Microfinance: Visionfund Tanzania

VisionFund Tanzania

Following VisionFund Mongolia's progress from 2007 to 2011, World Vision began supporting VisionFund Tanzania (VFT) on 1 October 2011. Tanzania is one of the poorest countries in sub-Saharan Africa and VFT will provide microfinance services to communities most in need.

Thanks to the generous support of New Zealand donors, World Vision is able to offer more loans to people who would not otherwise have a chance to improve their lives in a significant way.

Why support VisionFund in Tanzania?

• Tanzania is one of the poorest countries in the world with very high-need communities. Between 36% and 59% of these people live well below the national average per capita income of US$1.85 per day.
• VFT will provide microfinance services to isolated rural communities that would otherwise not have access to small business loans (microloans). This is important as Tanzania is 80% agriculturally focused and 75% of the population live in the rural areas. More than 90% of rural areas in Tanzania currently have no access to formal financial services.
• Funds will be used to support VFT branches operating in the World Vision NZ-funded community development programmes of Budekwa and Bukene. This will enable World Vision NZ to uniquely combine microfinance with its other development programmes.
• VFT is a stable microfinance institution with committed staff, a high-quality loan portfolio, and robust portfolio management and loan operations.

TANZANIA AT A GLANCE

Who is VFT?

• VFT is World Vision's microfinance institution in Tanzania, aiming to drive financial sustainability and integrated community development in the most impoverished and underserved areas within Tanzania
• VFT has eight branches in Tanzania, and is a mature and stable microfinance institution

VFT summary report as at 30 September 2011

Meet Adrian Merryman, CEO of VisionFund Tanzania

Andrew Merryman, CEO of VFT.

Appointed as CEO of VisionFund Tanzania (VFT) earlier this year, Adrian Merryman has an MBA from the Harvard Business School and extensive experience as an investment banker, private equity investor and CEO in the US and Europe. Most recently, Adrian served as CEO of the Opportunity International Network having joined them in 2004.

WV: Why should New Zealand donors get involved?
AM: Tanzania is a country of significant poverty, and one in which positive change will only come about through agricultural economic development. VFT microfinance activities can have a substantial impact on the livelihoods of farmers with positive spin-off results in the areas of children's education, nutrition, health and shelter. Our research suggests that farmers who gain access to loans to acquire appropriate agricultural inputs, such as seeds and fertiliser, can at least double their income after all loan-related expenses have been repaid.

WV: What are the main challenges VFT faces?
AM: Our main challenges include:

• Delivering our loan product offerings in the rural areas on a sustainable basis, because outlying rural clients are expensive to access, loan sizes tend to be smaller, and agricultural loans are inherently riskier because of the way they are structured and the danger of droughts, floods and pestilence
• Raising the capital required to transform from a non-governmental organisation to a regulated deposit-taking institution

WV: How can New Zealand donors be sure their funds will be secure?
AM: While the future can never be guaranteed, VFT is making strong and steady progress towards reflecting best practice in every area. We have talented, capable staff and a committed senior management team, and have maintained operational sustainability since November 2010 when it was first achieved. As of July 2011, VFT will have the lowest operating cost per loan of all the major Tanzanian microfinance institutions. It is also on track to reduce these costs even further, as well as having the lowest portfolio at risk. VFT expects to introduce risk management training and a risk management framework before the end of the 2011 financial year.