FAQ’s about Micro-finance.
What is micro-finance? Is it used in other countries?
The father of micro-finance is Dr. Mohammad Yunus, who started a program of lending to the poor in Bangladesh in the 1970s. He would go on to establish Grameen Bank in 1983 and win the Nobel Peace Price in 2006. Micro-lending is now used in many developing countries around the world.
Why is micro-finance needed in Tanzania?
In rural Tanzania capital is almost non-existent. Small loans enable a family to buy the fertilizer and seed needed to increase their farm income. Loans enable a small shopkeeper to carry more inventory and increase sales each month.
How does micro-finance compare to micro-loans or micro-credit?
These are just different names for the same thing. They provide small amounts of money to the poor to increase the return from an income earning activity.Loans are for a short period typically 3 to 9 months.
Who decides who will get a loan? Who manages the village funds?
To participate, families in the community must become a member of the village SACCOS and pay a small membership fee generally about $5.00. They in turn elect officers who manage the SACCOS and make loans. The directors and officers of Iringa Hope USA do not participate in these decisions.
How can you be sure the loans will be repaid? What has been your experience?
Capital is so scarce that a village micro-finance fund is a community concern. Repayment rates are typically better than 95%. Training is provided to help local loan committees avoid risky loans and help in basic business planning.
How do you start a village micro-finance fund?
The Micro-Finance Institute works with leaders in the community. They provide information and training sessions and assist with setting up a SACCOS.
What is a SACCOS?
A SACCOS (Savings And Credit Cooperative Society) is a legal entity under Tanzanian law. It can take deposits and make loans, and is subject to an annual audit.
Can I make a donation by credit card?
Yes, click on the donation page or go to GiveMN.Org and search for Iringa Hope.
