10 Empowerment Funds undern various government institutions and council in Tanzania government

The rate of youth unemployment hike every year in Tanzania as many graduates remain employed ,the government of Tanzania set aside fund to empower Youths and organization  including farmers.but due to information gap about the availability of these funds many graduates and organization keep on blaming the government ,here 10 empowerment funds under government of Tanzania

1.       Mwananchi Empowerment Fund (MEF)

Section 16 (1) of the National Economic Empowerment Act no. 16 of 2004 provides for the establishment of the National Economic Empowerment Fund, famously known as Mwananchi Empowerment Fund (MEF). MEF is among the Economic Empowerment Funds stated in the National Economic Empowerment Policy that are used by the Government to support the implementation of the economic empowerment initiatives. Specifically, the MEF assists in solving the constraints of lack of capital and credits; and to promote entrepreneurship training. It was launched on 23rd January 2008. The main objective of MEF is to facilitate the redressing of economic inequality which exists among persons. It intends to establish viable economic related activities that enable vast majority of people, mostly those lacking entrepreneurship expertise and financial resources to establish or smooth run their economic activities.
The Fund is under the supervision of the National Economic Empowerment Council (NEEC), a Government Agency that was established by Act No. 16 of 2004 in 2005 to oversee the implementation of the empowerment initiatives

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                                          The Objectives of the MEF

The Fund is a vital catalyst for implementing the National Economic Empowerment Policy. Its main objective is to empower Tanzanians economically through:-

1.    Promoting universal understanding of equity ownership among Tanzanians

2.    Contributing to the creation of employment opportunities;

3.    Providing a link between institutions and organizations that are registered under the NEE Act no. 16 of 2004; and

4.    To monitor economic activities undertaken by such institutions and provide technical or facilities that will be necessary for furtherance of their economic activities.

                                             Targeted Groups

The Fund targets Small and Medium Enterprises (SMEs), Cooperative Societies, SACCOSs and other feasible economic groups which have the potential to boost the national economy.

                                       

                                                     Sources of Fund

The main source of funds for the Fund as according to the National Economic empowerment Act no. 16 of 2004 are Parliament appropriation, private contributions grants and donations.

                           Categories of the Mwananchi Empowerment Fund

In the medium term plan the MEF will be a revolving fund for guaranteeing Tanzanian entrepreneurs to access credit facilities from Banks. The Fund shall serve the following categories:

a) Micro and Small Entrepreneur Fund-

This will guarantee credit facilities up to 10 Million.

b) Medium Entrepreneur Fund

This category will involve credit facilities above Tshs 10 million to Tshs. 500 million.

In this category some form of collateral will be required from the beneficiary.

c) Corporate Entrepreneur Fund-

This category involves those who have graduated from medium entrepreneur and normally have investment capital which is above Tshs. 500 million. The guarantee to entrepreneurs in this category is above Tshs. 500 million to Tshs. 10 billion.

                                              Eligible Customers

The Fund shall advance and lend money to eligible Tanzanian individuals, SACCOS, partnerships, companies, corporations and co-operatives, either with or without security.

Non eligible Customers

The following persons shall not qualify for credit guarantee from the Fund:-

1.    Minors (those who have not reached the age of 18 years);

2.    Un-discharged bankrupts or a person against whom bankruptcy proceedings have been instituted;

3.    Persons with unsound minds;

4.    Persons black listed by NEEC, banks or by Tanzania Bankers Association;

5.    A company for which petition for winding up has been signed or notice for receivership has been served; and

6.    A person who willfully gives false or refuse to give true information.

Types of Credit Facilities for Mwananchi Empowerment Fund

(i) Short term loans

The credit period does not exceed 12 months. It is used to finance agriculture inputs normally with one or more disbursement in a fixed or variable repayment schedule.

(ii) Seasonal Loans

This funds an increased inventory for a specific period such as during Christmas or Eid.

(iii) Term loans

Term loans are mainly used to finance acquisition of fixed assets or capital items. Repayment of term loan takes more than one year.

