Sunday, 24 February 2013


Prepared By Charles Clark 
Most villages that do not already have a SACCOS group would like to start one. SACCOS groups are the Tanzanian version of village micro-lending groups based on the Grameen Bank from Bangladesh.
Project Summery
My village, Kifumbe, wanted to start a SACCOS group and then wanted help with fundraising. I helped found the group but gave no financial assistance beyond that, other than income generating ideas.
Two years later, the SACCOS group in Kifumbe is thriving. SACCOS is a group where members save by contributing about 6,000 TSH per month and then have the option to take out loans from the group once the group’s savings is large enough to support loans. Loans are repaid in monthly installments at a rate of about 20% interest per year (to help the group and cover default risk).
Suggested Steps to follow
  1. Have a meeting with villagers and village leaders to see if there is interest in the project. Have all potential group members write a letter to the District Cooperative Officer.
  2. Set up a meeting with you, your Village Executive Officer, and the District Cooperative Officer and bring the letter of intent from your village.
  3. Arrange for a time when the District Cooperative Officer can come to your village to teach a seminar on starting and running a SACCOS group.
  4. After the seminar, the group should be up and running. The main thing for the PCV to do now is help with inevitable questions about how to get the group more money. I would recommend not helping the group directly with cash. Instead work with the group on income generating activities.
  5. The group will also probably want to open a bank account to store the savings, so helping facilitate the opening of a bank account can be helpful.
  6. The group will start slowly to build savings but over time and especially as more members join, the group will have more and more money available for loans. After two years, our SACCOS group had over 2 million shillings.

Advantages of Saccos Groups
Villagers typically have no access to loans of any kind. So when school fees or other unexpected expenses come up, the only recourse is to borrow in an ad hoc fashion from friends or family. SACCOS groups provide a micro-lending group in the village that everyone can join and that provides regular opportunities for savings and loans.
Lessons Learned
My first approach to SACCOS was to try to connect the village group with banks or other SACCOS groups. The Grameen Bank was set up more to provide start-up funds to struggling women and less as a savings group. However, the default rates are bad in Tanzania so even groups that want to help SACCOS groups (banks or the government) are unlikely to actually provide any money. So SACCOS, at least at first, is more of a savings group until enough funds are available for the group to loan to members.
It is possible to get loans for SACCOS groups from established banks (NMB or NBC) but that typically requires the group to have worked for 3+ years and to have audited financial reports. The banks also require collateral (such as land or houses) to be available in town so the bank can repossess the items in the event of a default. Needless to say, these and other requirements are not likely to be met, and in Makambako neither the NMB or NBC banks had ever actually approved a loan to a village SACCOS group.
Other micro-lending groups are in Tanzania although I have not worked with them. One is FINCA who apparently does not like working with SACCOS groups but prefers to work with small groups of villagers directly on income generating projects.
1. Charles Clark,
2. Village Executive Officer (Boniface Kyando in Kifumbe 0754280378)
3. Regional Supervisor (Samson Lwendo in Njombe 0757675442)
3. District Cooperative Officer (At the District Government Office in Njombe)

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