SELFINA

About 2.5 months ago, Chelsa and I traveled to Tanzania to visit one of Kiva's current partners, YOSEFO (Youth Self Employment Foundation), learn more about the local microfinance sector, and explore new partnerships with microfinance institutions working to alleviate poverty. One of our first stops was the Financial Sector Deepening Trust (FSDT) where we met with FSDT's charismatic director, Ian Robinson, and FSDT technical manager Sosthenes Kewe. FSDT is a collective undertaking of the Canadian, Danish, British, Swedish, and Dutch aid agencies and acts as a premier microfinance funder and repository of knowledge on the Tanzanian microfinance scene. In our conversation, Ian spoke about the findings of a 2006 study by FinScope (supported by FSDT) on access to financial services in Tanzania and highlighted the finding that 54% of Tanzania's 37.8 million citizens have no access to credit. You read that correctly, "no access." That means no access to loans from banks, from microfinance institutions, from moneylenders, from family members, from anyone. Another 35% of Tanzanians are able to get loans from family members or local moneylenders (better known as loan sharks) but, even here, interest rates are often through the roof and loan amounts are severely limited. The statistics were, and are, simply stunning and it in this context that we sought new Kiva partners that were working to expand access to credit in Tanzania.

While Chelsa and I were in Dar es Salaam, Tanzania's capital, we were introduced to the leader of an exciting organization called SELFINA (Sero Lease and Finance Ltd.) involved in an innovative form of microfinance called micro-leasing. Micro-leasing is very similar to traditional microfinance but is unique in that the organization, SELFINA, actually purchases the equipment that the borrower wants and leases it to the borrower for the loan term. The borrower uses the equipment throughout the loan (while they are repaying) but they don't technically own the equipment until they fully repay the loan. Victoria explained to me that SELFINA typically does micro-leases for sewing machines, water pumps for irrigation, and milling machines. SELFINA has very high repayment rates so it rarely has to go and take back the equipment but the arrangement provides the right incentives for everyone to make good loans and repay on time.

In speaking with Victoria, Chelsa and I were able to learn more about SELFINA's inspirational beginnings and the path it has traveled to get to where it is today. Originally, Victoria began an organization called SEBA (Sero Businesswomen Association) named after her cow, Sero. Sero was Victoria's only asset after her husband passed away and was one of the few ways she could make an income and survive. Victoria wanted to help women across Tanzania to improve their lives and formed SEBA to train women on business development skills, HIV/AIDS awareness, gender issues, and provide legal aid. After SEBA successfully grew and flourished, SEBA staff identified lack of access to credit as a major impediment in womens' business development and, from that, formed SELFINA (Sero Lease and Finance Ltd.) in 2002.

SELFINA has continued to grow since its inception and has provided over $7.5 million in loans to over 4,500 women. It is led by Victoria and fantastic managers like Fausta Lema (the financial director) who we were also able to meet. It describes itself in its most recent annual report as:

Sero Lease and Finance (SELFINA) was established as an indigenous organisation to assist women to build a solid economic base for themselves and for their families as the only practical way to achieve economic and social emancipation of women.

SELFINA has taken a lead role as a pioneer of micro-credit in Tanzania through Micro-Leasing, as an effective and practical way of offering credit to women with particular attention to widows and young girls. Customs and traditions in Tanzania normally make it difficult for women to own land and assets. Many women are therefore considered not creditworthy by financial institutions in the country as they lack tangible collateral assets. This leads to poor financial support hence poor access to basic needs and services for women with low incomes, the problem being even more acute for widows -who have to single-handedly take care of their families, and their marginalization in decision making at family and community level.

SELFINA’s mission is to increase the incomes and employment of poorer businesswomen in Tanzania. It strongly believes in investing in the life of another woman, the ripple effect of which benefits the lives of children, and particularly orphans. Currently SELFINA is operating in Dar es Salaam, Coast and Mbeya regions. In year 2007 SELFINA plans to open branches in Mwanza, Arusha and Iringa regions. Long term plans include strategically and prudently expanding to other regions of the country with the ultimate aim of covering as many regions as possible within Tanzania. Since year 2002, SELFINA has financed about 4,500 women with lease finance worth more than TSh. 3.7 billion.

By September 30, 2006 the outstanding portfolio was TSh. 1.3 billion. The repayment rate is 100% out of which 98% is paid on due date and the remaining 2% pay in arrears. Most of the leases are on 12 month financing contracts.