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Supporting Youth Groups with Microloans in Tanzania

By AJ Renold

AJ Renold, Opportunity Tanzania’s multimedia YAO reporter on the ground, sends us this report about a pilot microlending program for a Tanzanian youth group.

This past Friday, Opportunity Tanzania lending staff visited the NGAO Youth Group, a group supported by Youth Initiatives Tanzania (YITA), to assess their business for the capacity for a loan. This meeting marked the start of a partnership between Opportunity Tanzania and YITA to provide business credit to YITA youth groups. YITA is a non-government organization newly registered in Tanzania in 2009. YITA works with youth groups in the Manzese neighborhood of Dar es Salaam to assist the groups to build sustainable income-generating businesses. YITA facilitates the formation of groups and then takes them through a three-year training program. The YITA training focuses on entrepreneurship and also includes training on health topics like HIV/AIDS.

Until the start of the partnership with Opportunity Tanzania, YITA youth groups have been limited in their access to formal credit for their businesses. The YITA youth groups’ businesses operate using only the savings capital accumulated by members, an issue identified by YITA staff as constraining the potential of the businesses. As a pilot to a product specific to YITA youth groups, Opportunity Tanzania is making a group loan available to the NGAO Youth Group for use in their maize processing business.

The maize processing facility the NGAO Youth Group rents when processing maize.

The NGAO group is made up of 24 youths who have come together to participate in YITA’s program and build a business together. With a small office in the Manzese neighborhood, the NGAO group operates a maize processing and unloading business. The group is situated in an area where bags of maize are brought from rural areas around Dar es Salaam for processing into flour. Trucks arrive and NGAO group members work to unload the maize for processing. When the group has built the working capital to purchase maize, they buy and process hundreds of kilograms of maize. Their main income-earning activity is the maize processing, while they support themselves and build capital by unloading ten or more truckloads per week. Limited by working capital, the NGAO group only had capital to purchase and process maize two times per month. After taking a group loan from Opportunity Tanzania, the youth group should be able to increase their maize processing activities to four times per month and significantly increase their income.

Staff at Opportunity Tanzania and YITA are excited to see the results of this pilot. If successful, the NGAO youth group will open the door for group loans to be made to other YITA youth groups with mature businesses. As an Opportunity loan is an excellent complement to the intensive training that YITA provides to youth groups, Opportunity Tanzania hopes that we can partner with YITA to further strengthen their group businesses.

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