Huduma ya Maendeleo in Tanzania
MEDA began working with microcredit in Tanzania in 1993, starting in
the city of Mbeya. From the first day of business, women lined up early
in the morning to get on the waiting list for a small-business loan.
With an eye to the future, and eventual "graduation" to indigenous
operation, MEDA formed a company called Huduma ya Maendeleo (Swahili
for "service of development") to someday take over.
The program
got off to a promising start. Initial targets, though ambitious, were
soon met and surpassed. The five-year plan called for 13,000 loans. By
the end of the first year, 5,000 loans had been made. Within 18 months
the loan portfolio grew to $670,000, with much of the capital coming
from the Canadian International Development Agency (CIDA). Within two
years a similar credit facility was set up in the capital city, Dar es
Salaam.
Thousands of small business owners used their MEDA loans to expand
their businesses and increase their income and assets so that their
families were better fed and new jobs were created. Clients praised the
business training they received. Some cited the basic bookkeeping and
money management as especially helpful. Others pointed to marketing
insights. Many reported that profits increased from 50 to 75 percent in
the first year.
Sadly, the Tanzania program became defined by an
enormous fraud perpetrated by a trusted staff member. Discovered in
1996, MEDA set to work to restore the program and repay all the lost
funds to the donor, CIDA. MEDA also implemented many changes, such as
tighter adherence to lending methodology, regular internal and external
audits and increased accountability of loan officers for the
performance of their portfolios among others. Today the program is
regarded as an African success story. The hard work from staff rescued
the program from disaster, completely turned it around, and helped it
become a credit to MEDA.
In 2002, MEDA transferred the program to
the country's new National Microfinance Bank. The move was in line with
MEDA's aim to "graduate" its programs to local ownership when feasible.
Moreover, new developments in Tanzania's small business sector demanded
an enormous increase in scale and the kinds of services that only a
national financial institution could offer. Repositioning our work
within the NMB seemed the best way to continue meeting our commitment
to Tanzania's microentrepreneurs.
Queen
Mwasaga has been operating her own clothing business in Dar es Salaam,
Tanzania, for almost three years. She makes and sells tie/dye materials
like batiks, kangas (a wraparound skirt), blouses and shirts, as well
as placemats and tablecloths. She likes to operate her own clothing
boutique professionally and she likes others to be professional, too.