(iv) Bridge loans

These are normally used to bridge a gap until a specific event occurs, that repays the loan, such as sale of non current assets. For example a person wants immediate funds to buy a new house before he sells his old house. Repayment of loan will depend on selling the old house.

(v) Overdrafts

Revolving credit financing for purchasing current asset or paying current liability. The credit period does not exceed 12 months.

(vi) Guarantees, Letters of Credit (off balance sheet items)

These are credits which do not involve cash disbursement, but they are financially liable to NEEC. This involves guaranteeing a customer in order to fulfill a certain obligation as stipulated in the contract between a third party and the customer.

                               Conditions for accessing MEF

Micro and Small Entrepreneurs

1.    Unsecured loans;

2.    Application fee of not more than Tshs. 10,000 will be applied;

3.    SACCOS and Groups must be registered and legally recognized;

4.    Interest rate will be as negotiated between banks and NEEC.

5.    The maximum borrowing amount is Tshs. 10 Million.

6.    Maximum repayment period is 3 years;

7.    Individuals must have existing projects/business, however, new projects run by SACCOS and Self Help Groups will be considered;

8.    Priority sectors for lending are agriculture, livestock keeping, fishing, agro-processing and artisan miners; and

9.    Other Banking conditions shall apply.

Medium and Corporate Entrepreneurs

1.    Security of at least 50% of the requested amount is required;

2.    Application and facility fee of 0.5% of the requested amount will be charged;

3.    Applicant to submit a business plan for the project to be funded;

4.    For existing business the applicant to submit financial statements for the last three years;

5.    Minimum amount is above Tshs. 10 million with a maximum amount of Tshs. 500 million for Medium. Where as for Corporate it is from above Tshs. 500 million to Tshs. 10 billion;

6.    Business license and MEMARTS is required depending on the nature of the borrowing entity; and

7.    Repayment period will depend on the nature of business but will not exceed 5 years.

Procedures for credit applications

Micro and Small Entrepreneur Fund

This category will submit their applications to DFIs for scrutiny and analysis. Applications from SACCOS will have to be endorsed by District Co-operative Officer before being submitted to DFIs.

The DFI will analyze the applications and approve those which are viable. It will then have to inform the Ward Coordinating Committee on the approved and rejected applications. Also submit a list of approved applications to NEEC.NEEC will prepare a guarantee certificate for the credit facilities as submitted by DFIs. Upon receipt of a guarantee certificate the DFI will continue with disbursement procedures.

Medium and Corporate Entrepreneur Fund

The client shall submit his/her application straight to the bank. The DFIs will visit client’s business premises. For credit requests from Tshs. 20 million and above a bank official must be accompanied by the NEEC official during the visit. The DFI will conduct the necessary appraisal of the request and submit their recommendation to NEEC on approval or decline of the request. NEEC will go through the appraisal process for a request from Tshs. 20 million and above. Upon approval NEEC will inform the concerned DFI for signing of a Guarantee certificate. NEEC will educate clients whose credit requests have been declined, so as to build them up and become eligible for loans

 

 

2.    J.K.Fund

Background

During the financial year 2006/2007 the Government committed a total of shillings 21 billion to establish the Economic Empowerment and Job Creation Programme in order to promote, support and empower small and medium Tanzanian citizen entrepreneurs engage in productive activities to access loans. These includes Savings and Credit Cooperative Societies (SACCOS), Formal and informal economic groups and individual entrepreneurs.

Objectives

The main objective of the programme is to increase incomes of small and medium entrepreneurs and to create new jobs for Tanzanian citizens. The programme was planned to be implemented in to two phases and each phase was allocated with shillings 10.5 billion as loan Fund. Two different windows were designed to channel the Fund to entrepreneurs:- one window was as a "guarantee facility" and the other one as  "an on lending facility".

In the case of the on lending facility, it was agreed that banks and other financial institutions participating in the programme would issue loans to entrepreneurs amounting to exactly the same amount of Fund deposited by the Government.

