania (ECLOF-T) was established as a department of the Christian Council of Tanzania in 1961. Based in Arusha, ECLOF was re-launched as a NGO in 1994. ECLOF portfolio grew from TZS 1.9 billion (USD 1,123,050) in 2010 to TZS 3 billion (USD 1,773,240) at the end of 2013. It currently employs 55 full-time employees. The institution’s annual income grew from TZS 6.8 million in 2006 to TZS 1 billion (USD 591,000) in 2012. Its current savings deposit amount to TZS 400 million. ECLOF-T is currently serving the market through 6 products, the main ones being Jikwamue and Jitegemee which consist of 65% of the portfolio. Table 1 - ECLOF-T current range of products Source: ECLOF-T
  4. 4. 4 Activities under SanFin Project Two members of ECLOF-T received training with MicroSave in January 2014. Following the training, ECLOF conducted market research in March 2014. A total of 8 Focus Group Discussions (FGDs) were conducted in 3 days with 95 respondents. Through these FGDs, the following lending product concepts for sanitation were identified:  Toilet/Bathroom Construction/Improvement for households, businesses and institutions  Integrated sludge collection pit and biogas production unit construction  Working capital for sanitation businesses Anticipated challenges Although demand for the above products was identified, ECLOF expects that there will be challenges for rolling out such products. These challenges are the following:  ECLOF has limited funds to carry out WASH financing;  Its credit officers lack of skills for assessing/appraisal of sanitation businesses;  The institution lacks of experience in marketing/identifying sanitation type business opportunities;  Customers have a poor perception of sanitation financing  Loans for sanitation will multiply customers’ loans. Lessons learnt so far  There is high demand for the WASH activities/products;  The customers appreciate the benefits of improved toilet and bathroom;  By providing sanitation loans ECLOF Tanzania will improve the general well-being of its customers Technical Support Requirements For ECLOF-T, overcoming the above challenges would require:  Funds for supporting the WASH product;  Training on sanitation to management team to generate buy-in;  Training on sanitation businesses appraisal and marketing of the products;  Sanitation awareness to customers. SanFin activities likely to be carried out ECLOF-T is likely to train its customers concerning the WASH products (awareness raising) to increase uptake. ECLOF-T is likely to develop products like biogas loans because there is high demand and they seem sustainable as they reduce other costs for households. 3.4 CCI, Teressia Ntanga Background The Centre for Community Initiative (CCI) is an NGO that was established in 2004. CCI mobilises urban communities to form savings and credits schemes. Saving schemes contribute to Tanzania Urban Poor Fund (TUPF). The TUPF operates at regional level through the Jenga Fund, a revolving fund established for purpose of financing different livelihood projects including the purchases of land, home improvements, water and sanitation projects and other development projects initiated by Tanzania Federation of the Urban Poor. Currently, 350 communities or groups have been mobilised in different regions: Dar Es Salaam, Dodoma, Arusha, Morogoro, Mwanza, Mara, Zanzibar and Tanga. The total amount of savings within the groups amounts to TZS 165,600,400 (USD 97,557). The Jenga fund has disbursed a total of 1,189 loans for housing construction, water connections, borehole and toilets construction. Since 2009, TZS 450,690,900 (USD 274,811) of loans has been disbursed. The Jenga Fund has an outstanding loan balance of TZS 222,707,250 (USD 135,797). The current repayment rate is 30%.
