Informal traders enjoy new scheme

Dar es Salaam. The National Microfinance Bank (NMB) has started a scheme to empower informal businesses to enable themselves to be formal, get large loans and grow.

The scheme involves lending money, imparting skills to business operators and providing advice on how to upgrade and formalise their undertakings.

NMB hopes its Fanikiwa Account will boost such businesses despite complaints about Tanzania’s cash crunch.

NMB customers’ relations officer Baraka Kyamba said last week that the bank aimed at doubling the number of Fanikiwa account holders in 2017/18 from 4,700 the previous year to serve more informal businesses.

“We want to debunk the myth that it’s impossible to empower and formalise informal businesses. We are opening up hundreds of Mafanikio accounts,” he said.

An interested person can visit any NMB branch and open an account at a minimum of Sh20,000 on simple conditions.

“Fanikiwa Account holders can also join the Biashara Account and the Business Club to exchange ideas as well as design new business products.”

Fanikiwa Account holders can also access loans ranging from Sh500,000 to 30 million with relatively affordable interest rates that cannot be accessed in other credit schemes.

According to bank credit package fixed for six months, a recipient of a Sh500,000 loan has to remit Sh89,263 monthly. One who borrowed Sh2 million has to repay Sh357,052 monthly while one who took Sh5 million has to pay back Sh892,629.

For a year repayment, a recipient of Sh500,000 has to repay Sh47,280 a monthly while a recipient of Sh2 million has to pay Sh189,119 and a recipient of Sh5 million Sh472,718.

NMB is ready to advise customers on how informal businesses can be formalised to enable them to get relatively large amounts of loans.

Tanzania Business Entrepreneurship Centre Donath Olomi applauded the scheme, but saying it must be supported by a sustainable national policy to transform the informal businesses.

“The national policy for transformation of informal business must be formulated to ensure that kind of bank initiative lasts long and does not depend on personal whims.” According to him, formalising informal businesses depends on a sound national policy. President John Magufuli has directed that hawkers should not be harassed.

In 2003 President Benjamin Mkapa invited Peruvian economist Hernando de Soto to advise Tanzania on how to formalise informal businesses.

Between 2004 and 2005 the Tanzania Business and Property Formalisation Programme carried out a study, which established that the country had a dead capital of $29 billion.

To unlock the opportunity, it was established that informal businesses should be formalised and the pace of land survey stepped up to use title deeds in borrowing funds for investment and development.