Baby steps into 21st century

By Young Hoy Kim Kimaro

You may have been shocked to read last month that the majority of the people living in rural hinterlands of Kilimanjaro don’t hold bank accounts, that instead they turn to spare cooking pots, layers of old clothing, underside of a mattress, or a pot buried inconspicuously under a tree or whatever to stash away spare cash.

We had our first brush with microcredit through rural Savings and Credit Cooperative Societies (SACCOSs) about 10 years ago. It was highly successful. But success which triggered rapid expansion of loans exceeding SACCOSs’ ability to manages put their very existence to the test.

Neither SACCOSs themselves nor we realized that what they needed before any additional money was improved ability to track loan repayments. This happens a lot in development efforts. Money is often taken as the panacea, and we too had fallen into that trap.

Our second attempt to make a difference to rural microfinance was to bring in the local Uchumi Bank, which was reputed to be pro rural SACCOSs. From the start, Uchumi put forward two conditions which must be met for a SACCOS to be taken under its wing.

1. SACCOS Boards shall be composed of people with adequate education and work experience, to enable them to comprehend financial reports.

2. SACCOSs shall be registered with the local government as legal, financial entities.

All sensible demands but in the rural setting of Tanzania today, these conditions are challenging. Boards of church run SACCOSs tend to be filled with church elders, irrespective of their educational level. Very few board members of rural SACCOSs have more than primary education because at the time they went to school, access to education was severely limited.

In those days, less than 0.1% of the age cohort could find placement in the then one and only University in the country; less than 15% of the age cohort could get secondary education. And, after schooling why would they hang around in a village when well-paying jobs were to be found in cities?

Formal registration to become a legal, financial entity requires a minimum of 5 million shillings (about $2,300) as a capital base. A small sum for a financial institution, even by Tanzanian standards; but it is still a tall order for small rural SACCOS upstarts whose membership base may be as low as 100. Even if they reached that threshold, SACCOSs were skeptical of the notoriously cumbersome government red tape. How long would the process take? Six months? A year? Forever?

SACCOSs were discouraged. Try as we might, we could not bring the two sides together. Our initiative fizzled away. Then an unexpected opportunity presented itself.

During our visit with Prof. Walt Schafer, a Chico Rotarian who has long been supporting Rotary work on Mount Kilimanjaro, we shared the frustrations we faced in our efforts to modernize SACCOSs’ management capacity which would put them on a sound path of growth. “If only …” That was in October last year.

Prof. Schafer knew two MBA holders from Chico University in California who might be interested. And sure enough, they were. They signed up to come to Mwika in July this year to conduct short-term training on financial analysis and reporting, simplified and custom tailored to the needs of rural SACCOSs in Tanzania.

The prospect of sound technical backstopping energized us. We met with leaders of four SACCOSs. With no pre-conditions before them, they too were enthused.

In February, a three week course on computer basics was launched with 12 SACCOS staff participating. Many of the trainees had never even touched a computer before. Taming a jumpy mouse was a huge challenge they had to sweat out and master before all else. Their perseverance and enthusiasm for the training manifested in exceptionally high attendance rate ― 88 percent on average when normally one hopes for 50 to 60 percent at best!

At the start of the third week of training, they pleaded. “Please and please… if there is any chance … extend the training just a little longer?” How could we say no to such an enthusiastic group of trainees? So we added on two more weeks to the training.

We reached out again to Uchumi Bank, which had these SACCOSs a computer here, a lap top there but no training to go with them. Perhaps Uchumi Bank assumed training was as easily available in villages as in Moshi town where it is located. The bank was sore that these SACCOSs did not use the donated computers for their SACCOS work. But how could they? Our third (and current) entry into the SACCOSs scene with a focus on computer skills training for SACCOSs’ staff to build their management capacity fills this gaping hole.

The last of their five-week long training, the trainees are in the thick of computerizing their SACCOSs’ database. A big morale booster follows at the end of this part of their training. SACCOSs whose staff demonstrate satisfactory mastery of computer skills will return to their SACCOSs with computers and accessories such that each SACCOS will be equipped with a desk top, a lap top, a printer and stabilizer, including what they received from the Uchumi Bank previously.

Then in July, more training will follow. This time, taking it a level higher, touching on basic financial analysis and reporting which will be conducted by the two MBAs from Chico.

For SACCOSs which faithfully put into practice what they learn, and produce board reporting using analytical approaches and raising the loan repayment rates, we hope to reward them with an injection of capital as they will be ready for more aggressive growth. But before we make promises and raise expectations, we’d better start fund raising.

Hopefully, what we learn from this experience will enable us to reach out to more SACCOSs to improve their operations. When we do, we hope the Uchumi Bank will be with us as a full partner.

The writer resides on the slopes of Mount Kilimanjaro in Tanzania. She worked for the World Bank for nearly 30 years and her email is youngkimaro@gmail.com.