  5. 5. 5 Outside the SanFin project, CCI has been financing WASH activities in urban areas. In regards o sanitation, a total of 980 toilets have been constructed, with 780 of these financed on loans. CCI also facilitated the financing of one public toilet through a loan to one of the community group. About TZS 190 Million (USD 115,853) worth of loans has been disbursed for toilet construction. Activities under SanFin Project As a result of the training provided by MicroSave in January, CCI conducted a market research in order to:  Identify factors limiting the uptake of the loan;  Establish the reasons for low repayment rate;  Explore additional sanitation loan products that Jenga Fund could offer to its customers; and  Evaluate the current delivery mechanism with a view to make more efficient and responsive. A total of 16 FGDs were conducted in 4 days with 166 respondents. Research was conducted in Karakata, Vingunguti, Chamazi, Kekomachungwa, Kekomwanga, Tandale and Msasani Bonde la Mpunga. Following the FGDs, CCI intends to work with MicroSave on revising the features of their current toilet construction loan (including targeted customers and delivery mechanism). CCI will also define loans for purchasing Gulper equipment and construction of DEWAT systems and for housing improvement. Anticipated challenges One main challenge anticipated by CCI is that most customers perceive the loans given under the Jenga Fund as a grant, which induces poor repayment rates. This situation means that there is less and less fund available in the revolving fund for loans. Overall, the current disbursement and repayment mechanism are lengthy processes as the Jenga fund relies on the federation committees to remit their payments (savings and repayments). In addition, low or irregular income in informal settlements threatens the viability of lending schemes. One way to enhance income is to provide livelihood loans as well. Lessons learnt so far One important lesson that has emerged is the potential need to reform the Jenga Fund into a full- fledged MFI, particularly to reach non-federation members and adopt mechanism to ensure repayments. Another key lesson is to match financial services with customer needs, identified through market research. This activity has confirmed that there is an unmet need for sanitation financing in informal settlements. However, to increase sources of revenues, it might be suitable to introduce other types of loans that are “income generating” – livelihood loans. Technical Support Requirements CCI requires technical support to revise their current loan process within Jenga Fund. The NGO needs capacity building on loan managements through exchange visits and training of staff. In the event where it would deem necessary to transform the Jenga fund into an MFI, CCI would need support in this process. SanFin activities likely to be carried out CCI will engage in a process to revise their current loan products and process to make the Jenga Fund more efficient and sustainable. They will carry out activities to increase uptake of the loans and chances of repayments – activities aiming at changing people’s perception of the Jenga fund. CCI will also look into including livelihood loans (business loans) to improve income levels in the informal settlement.
  6. 6. 6 Box 1 – Discussion following CCI’s presentation: Following Teressia’s presentation, the discussion was animated by two subjects: the Jenga Fund’s poor repayment rates and CCI’s project to transform it into an MFI. Japhet from SEDIT said that as toilets are non-income generating, CCI cannot expect to have the loans repaid and questioned CCI’s procedure for issuing the loans. Harry from TAMFI added that if loans were targeting the destitute, it is normal that the repayment rate is low. Judith Sando from WAT-Human Settlements reminded the audience that in Tanzania there was only two institutions officially registered as MFIs, i.e. which are regulated by the Bank of Tanzania. All other institutions are considered as NGOs. Judith praised CCI for realizing the need to make improvement to their organization. However, she advised CCI to carefully weigh whether they should leave behind the federation system. She invited CCI to visit other countries (where federation systems work well). “Don’t abandon it!” said Judith. She added: “NGOs are community-driven. Their perspective started changing a few years back as sources of income started to fade. CCI needs to look for a middle ground: will you continue to be a NGO community-driven and adopt an enterprise system? What would that mean as an institution? Be careful that what you transform into does not take you away from the community. If CCI become MFI, you might lose this.” George Mugweru from MicroSave clarified that it was not CCI that is transforming but the Jenga Fund itself. Kenneth Sinare shared Judith’s concerns and advised CCI “to guard their mission”. He added: “Rather than deviating giving livelihood loans, find a partner, and concentrate on what you do best – building the community – In that way you complement each other.” 