Tanzanian earns top Harvard honour for AI credit solutions

Away from the glamour and the claps, the real on the ground had begun years ago in the remote areas of Iringa, where she spent two years, a place so isolated, you would need to climb a tree or a hill to catch a phone network signal. There she conducted her research in person, working with rural communities, men and women, understanding the economic practices in those communities and how the loaning system is applied and its impact.

She had to invest her time, money and expertise to study the reality on the ground and the whole ecosystem. Discovering problems and solutions.

She didn't want her research to remain on paper; she wanted her research to solve a real-world problem that isn't just a patch over pervasive long-term problems but gets to the roots of what entrenches people in poverty.

She had previously worked under a USAID-funded program that helped young people in economic empowerment.

“We were tasked with providing capital to young people to help them start a business and scale it” she mentioned.

As the funding was running out, they looked at solutions beyond the financial aid and how the community could sustain itself thereafter. The traditional banking system proves to be challenging for young people to get loans to scale their businesses because they require hard assets collateral to secure a loan.

Assets that many young people don't have, this gets worse for women, who traditionally are not allowed to inherit land in Tanzania. In a country with more than 67 million people, 65 percent are under the age of 25 years old. Decent jobs and entrepreneurship are a priority that can transform the country's economic future.

There are an estimated three million Micro, Small and Medium-sized Enterprises (MSMEs) making up 90 percent of all businesses in the country.

The financing gap for MSMEs in Tanzania is estimated at approximately $7.5 billion, reflecting unmet demand for working capital, investment and growth finance. A mere 10 percent of Tanzanian adults have access to formal financial capital.

This means that while MSMEs dominate the Tanzanian economy, nearly 9 out of 10 cannot access formal bank credit, severely constraining business growth, job creation and household liquidity.

Ngasuma insists on finding means to unlock capital for this young population if Tanzania wants to develop. Empowering young people goes beyond entrepreneurship.

A financially stable youth will significantly impact the health sector in reducing transactional sex, which has been a core factor driving HIV and sexually transmitted infections in the country.

As an example, she mentioned, two-thirds of all new HIV infections in the world are among adolescent girls. One of the culprits is transactional cross general sex. Just by the mere recognition of the word 'transaction', it means there is an economic impetus that puts adolescent girls under duress.

This underscores the importance of Ngasuma’s research and its potential to impact Tanzania in the future. Since Harvard’s establishment in 1636, she is the second Tanzanian woman and among only 5 Tanzanians who have attended this university for their PhD. As a Harvard - funded student, she maintains a tight schedule and a recommended GP average she has to attain to keep her scholarship. Still, he hopes more Tanzanians will apply for the scholarships.

“There is no pride in being among the few Tanzanians to come to Harvard; we need more of us here at the global stage, the more we are, the more our influence will be as a nation,” she said.

Another Tanzanian who has been involved with the university is former president Jakaya Kikwete, who trains world leaders from emerging markets in a program run by the university. He has been doing that for 14 years.

He was pleasantly surprised to learn that a Tanzanian has won the highly competitive ministerial leadership program award sponsored by the Tessa Jowell Foundation. She is the first Tanzanian to do so.

In the presence of high-level Tanzanian government leaders, including the Minister for Finance, Mr Khamis Mussa Omar, the Minister of Planning and Investment, Prof Kitila Mkumbo, Zanzibar’s Minister for Finance and Planning, Dr Juma Malik Akil, Ngasuma was jubilant to be recognised by her country.

She doesn't take this privilege and responsibility lightly. Speaking on how she decided on what to do her research on, she said she wanted to focus on root-cause solutions to public health constraints and also wanted to do research that has real-life applicability and impact. “I owe that to my country and my community,” she said.

More than 80 percent of Tanzanian people work in informal economies. It is clear that if we want to tackle pervasive unemployment, we need to put our resources towards providing capital to young people that is affordable, accessible and grounded in the reality of their lived experiences.

Ngasuma lived in a small town called Iringa for two years, working as the Chief of Party of a USAID $20 million project focused on youth economic empowerment, health and governance.

During that time, she learned a great deal about what young people need, prioritise and aspire to become. Jobs and economic opportunities are the most important needs. That is where the idea for her startup “Taji Finance” began. “We use alternative data from saving and lending groups and group trust to determine creditworthiness and to derisk loans,” she mentioned.

Essentially, saving groups are the backbone of informal economies because traditional banks do not have the appetite to serve rural youth and they have yet to take the step to derisk loans using data from savings groups or use the savings group members’ trust infrastructure to design loans that work for youth. “Traditional banks are missing an opportunity worth over $7.5 billion in Tanzania alone,” she added.

Ngasuma urges for improved relationships and communication between Tanzanians in the diaspora and the government. The Tanzanian talents abroad have to be involved in developing the country, like other nations have been able to do.

This does not require those in the diaspora to physically relocate home, but their presence abroad can create opportunities for other Tanzanians and open doors for country men and women at a global stage.

This also means, the government has to be eager to support by funding potential Tanzanian startups and talents abroad and creating an atmosphere in the country that will ease the implementation of their expertise and skills at home, this will attract their greater investment to the motherland.