The council has also challenged women with constrained accessibility to investment and working capital to leverage on opportunities offered by other various public empowerment funds, whose activities it also coordinates.
For the current financial year, NEEC has 1.8bn/- for guaranteeing borrowing by entrepreneurs in Mainland Tanzania.
According to its Executive Secretary Beng’i Issa, NEEC has since 2008 guaranteed a total of 12.9bn/- to 17,638 micro, small and medium entrepreneurs most of them being women. Issa (pictured) told The Banker last week that the loans were extended under guarantees of its Mwananchi Empowerment Fund (MEF) through three banks.
According to information on its website, loans worth 10bn/- were guaranteed by MEF through a framework agreement NEEC had with CRDB Bank Plc. Currently the council has credit guarantee arrangements with UTT Microfinance Plc and TPB Bank Plc.
“Such loans, which have been issued through savings and credit cooperative societies (SACCOS), have enabled thousands of entrepreneurs in rural areas to fulfil their dreams.”
MEF serves both women and men. To date it has enabled 9,234 women entrepreneurs and 8,404 men to secure loans as well as 58 SACCOS and 172 Village Community Banks (VICOBA). All these groups account for about 52 per cent of the credit NEEC has guaranteed under Mwananchi Empowerment Fund.
Section 16 (1) of the National Economic Empowerment Act No. 16 of 2004 which provides for the establishment of NEEC has specified that MEF shall advance and lend money to eligible Tanzanian individuals, SACCOS, partnerships, companies, corporations and co-operatives, either with or without security.
“MEF is among the Economic Empowerment Funds stated in the National Economic Empowerment Policy that are used by the Government to support the implementation of the economic empowerment initiatives,” reads the NEEC profile on the website.
“Specifically, the MEF assists in solving the constraints of lack of capital and credits; and to promote entrepreneurship training. It was launched on 23rd January 2008. The main objective of MEF is to facilitate the redressing of economic inequality which exists among Tanzanians. It intends to establish viable economic related activities that enable vast majority of people, mostly those lacking entrepreneurship expertise and financial resources to establish or smooth run their economic activities,” it adds.
Executive Secretary Issa said the loans guaranteed by NEEC have been offered to women and men entrepreneurs engaged in fishing activities, food processing, farming, livestock keeping, soap making, wine making and handcraft.
She said the main source of MEF capital is the government. NEEC, which has plans to also work with other financial institutions when the size and scope of the base capital allows, is also coordinated the JK Empowerment Fund through which 21bn/- were lent to thousands of entrepreneurs in districts across the country to promote empowerment and job creation.
“In view of its mandate NEEC also has a role of follow-up and coordination of the other Government Empowerment Funds and to provide up-dates of the same to Government, stakeholders and other interested parties,” it says on the website.
These funds are the Presidential Trust Fund (PTF), the Small Entrepreneurs Loans Facility (SELF), the Agricultural Inputs Trust Fund (AGITIF), the National Youth Development Fund and the National Entrepreneurship Development Fund. There is also Tanzania Social Action Fund (TASAF), the Export Credit Guarantee Scheme (ECGS) and the Small and Medium Enterprise Credit Guarantee Scheme (SME-CGS).
“As we celebrate the International Women’s Day in Tanzania this year, we are very proud for what we have done to women entrepreneurs in the country because the loan repayments is satisfactory and 93 per cent of the guaranteed credit has been returned to the banks allowing more micro, small and medium entrepreneurs access financing from them,” Issa told The banker.
There are currently six credit facilities under MEF, including short term loans whose credit period is 12 months and which is used to finance mostly agriculture inputs; seasonal loans for funding increased inventory as well as term loans that are mainly for acquisition of fixed assets. Bridge loans are normally used to bridge a gap until as specific event occurs such as sale of noncurrent assets.
Overdrafts are about revolving credit financing for purchasing current assets or paying current liabilities. Guarantees and letters of credit are loans which do not involve cash disbursement, but are financially liable to NEEC.
Issa said the borrowed funds have had positive results in terms of creating job opportunities in various sectors, boost incomes of households to improve livelihoods of many people as well as helping those lacking access to commercial financial resources to establish new businesses and run their economic activities more effectively.
According to her, loans for micro and small entrepreneurs are unsecured and they are repaid within three years. Here NEEC guarantees loans to individuals and groups of entrepreneurs who are eligible for maximum borrowing of 10m/- with interest rates negotiated between banks and NEEC.
Medium and corporate entrepreneurs are required to have security of at least 50 per cent of the requested amount and the repayment period for their loans depending on the nature of the business should not exceed five years. The minimum loan amount is above 10m/- with a maximum amount of 500m/- for medium entrepreneurs whereas for the corporate category the credit ranges between 500m/- and 10bn/-.
NEEC lists priority sectors as agriculture, livestock keeping, manufacturing, fishing, agro-processing and artisanal mining.
Issa said women should invest in various business activities because there are ready markets in the country, region and overseas. She however cautioned them to be extra careful when they decide to venture into business and borrow because doing so without planning would be detrimental.
She said women entrepreneurs seeking credit and those who want to be trained in entrepreneurship to visit NEEC offices for support wherever they are since all of them have economic empowerment desks to help them. Currently the council has economic empowerment desks in 185 district councils in Tanzania Mainland.
“These desks are under specialized experts in training how to form SACCOS, VICOBA, and how to run and supervise them. The goal here is to train as many people as possible on entrepreneurship to ensure they benefit meaningfully from whatever they are doing,” NEEC’s Communication Officer Jozaka Bukuku said.
He said the agency also plays the role of linking entrepreneurs with banks to enable them access financing therefore women should also exploit this service and opportunity. Beng’i Issa said that if Mwananchi Empowerment Fund is optimally utilized it can play a big role in liberating women financially and economically.
She said the fund is a vital catalyst for implementing the National Economic Empowerment Policy, whose top objective is to empower Tanzanians economically through promoting universal understanding of equity ownership and contributing to creation of employment opportunities.