The Citizen, a Tanzanian newspaper, has reported on the performance of the Youth Self Employment Foundation (Yosefo), a microfinance institution(MFI) in Tanzania that has now been in existence for twelve years [1,2]. In this time period, Yosefo has loaned Sh11.6 billion, the equivalent of over USD 8.7 million, to 28,000 borrowers, according to the Citizen’s report on comments from Altemius Millinga, Executive Director of Yosefo [1].
Yosefo was founded in 1996 [2]. It is a non-governmental organization (NGO) based in Dar es Salaam, Tanzania, the largest city in Tanzania [2]. They focus on providing micro credit in rural and urban areas, mainly to young, female entrepreneurs [2]. Women make up 70 percent of their clientele [2]. They offer group and individual loans, and have utilized a “school loans and savings program” to finance education for the children of low-income families [2]. Additionally, they have begun a Village Savings and Credit Associations program for groups of up to contribute to a savings fund and subsequently borrow through that fund [2]. The bank also provides additional credit to this fund if such action is necessary to meet demand [2]. They have more than a dozen locations in and around Dar es Salaam, and several more on the east coast of Tanzania [2]. Yosefo does not report data to the MIX Market, the microfinance information clearinghouse [3].
In twelve years, Yosefo’s loan portfolio has increased by over 2,000 times from Sh5million, the equivalent of over USD 3.7 thousand, to the Sh11.6 billion (USD 8.7 million) figure mentioned prior, according to Mr. Millinga [1]. Between January and September of 2009 alone, Yosefo loaned Sh3.5 billion, the equivalent of over USD 2.6 million [1]. Mr. Millinga stresses the role of Yosefo in providing credit to those who have had difficulty securing employment in the formal sector. He also stated that most funding for the MFI comes from outside sources [1].
The Economist Intelligence Unit (EIU), the research arm of the Economist magazine, ranked Tanzania as the nineteenth best country in the world and the fourth best country in sub-Saharan Africa for microfinance in its 2009 Microscope index [4,5]. Microcapital covered this report in October of 2009 [6]. Tanzania’s strongest performance was in terms of regulatory framework, where it was tied for tenth best on the world [5]. The Bank of Tanzania regulates both MFIs as well as Savings and Credit Cooperatives (SACCOS) rigorously, but MFIs are free to set interest rates themselves [5,7]. Another positive aspect of microfinance in Tanzania is the fact that there are “no significant publicly subsidized credit initiatives which compete with MFIs” [5]. Some difficulties for Tanzanian microfinance include lack of resources and training for proper supervision, a moderate range of services, and a limited penetration to rural markets [5]. Nine MFIs from Tanzania reported to the MIX Market in 2008 [8]. Combined, these MFIs had a gross loan portfolio of over USD 77.2 million, and served over 268,000 borrowers [8].
By Chris Maggio, Research Assistant
Bibliography:
[1] Citizen article entitled ‘Micro borrowers receive Sh3.3bn’: http://thecitizen.co.tz/newe.php?id=15207
[2] Yosefo: http://www.yosefo.org/
[3] The Mix Market: http://www.mixmarket.org/
[4] Economist Intelligence Unit: http://www.eiu.com/site_info.asp?info_name=about_eiu&entry1=about_eiuNav…
[5] Economist Intelligence Unit Global microscope on the microfinance business environment: http://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=2189221
[6] MICROCAPITAL.ORG STORY: Peru Ranks First in 2009 Microscope Microfinance Index, A Global Index on Business Environment for Microfinance Developed by the Economist Intelligence Unit (EIU), Released by the Inter-American Development Bank (IDB), the Corporación Andina de Fomento (CAF), the International Finance Corporation (IFC), and the EIU: https://www.microcapital.org/microcapitalorg-story-peru-ranks-first-in-20…
[7] Bank of Tanzania: http://www.bot-tz.org/
[8] Tanzania on the MIX Market: http://www.mixmarket.org/mfi/country/Tanzania/flatstore_mfi_mfdb_data.mi…
All conversions calculated using Bloomberg Currency Converter: http://www.bloomberg.com/invest/calculators/currency.html
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