By Marion Walls, KF19, Tanzania

There’s a buzz about Group Loans here in Dar Es Salaam!  And now that I see them in action every day, I’m sold too!  I’m volunteering as a Kiva Fellow at Tujijenge Tanzania where all Kiva loans are Group loans, so I’ve learned considerably more about them in the last six weeks.  It’s become clear why Group Loans are a mainstay of microcredit: they fill a particular niche for borrowers.

Let me show you what I’ve learned…

Borrower groups at Tujijenge are made up of around fourteen members who know each other, though there may be as many as twenty or as few as eight.  Groups choose their own names – and names run the gamut from the practical “Mt Rungwe”, to the motivational “Breakthrough”, and confident “Top Class”.  Their names are just the first indication that each group is unique…  It’s been immediately apparent when I’ve met them that each group has it’s own personality: some are shy and quiet, others cheerful and full of energy!

Group members don’t necessarily operate the same type of business as each other.  One may have a fruit stall in a market;

another may own a general store;

while a third raises (inquisitive) ducks!

Group members don’t all borrow the same amount as one another either – each member’s loan amount is dictated by both the amount they requested and their personal loan history at Tujijenge.

I’ve participated in a number of Group loan disbursements at Tujijenge’s main branch.  I’ve been delighted to meet members on their tenth loan cycle, borrowing Tsh 1,800,000 (about US$ 1125), because it confirms for me that the loans provide genuine benefit.  I’ve been equally happy to meet members who’ve only recently joined a group and are on their first loan cycle, borrowing Tsh 80,000 (about US$ 50).  Wait a minute…. surely that can’t be right?  $ 50!   I’ve never seen an Individual loan for $ 50 on Kiva.  And this is precisely the point: Group Loans are special.  They enable borrowers to start borrowing.

This thrills me – I’m here, seeing borrowers stepping onto the first rung of a ladder that could lead upward out of poverty!  New group members are borrowing $ 50 to boost their fledgling business, or to make a lump sum payment on an item such as school fees.  The main reason these borrowers join a Group is that members guarantee each others’ repayments, so small loan amounts are accessible to those who don’t yet have physical collateral.  (Tied to this fact, too, is that members don’t need spousal approval for participation in a Group loan – an important consideration in a culture where gender equality has not been the traditional norm.)

Group loans also provide a good environment for nurturing new borrowers.  Established group members can help new borrowers learn the skills and discipline associated with repaying a loan, all within the safety-net of the group guarantee.  And, I was fascinated to learn, a Group is a self-regulating mechanism against the scourge of over-indebtedness.  Group members actively discourage each other from taking out simultaneous loans from multiple organizations because they know they’ll personally be on the hook for paying back the Group loan if a fellow member cannot.

Then there are the intangible benefits to a Group loan that I’ve discovered while attending Group meetings!

Groups meet on a weekly or bi-weekly basis in a location convenient to them (but that entails several hours’ journey on a hot and supremely overcrowded dalla dalla for the Tujijenge loan officer and Kiva Fellow…), to register repayments with their loan officer.  At one meeting, I ask the Group Chairman if hers is a tough job and she sighs: “Yes, following up with members who haven’t repaid is the hardest part.”  I ask her why she’s persevered in the role for five years, and she answers without hesitation: “Leadership!”  She’s referring to leadership within her group, as well as within her community.  It’s her very practical way of bettering the community in which she lives.

Likewise, the young Treasurer is demonstrating her accounting skills and acting as a role model to new borrowers within the group, whilst also developing her status outside it.

And another group member, (an irrepressible character who offered me a two-week home stay to get my Swahili vocabulary up to scratch!), has the opportunity for the group interaction she so obviously thrives on.  It’s a big part of the reason she was a founding member of the group five years ago…

But it’s not just idle chit chat at a Group meeting; the support members gain from one another is so highly valued that many well-established borrowers choose to stay in a Group long after they are eligible for “graduation” to an Individual loan.  In this case – and in a nice paradox – the Group loan enables borrowers to access some of the largest loan amounts on offer.  So chalk up one more winning attribute: Group loans empower the borrowers that started with them to keep moving upward!

If you’d like to loan to Tujijenge’s Group borrowers, you can do so here.

As we say in Tanzania: Karibu sana!  You are very welcome!


Comments

I loved reading what you are up to, Marion! The colorful image and the pictures you paint with words brings out the beauty of Tanzania... I've only worked with individual borrowers here in Bolivia, but many of them started with microcredit in a group environment so we know how important these types of loans are. I hope you take that home stay offer, how awesome! Hujambo from Bolivia, my friend!

Thanks Peter! I get to visit my first Individual borrowers next week with Barefoot Power, so it'll be interesting to see a different model. I'm really looking forward to the traveling it'll entail too because you're right - Tanzania is truly beautiful!

Marion, this is really great! The MFIs in Jordan currently only post individual loans on Kiva, so I haven't had a lot of exposure to group loans yet. But it may something that we'll be considering for the future and it will be interesting to compare and contrast our experiences and the effects of group loans in community settings. Wonderful pictures too!

Thanks Taline! Yes, it really would be to awesome to see the group dynamics play out in another culture. I love that all us Fellows are having different experiences in our various countries!

You have really done a very marvelous article. It looks so creative and exiting! We are anxious to have more articles from you. It seems Tujijenge should be doing tremendously good work. You are wonderful Marion. Please keep it up. And also very bright!

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