3.5 Tujijenge, Debora Kiwale Background Tujijenge Tanzania Limited is a microfinance company that started operating in April 2006. It currently operates through five branches located in Dar es Salaam, the Coastal region, Mwanza and Mara (in both urban and rural areas). Tujijenge’s social mission is “to improve quality of lives of families in Tanzania through the provision of microfinance”. Tujijenge’s main focus is the provision of loans to its customers, via both via Group and Individual lending methodologies. Other services include pre-loan training to group clients, savings services and mobile phone banking (for loan disbursement and repayment). Currently, Tujijenge has over 8,000 active borrowers, with an outstanding loan balance is of TZS 4.9 billion (USD 3,062,500) Activities under SanFin Project In January 2014, two senior staff of Tujijenge attended the training on sanitation microfinance. With support MicroSave, Tujijenge developed a draft of a sanitation microfinance product. Having met with the director of UMAWA (a sanitation –focused community-based enterprise), Tujijenge disbursed a loan of TZS 5 million to UMAWA at 36% IR. This was Tujijenge’s first step towards funding sanitation-related activities that fit into their current lending activities. Anticipated challenges The main challenges for developing further sanitation related financial services are:  Tujijenge’s staff lack of capacity for appraising sanitation-related businesses  Start-up loans are deemed too risky - therefore Tujijenge needs funding to share the associated risks of lending to sanitation start-ups  For many people, sanitation is still not at the top of their priority chart Lessons learnt so far  There is still a big market for sanitation microfinance;
  7. 7. 7  Staff selling the sanitation products must be groomed to be able to deal with sanitation-related businesses as they are not conventional microfinance products;  The products roll out might need to go along with education and awareness campaigns. Technical Support Requirements To develop the identified products, Tujijenge would require:  Staff training on sanitation microfinance  Training of credit officers on individual lending (which is new business for Tujijenge) and marketing skills  Lending funds to mitigate on start- up lending risks  Networking with other stakeholders to unlock the product potential  Conducting a mapping out of areas to identify those where sanitation elated activities would fit into their lending activities SanFin activities likely to be carried out Through the mapping out activity, WASH enterprises could be identified and Tujijenge will be able scale-up their sanitation business activities. Tujijenge hopes it can get a funding partner to do better with the sanitation product in the future. Such funding will support financing sanitation businesses start-ups. Box 2 – Discussion following Tujijenge’s presentation The discussion focused on Tujijenge’s first loan to a sanitation business and the need to train loan officers so that they’re able to recognize sanitation businesses. Tujijenge’s loan officer had to go three times to meet UMAWA before issuing the loan. According to Tujijenge, there was little evidence of cash flow (there were cheques from the municipality, but no other means to assess the cash flow). Tujijenge’s findings are surprising since UMAWA has been receiving support from WaterAid and BDS partners, precisely to enhance their bankability. As a result of these activities, UMAWA is probably one of the best trained gulper entrepreneurs that is currently operating in Dar es Salaam. However, this puts in evidence the difficulties of building the capacities and business management skills of this type of businesses, so that they can interact with financial institutions. Goufrane Mansour from Trémolet Consulting wondered whether this absence (or poor) evidence of cashflow was typical or not of businesses that Tujijenge usually deals with and if Tujijenge helps businesses (through training) to package themselves in a way that is attractive for a financial institution. According to George Muruka from MicroSave, the loan issuance was also the fruit of innovative thinking from the CEO. Tujijenge normally provides individual loans to those who are members of a loan group and have proved ability to repay (“Most of individual borrowers graduate from the group”) – this was exceptional for them and demonstrates the high level of interest at the level of Tujijenge’s management for this new market. George Mugweru recognized the need to provide training to loan officers on sanitation: “There is a need to build capacity of financial institutions: how do you see an opportunity in a sanitation finance business – which is a very different business from what they know. If I were an MFI officer and meet this man carrying sludge, I may not see him as a businessman: need for us to build capacity of FI staff to be able to identify this opportunity.” 3.6 Other SanFin members The working group also enabled taking stock of the other present institutions’ activities, particularly focusing on those that had received the training provided in January. Yosefo are not carrying out sanitation activities yet – but this is partly because they are busy transforming the organisation into a microfinance bank.
  8. 8. 8 K-Finance finds that there is a business potential in sanitation but there are other issues to overcome. (1) The problem of funds: sanitation is a new business (taking funds from the banks). It is risky to test such product with funds from the bank. They would need soft loans to carry out such activities. (2) Demand for sanitation is another challenge. (3) Training of loan officers and give them capacity to assess sanitation businesses. SEDIT has registered as an MFI on the side to complement its current activities. SEDIT currently has a sanitation and hygiene project in Dodoma – linked with sanitation marketing. They are working with Vicoba groups but are expecting to top up the capital of the groups through microfinance institutions and capacitate members of the group in entrepreneurship. SEDIT has just started this sanitation activity [under a WSSC/Plan funded