IN mid of November this year, the ruling Chama Cha Mapinduzi (CCM) held elections of its leaders from the district to National Executive level who would lead the party to another five coming years. After the election, the party outlined various resolutions it had put forward during its 8th general meeting which was held at Kizota hall on the outskirts of Dodoma town, a prospective Tanzania’s capital city. Among the most important recommendations put forward, the ruling party has directed the government to give priority to entrepreneurs and also to ensure that it removes all sorts of bureaucracy among the executives of the financial institutions against money lenders. The party has also directed financial institutions and money lenders in the country to limit down some of their tougher conditions which they have imposed to their money lenders so as to allow entrepreneurs and individuals as a whole to take loans of affordable interest rates with ease. Announcing the new basic concepts of the party’s stance, the newly appointed CCM secretary general, Abdulrahaman Kinana said that, CCM has reiterated its commitments to help Small and Medium Enterprises (SMEs) which offers self employment to about 80 percent of Tanzanians. CCM’s concept has come amid statistics which shows that the current inflation in the country stands at 19.2 percent from 12 percent it had been seven years ago when the fourth phase government of President Dr. Jakaya Kikwete came into being in 2005. The CCM’s development concept aims at empowering SMEs and the move prompts national strategy on poverty reduction drive whose aim is to seek better life for Tanzanians before its goal has to be realized by 2015. But despite of the efforts shown by the government, interviewed loan seekers say that bureaucracy is still existing in some micro-finance institutions which are involved in the provision of loan facilities to Small and Medium Enterprises (SMEs) including banks which are operating in the country.
They say the developing habit has been the main stumbling block for the development of their SMEs in the country. The situation has discouraged most loan seekers who sometimes are asked to introduce bribes (the so-called kitu kidogo) before the service is rendered to them whenever they apply for loan facilities from these institutions. Some loan seekers when interviewed early this week in Dar es Salaam said that, the low capital which they have is not enough to run their business activities and instead resort to depend on loans from various financial institutions to help them run their businesses but to in vain. Expressing their emotions over the issue, some disappointed entrepreneurs said that they have been met with lots of challenges accompanied by tough conditions an aspect that most working groups have failed to meet them. “Postponements of unfulfilled appointments are the order of the day” says Rhoda Kilasa who has been making frequent visits in follow up for her loan application she had applied two months ago from one of the well-known financial institution (name withheld) located in Dar es Salaam, but to no avail. Ezekiel Kilambo (42) a resident of Ukonga-Madafu who was in need of a medium loan to increase his working capital from one of the famous micro-finance institution in the city (name withheld), is discouraged when he failed to get financial support due to tough conditions imposed by loan officers. However, in desperation, he says that, there was no need of establishing such institutions which do not fulfill their appointments to help the needy people as required. Mr. Kilambo is on the view of the fact that, the long process of obtaining loans is too cumbersome and time consuming without success an aspect that most loan seekers gets discouraged. According to him, loan officers have been using a loophole without shame of soliciting for bribes whenever contacted by their customers at their working places. Apart from bureaucracy, banks have to be blamed for stiffer conditions say Marcelina Adoyo. According to her, Banks have been giving stringent conditions in order to get loan facility to the extent that some groups fail to meet them. However, she said that, although many banks have been providing loans especially to women groups, but they have imposed tough conditions which require loan seekers to own things like immovable properties such as a house as collateral, a thing that most of them cannot afford. Cornered by this writer, one lady by name of Lucia Wambura (38) who conducts a shop business selling both human and animal drugs at Kipunguni ‘A’ suburb in Ilala district, Dar es Salaam region, had long been in need of a loan from a renowned micro-finance institution, but she is yet to receive such loan owing to conditions imposed by the firm that she can’t meet. According to her, in order to fulfill one condition, she was told by loan officers to bring a contract she had had entered with the landlord in a house in which she conducts her business. As if that was not enough, she was also told to show alongside the annual property tax receipt if paid to Tanzania Revenue Authority (TRA), she dropped the order upon failure to meet all these. When contacted for comments, the head of the loan section of the National Micro-Finance Bank operating in the city who spoke on strict condition of anonymity said that, most loan seekers are not trustworthy an aspect that ought them (as bank) to investigate their customers’ businesses to establish their existence. However, one loan officer from one famous and long serving Micro-finance institution known as Promotion of Rural Institution and Development Enterprises Ltd, in short ‘PRIDE (T) Ltd’ Rehema Boniface said that, the issue of bureaucracy is personal and has nothing to do with his firm’s operations. PRIDE (T) Ltd has been a liberator of most women groups in the country, and in view of this, the institution takes long time to verify the authenticity of the documentation produced by their customers who needs personal loans as collaterals for proof as some documents presented by their customers are not genuine. However, she added that, they have to check them thoroughly according to procedures any documents presented to them by their customers so as to ascertain any irregularities and or suspicion that might have been noticed before decisions to accept them is made. However, she said adding that, the exercise takes about one month or two including a visit to a principal place of business. Customers might take it as an easier task and that’s why it takes long process to complete. The essence of doing this is to verify the truth before the actual money is issued as loans to would be applicants, he said adding that many of their customers’ presented documents have sometimes been found not to conform to their original ones, therefore a need for more time scrutiny is essential. According to one economic analyst, Rebeca Mdoe “lack of enough capital has been a stumbling block to most newly formed business enterprises in the country which have failed to develop for lack of bigger capital. Some of these have ceased operations for failure to meet their business targets mainly due to low capital investments”. In a bid to keep customers’ credit information database into a single databank system, the Bank of Tanzania (BOT) which is the main financial regulator in the country launched a Credit Reference System (CRS) in the country two months ago. The CRS system is designed to collect and provide information on the payment record of all clients of the lending banks and other financial institutions as well as those of Savings and Credit schemes in the United Republic of Tanzania and other entities engaged regularly in the extension of credit. The BOT’s Director of Banking Supervision, Agapiti Kobelo said during the launching that, “the establishment of CRS is a continuation of government’s efforts to reform the financial sector with the enactment of the banking and financial institution’s Act which started way back in 1991”.
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