Improving Inclusive Access and Effective Use of Loans in Kibaha Town Council
Jenifer Bukokhe Wakhungu
Deputy Director, Local Transformative Finance
UNCDF
Amadou Sy
Amadou.sy@uncdf.org
Communication & RBM Lead
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A recent project implemented by Kibaha Town Council in Tanzania under the support of UNCDF and the International Centre for Local Democracy (ICLD) aimed to improve participation and effective use of municipal loans by marginalized groups, specifically youth and people with disabilities (PWDs).
A recent project implemented by Kibaha Town Council in Tanzania under the support of UNCDF and the International Centre for Local Democracy (ICLD) aimed to significantly improve participation and effective utilization of municipal loans by marginalized groups, specifically youth and people with disabilities (PWDs) in the area.
The project was an initiative under ICLD's Inclusive and Equitable Service Delivery project ,implemented together with UNCDF. It aimed to strengthen capacities of local governments like Kibaha Town Council to deliver inclusive and equitable services to all residents.
The need for the project arose after observing very low involvement of youth and PWDs in the council's various loan programs over the years. Additionally, several complaints had arisen from these groups regarding the inflexible and unaccommodating loan policies and systems in place. These failed to provide tailored terms and conditions to meet their unique needs and constraints. As a result, youth and PWDs remained excluded from the benefits of access to credit for income generation and livelihoods improvement.
To address this, ICLD and UNCDF provided crucial funding support, technical guidance, training and mentoring to build the capacity of Kibaha Town Council to reform its lending programs. Through this external expertise, the council was able to target 30 new loan groups comprising marginalized youth and PWDs in the area, who had minimal access previously.
The project commenced with extensive mobilization and sensitization of these youth and PWD groups by leveraging local community leaders, village heads and ward officials. They helped encourage them to organize into groups and apply for municipal loans as per their eligibility. Simultaneously, the council reviewed its outdated loan policies and amended them to be more flexible, inclusive and accommodative towards PWDs based on their needs. For instance, customized and lenient repayment terms were now offered.
Over the one-year project duration, remarkable results were achieved. Participation of PWDs increased exponentially from just 1 active loan group in 2022 to 8 successful groups by April 2023. Similarly, the number of youth groups accessing loans rose tremendously from 12 to 34 groups over the same period.
To monitor performance and proper utilization of loans by these groups, the council allocated a specific budget of 6 million Tanzanian shillings for the year 2022/23. The loan application and disbursal processes were also digitized through development of a specialized IT-based tracking system called TPL MIS. This enhanced transparency, efficiency and data management.
Importantly, the project had a significant impact on the council's revenues. Loan repayment rates improved dramatically due to the financial management training provided to beneficiaries as well as increased transparency mechanisms.
Moreover, the council demonstrated its commitment to sustaining inclusion of marginalized groups by boosting budget allocations for women, youth and disability targeted loans in FY 2023. Decentralized loan access was enabled by creating loan application desks in 8 wards.
In conclusion, the project provided invaluable learnings for Kibaha Town Council on improving perceptions, social accountability, and cooperation through targeted inclusive service delivery. It also highlighted that appropriate policies, streamlined systems and regular training are vital to ensure effective use of loans by marginalized groups. The success can be attributed to the strategic partnership between UNCDF, ICLD and the local government. Going forward, Kibaha Town Council must continue building on these gains through sustained sensitization campaigns, well-designed lending programs and transparent monitoring mechanisms.