RARUDEIF Entrepreneurs Loan Support Project- ELSP (Abstract)

Project Abstract

The purpose is to conceptualize the idea for support and contract making to provide go ahead for Loan facility to improve the access of entrepreneurs particularly in rural areas, to micro-finance service and there by improve socio-economical well being through their engagement in income generating activities. In order to achieve these vital goals, which will be benefited for receiver and provider guided implementation, monitoring and evaluation as well as small guideline will be developed and engineering changes to focus the establishment of networking of loan facilities to be executed as project by both RARUDEIF and Donors. 

In line with Rural Financial Services Strategy, the project will support economic and social development through the provision of financial services to underserved categories of the population. Recent studies found that Tanzania ranks lowest in the region on the ability of the population to access financial services. Only 9% of the populations in Tanzania have access to any form of formal banking services while more than 54% of the population is totally excluded from accessing of financial services.

RARUDEIF is chiefly committed to empowering the communities in rural areas because of the fact that their access to financial services is extremely limited. The initial community to be reached during the pilot phase is Kilosa, starting with 400 entrepreneurs, a District in Morogoro Region, 300 km away from RARUDEIF’ s Head Quarter in Dar es Salaam City.

The main goal of the project is to contribute in reducing poverty in the project target areas (Kilosa-as Pilot District) and later all districts of mainland Tanzania and Zanzibar. The project objective is to improve access of the poor in rural areas to microfinance services particular Entrepreneurs. The Project will have two components basically provision of Credits and Capacity Building to entrepreneurs.

The total project cost is estimated at Tshs 244, 910, 000 equal to 136, 061.11 USD. These cost estimates are based on November 2011 prices, the cost analysis has given bellow as capital and operation cost. For the purpose of costing, all items have been priced in Tanzania Shilling and converted into USD at the exchange rate applicable for the month of November 2011.Price escalation has been calculated based on 5% annual rate of depreciation of foreign and local currency throughout the implementation period under partnership.

The Project financial projections for the year 2012-2013 are produced but transform into a corporate entity during project implementation. Projected interest on loan portfolio received per annum will increase from Tshs 220 Millions (122, 222.22 USD)-100% to Tshs 273, 240, 000 (151, 800 USD) - 124% at the end of the first year, this will include the general performance that is the share of the Project Team 44, 000,000 -20% Total of profit interest) where 3.5% will add to capital and 16.5% for operation cost. Under this performance the project will double the capital and returned to Lender/Donor after period of 5 years equivalent to 10 Terms where by one term is equal to 6 Months.