programme]. SEDIT expects that four month will be needed to train people so that they start saving for sanitation and VICOBA groups start lending for sanitation related-activities. Each Vicoba group has 30 people. A typical VICOBA group collects TZS 1,500 per person per week. After 4 months, people will be able to take loans through the Sanitation Fund. SEDIT estimates that each group will have contributed 180,000 TZS (USD 106.1) towards the Sanitation Fund. [1500 * 30 = 45,000 * 4 months = 180,000 TZS] SEDIT is looking to influence 261 VICOBA groups to contribute towards the Sanitation fund. The sanitation fund will provide loans that will help them buy small sanitation components. There are plans to distribution centres, which will buy and in bulk and enable groups buy at reduced cost. SEDIT plans that households will contribute to the toilet construction by providing some materials.. Artisans that will be hired will come from the Vicoba groups. MAMADO implemented a microfinance project 4 years ago but they were not successful. They are analysing the challenges that made the project not successful. The report could be shared at the next working group meeting. Habitat for Humanity started providing loans in 2009. They do not differentiate toilet loans from other home improvement loans. They charge 2% flat rate. If the loan is taken and not used for home improvement, H4H issues penalties. H4H is looking for regional expansion and for funds from other partners. 3.7 Wrap-up: the main challenges to developing microfinance products for sanitation Wrapping up the discussions, Sophie Trémolet identified the following key challenges or areas where CCI, ECLOF and Tujijenge needed support:  Identifying sources of fund to generate sanitation loans: o Possibility of saving schemes? o Establish links with providers of grants or soft loans o Issue of interest rate: lower interest rates or lower the capital?  Training of credit officers: it is important to develop and roll-out a programme for training credit officers so as to sensitise them to the sanitation market and provide them the basis for evaluating applications for financial support coming from the sanitation sector. This needs to be explored further particularly to identify who can lead on this (e.g. whether there is a role for TAMFI (which provides umbrella training) or for Water NGOs (such as WaterAid)
  9. 9. 9  Training of CEOs and senior management of microfinance companies: similarly there is a need to raise the awareness of CEOs and senior management of microfinance providers. Similar questions arise as for the training of credit officers, although the answers might be different.  Increasing viability of sanitation entrepreneurs o Better communication about what is needed in terms of demonstrating financial viability for sanitation businesses o Who should support these entrepreneurs? Will they repay?  Collaboration between organisations o Distribute roles: who is the best placed to issue loans? o Who can provide training and support? o How can they best coordinate? o How to involve local government? Who would take the lead in advocating stronger enforcement? MFIs or NGOs? o Role of the working group: who could host? What could be future activities? According to James Mturi, WaterAid can take the lead to organise training to loan officers. Another potential partner for this would be SNV (Dutch NGO) which has recently been awarded a Euros 28 millions service contract for the Sustainable Sanitation & Hygiene for All (SSH4A) Results Programme. 3.8 Next phases Finally, George Mugweru presented the estimated timeline for the next steps:  19th -23rd May: finalizing concepts  26th -30th May: concept testing  9th -12th June or16th -18th June: pilot testing workshop  12th -27th June: pilot planning and financial projection support  1st July: Pilot Launch  October: pilot testing review  Late November: final Working Group meeting under SHARE Research.
  10. 10. 10 Annex 1 – Agenda 9:00-9:15 Welcome and introductions Abel Eliezer Dugage, Director of SSTZ, WaterAid 9:15-9:45 Update on the action-research: overview of the training and steps undertaken since Microsave 9:45-10:30 Market research and ongoing product development: Eclof Tanzania ECLOF 10:30-10:45 Coffee break 10:45-11:30 Market research and ongoing product development: CCI CCI 11:30-12:15 Market research and ongoing product development: Tujijenge Tujijenge 12:15-13:00 Wrap-up and next steps Trémolet Consulting 13:00 Lunch (provided by WaterAid)
  11. 11. 11 Annex 2 – Attendance Institution Name Email Mama Bahati Foundation Japhet Makau japhetmakau@ymail.com ECLOF Davita Mtui dativa.bahati@gmail.com Tujijenge Tanzania Debora Kiwale deborak@tujijenge.org K - Finance Arthur Kaane akaane@yahoo.com; dnminzi@gmail.com K - Finance Oscar P.Bwanakunu oscarpbwana@yahoo.com YOSEFO Ndeu Naboja nmaboja@yahoo.co.uk Tujijenge Tanzania Debora Kiwale deborak@tujijenge.org CCI Teressia Ntanga teddyntanga@yahoo.com Mama Bahati Foundation Japhet M.Jackson japhet.jackson@seditvicoba.or.tz WAT-HST Judith Sando jdthsando@gmail.com Habitat for Humanity Anna Kway akway@hfhtanzania.org Habitat for Humanity Tonny Charles ctonny69@yahoo.com TAMFI Harry Ndambala hjnndambala@gmail.com VKS construction support services Kenneth Sinare kensinare@gmail.com WaterAid Abel Eliezer Dugange AbelDugange@wateraid.com WaterAid James Mturi JamesMturi@wateraid.org WaterAid Sally Faulkner SallyFaulkner@wateraid.org Trémolet Consulting Sophie Trémolet sophie@tremolet.com Trémolet Consulting Goufrane Mansour goufrane@tremolet.com MicroSave George Muruka muruka@microsave.net MicroSave George Mugweru mugweru@microsave.net