Banks that agreed to use the “guarantee facility” window in Phase II include the following:-

1.    CRDB Bank

2.    Tanzania Postal Bank

3.    Akiba Commercial Bank

 Whereas, banks and financial institutions that opted for the “on lending facility window” are as follows:- 

1.    Kilimanjaro Cooperative Bank LTD,  

2.    Kagera Farmers Cooperative Bank,

3.    SCCULT (1992 LTD),  

4.    Mbinga Community Benk,  

5.    Pride Tanzania,  

6.    Mufindi Community Bank,

7.    Azania Bank,  

8.    Shirika la Dunduliza,

9.    Uchumi Commercial Bank,

10.                       Presidential Trust Fund, and

11.                       Mwanga Community Bank

Operation of the Fund

 Implementation of Phase I

The implementation of phase I started in November 2006 when the Government deposited shillings 5.25 billion to the CRDB Bank and shillings 5.25 billion to the NMB Bank as guarantee. According to the agreement between the Government and the two banks (CRDB and NMB), the banks were obliged to issue loans to entrepreneurs three times as much the amount deposited by the Government which is equivalent to shillings 31.5 billion. In this phase CRDB issued loans to SACCOS, where as NMB was issuing loans to individual entrepreneurs.

                                 Implementation of Phase II
The implementation of phase II started in December 2007 and concentrates mainly in the 78 districts that were either not at all reached or inadequately funded during Phase I. The Government issued shillings 10.5 for the implementation of Phase II and out of that amount shillings 9.9 billion were allocated to Tanzania Mainland and the remaining shillings 600 million to the Revolutionary Government of Zanzibar for a similar programme.

From the shillings 9.9 billion allocated to Tanzania Mainland, shillings 8.947 billion were disbursed to 12 Financial Institutions to cater for both, as “guarantee facility” and “on lending facility”. Reports show that by December 2013 a total of shillings 49.65 billion were issued as loans to 76,824 entrepreneurs, 192 SACCOS and 86 groups in all of the two phases

                                         

3.             THE PRESIDENTIAL TRUST FUND

The Presidential Trust Fund (PTF), for self reliance was established in 1984. The objective of its existence is to eradicate poverty by creating employment on self help basis and increase the incomes of the disadvantaged groups, women and youths in particular who constitute the largest active population in Tanzania. These activities are made possible through facilitation of financial services and technical support e.g. business skills and entrepreneurship training. (More information is available in www.ptftz.org)

4.     SMALL ENTREPRENEURS LOANS FACILITY (SELF)

The Small Entrepreneurs Loans Facility (SELF) Project is microfinance project which is executed by the Ministry of Finance, and is jointly funded by the Government of Tanzania (GoT) and a loan from African Development Bank (AfDB) under ADF window. The primary objective of SELF Project is to enhance access of the poor especially in rural areas to microfinance services through eligible Micro-Finance intermediaries. SELF provides wholesale lending to intermediary Microfinance Institutions (MFIs) for on-lending (retail) to ultimate borrowers commonly known as SELF Project final beneficiaries. (More information is available in www.self.or.tz)

5.    THE AGRICULTURAL INPUTS TRUST FUND

The Agricultural Inputs Trust Fund was established by Act No. 9 of 1994, its establishment was as a result of various reasons which hindered the availability of various agricultural inputs to farmers and livestock keepers. These reasons include;

1.    Poor performance of cooperative societies in the country where some of them collapsed.

2.    Change in the policy of agricultural inputs business to be governed by free market forces.

3.    Change in policy, duties and responsibilities of agricultural product boards which failed to ensure sustainable availability of agricultural inputs to farmers and livestock keepers.

4.    Donors stopped financing agricultural sector under open General License (OGL).

5.    Removal of agricultural input subsidies especially fertilizer.

 The objective of the Fund is to implement the government policy of ensuring the availability of agricultural inputs to small farmers and livestock keepers timely and at affordable price. In order to implement this objective, the Fund has embarked in performing the following duties;

1.    To provide less stringent loans for distributing agricultural inputs, pesticides and small agricultural equipments.

