Make 10% of loans work for women, youth and people with disabilities
-of them fail to repay the loan. In this interview, our correspondent GERALD KITABU met Lucas Kifyasi, head of the UNA Tanzania, Youth, Economic Rights and Participation program, who explains, read on:
You have worked with young people, tell us what does this empowerment fund mean?
Seed capital for women, youth and people with disabilities was first introduced by a 1993 parliamentary resolution that aimed to uplift economically disadvantaged groups of women and youth without access to loans issued by financial institutions due to the lack of collateral. However, despite the resolution, local council empowerment loans were allocated at five percent for women and five percent for youth, excluding people with disabilities, and were issued with one percent interest.
UNA Tanzania submitted to TAMISEMI the necessary recommendations collected in a timely manner from 17 districts of the country. These recommendations were gathered from women, young people and disabled and responsible people. The recommendation informed the need to improve and ensure effective governance of local government, empowering own-source income in the form of loans to groups of women, youth and people with disabilities.
Has progress been made?
Following the recommendations, in 2018 the Local Government Finance Act 1982, CAP 290, section 37A was amended to require local councils to set aside 10% of their own sources of income without interest rates for loans from local governments. empowerment of women, youth and people with disabilities. The loan was designed as a revolving fund to which local government authorities (LGAs) are supposed to allocate 10 percent of their own income (four percent for women and youth groups each while two percent goes to people with disabilities) to empower these groups in carrying out lucrative ventures to lift their own households out of poverty.
How has the government worked with UNA Tanzania to ensure effective loan governance?
From the start, UNA Tanzania had an interest in ensuring that women, youth and people with disabilities had access to lenient capital to help them start businesses. In working with women, youth and people with disabilities, a number of issues were identified that hindered smooth access to loans. One of the obstacles was the governance of loans. We brought our ideas to improve operations for the benefit of intended beneficiaries and the nation as a whole.
What were the major challenges?
Challenges include the delay of some LGAs in allocating 10 percent of their own income to groups of women, youth and people with disabilities, financial inequalities among LGAs, low reimbursement rates, low income collection by the LGAs which reduced the overall allocation of the fund and, in some cases, the competing priorities of LGA. In addition, the current capacity of community development departments at LGA level to process, manage and collect loans and provide business development services to beneficiaries limits the effective functioning of women, youth and persons with disabilities as a fund. renewable. Some LGAs do not prioritize the most disadvantaged, a short loan repayment period and the lack of a lenient mechanism in group formation, especially for people with disabilities.
As UNA Tanzania, what did you recommend?
We had several recommendations which were submitted to PO-RALG in October 2019 and these recommendations were taken over for the regulation modification in 2021. We recommended that the size of the women’s and youth groups be reduced from 10 to five for help manage them.
We also recommended that people with disabilities be given priority in accessing empowerment loans as well as building the capacity of community development departments to provide technical support. Formulate more lenient loan conditions for groups of people with disabilities. Some projects take a long time to start generating profits and as such we recommended that there be a need to extend the time frame for beneficiaries to repay.
We also recommended that LGAs consider allowing the use of government-provided corporate identifiers by groups when applying for loans if and when the groups do not have a business license. Local councils should consider providing tools instead of cash loans to prevent abuse by beneficiaries. A specific bank account must be opened and integrated into the system so that loans can be allocated automatically as well as the repayment process. Set a certain amount of funds for training and group development monitoring and provide technical assistance for management and business management.
Feedback on the recommendations?
Improvements were made for effective governance of 10 percent of loans to local councils for the empowerment of women, youth and people with disabilities. For example, Article 3 provides that loans will mean the provision of money and tools necessary for groups to venture into businesses of their choice. Previously, LGAs were required to issue cash-only loans.
Section 6 Article 1, the new amendments reduced the group members from 10 to five for women and young people. Previously, women’s and youth groups had to have 10 members. Section 7 is amended to allow groups to use corporate identifiers provided by the government when applying for a loan. Article 23 of the new amendment obliges LGAs to set aside an amount for monitoring the development of groups and to provide technical assistance for the operation and management of businesses.