2.    To ensure that agricultural inputs are distributed timely to farmers and at affordable prices.

3.    To provide loans for purchasing new tractors, power tillers and repairing tractors in order to widen agricultural areas in the country.

4.    Monitoring loan repayments to ensure timely loan repayment so as other farmers can benefit from the revolving fund.

The main beneficiaries of the fund are all Tanzanian who engages in agricultural activities and livestock keeping in Tanzania mainland. (More information is available in www.kilimo.go.tz)

5.     THE NATIONAL YOUTH DEVELOPMENT FUND

The National youth Development Fund was established in the financial year 1993/04 under section 17 (1) of “The exchequer and Audit ordinance (cap. 439) No. 21 of 1961”. The rationale of this Development Fund is also articulated in the Revised National Youth Development Policy of 2007 sub section 3.12 on youth and informal sector initiatives. The general objective of the fund is to empower youth in income generating activities by providing credit. Areas of operation it cover all districts, regions in Tanzania mainland. (More information is available in, www.hum.go.tz)

6.       NATIONAL ENTREPRENEURSHIP DEVELOPMENT FUND – (NEDF)

NEDF started its operations in 1994 by the parliament resolution aiming at providing loans to entrepreneurs throughout the Tanzania and is operating under Small Industries Development Organisation (SIDO). The main objective of the Fund is to provide credits to small industries and small and medium enterprises aiming at eradicating poverty through designing and implementation of in three economic sectors. These sectors are productive sector which includes small industries, agriculture and food processing, Business sector which includes beverage, food, shops of assorted goods and other sectors like health, stationeries and printing, masonry, tourism and transport. (More information is available in, www.sido.go.tz)

8.     TANZANIA SOCIAL ACTION FUND (TASAF)

Tanzania Social Action Fund (TASAF) is a Community-Driven Development (CDD) operation initiated by the Government of Tanzania to enhance its efforts in poverty reduction.  Its Development Objective is to improve access of communities to enhanced socio-economic services and income generating opportunities.  The objective is linked to Millennium Development Goals (MDG’s) indicator targets as stipulated in the National Strategy for Growth and Reduction of Poverty (NSGRP/MKUKUTA). The project provides a mechanism that allows local governments to respond to community demands focusing on interventions that will ultimately contribute to the attainment of MKUKUTA objectives as well as Millennium Development Goals. (More information is available in, www.tasaf.org)

9.     EXPORT CREDIT GUARANTEE SCHEME-ECGS

The Export Credit Guarantee Scheme (ECGS) was established by the Government of Tanzania in 2003with the seed capital of Tshs.5 billion.  The objectives of the schemes are;

1.    To promote economic development in general by encouraging high value exports, such as horticulture and floriculture, and other value added exports that will generate high level of employment and foreign exchange earnings

2.    To promote and support Small and Medium Enterprises (SMEs), which have a significant role in the economy, by creating an enabling environment for its expansion and facilitating access to financing resources. (More information is available in, www.mof.go.tz)

10. SMALL AND MEDIUM ENTERPRISES CREDIT GUARANTEE SCHEME-SME-CGS

During the financial year 2004/05, the government of Tanzania decided to establish the Small and Medium Enterprise Credit Guarantee Scheme (SME-CGS).The scheme is geared towards promoting and supporting SMEs by creating an enabling environment for expansion and facilitating access to financial resources, thereby accelerating economic growth and job creation. This initiative is in line with the National Policy on SME Development and the Poverty Reduction Strategy.

The scheme is managed by the Bank of Tanzania as an agent of the Government of Tanzania. The SMEs can access the guarantee facility through the participating Financial Institutions with which the Bank of Tanzania has made arrangements.

Targeted Beneficiaries

The small and Medium Enterprises (SMES) engaged in formal business with capital requirements ranging from TZS 5 million to 500 million are potential beneficiaries of the Scheme. (More information is available in, www.bot-tz.org)