Ejecución del proyecto de imagen urbana 2009-

Table 4.1 shows the extent to which women entrepreneurs had tried to access credit and their success in doing so. The Table shows that a large proportion (41 per cent) of the women tried to access loans from MFIs, and that many of them were successful. Table 4.1 Attempts to Access Finance and Incidence of Success

Tried to access credit Successful Source

Number % Number %

Dar es Salaam

Micro-Finance Institution (MFIs) 28 21.9 20 15.6

Friend and Family members 26 20.3 18 14.1

Bank 12 9.4 6 4.7

Money lender 4 3.1 3 2.3

Arusha

Micro-Finance Institution (MFIs) 19 14.8 16 12.5

Friend and Family members 10 7.8 9 7.0

Bank 16 12.5 8 6.3

Money lender 3 2.3 2 1.6

Zanzibar

Micro-Finance Institution (MFIs) 6 4.7 4 3.1

Bank 1 0.8 1 0.8

Friend and Family members 1 0.8 1 0.8

Money lender - - - -

Total

Micro-Finance Institution (MFIs) 53 41.4 40 31.3

Friend and Family members 37 28.9 28 21.9

Bank 29 22.7 15 11.7

Money lender 7 5.5 5 3.9

About a quarter of respondents tried to get loans from banks, half of whom were successful. A good number of the women got loans from friends and families. Notwithstanding the successes in getting loans, those who had attempted to borrow money indicated that they had faced a number of problems, and the main issues are shown in Table 4.2.

Table 4.2: Problems Faced in Borrowing Money Sector Food Processing Health and

Beauty Textile

Total Constraint

Number % Number % Number % Number %

Cumbersome procedures

12 9.4 6 4.7 15 11.7 33 25.8

High interest rates 10 7.8 5 3.9 12 9.4 27 21.1

Small loan size 7 5.5 3 2.3 12 9.4 22 17.2

Lack of collateral 5 3.9 2 1.6 6 4.7 13 10.2

Inability to write business

plan 2 1.6 - - 2 1.6 4 3.1

Total 39 30.5 33 25.8 56 43.8 128 100

The most commonly cited problems are cumbersome procedures and high interest rates. These are followed by small loan sizes from MFIs and lack of collateral in the case of bank loans. The women who participated in the in-depth study gave a number of reasons why it is difficult to access finance. First, the banks require borrowers to have collateral worth at least 125 per cent of the amount borrowed. The women were unable to provide collateral and therefore only two of them (Ulkaria and Urbania) have been able to access bank loans.

Secondly, the banks are not accustomed to dealing with small businesses and as such see them as very risky. Matrona says that when she approached the bank officials for a loan, they concentrated more on the collateral she would provide than on the history and performance of the business, which she believes should be the most important factor in making a lending decision. The third problem is that banks charge about 25-30 per cent interest for loans to small enterprises and the women entrepreneurs consider this to be very expensive.

An alternative to bank loans is borrowing from Micro-Finance Institutions (MFIs). These institutions have two limitations. First, one has to start borrowing very small amounts and gradually graduate to higher sums. The amount they start lending (about US $50) is considered too low to be of much use to most of the women interested in growing their own businesses. Secondly, MFIs require the borrowers to attend weekly meetings which takes a lot of their working time.

Nana, the least upwardly mobile of the women, says that the MFIs are of no help. She sites FINCA, which operates in Mkanyageni where she runs her business. She finds the initial loan amount provided (US $60) too small to help her business to grow. Also, she could not raise the weekly repayment of US$ 5.20 from her business. She also argues that the loan is not even enough to pay for licence. To get the licence she has to pay US $50 as a licence fee, US $10 for the health permit, and US $3.40 as an application fee. Therefore the total amount required to formalize the business is US $ 63.50, which is more than the loan US $60 offered by the MFI.

Nana is also aware of PRIDE (T) which offers loans with smaller repayment instalments than those offered by FINCA, but she says to get the loan one has to take a bus to

Magomeni for which she has to pay US $0.60 per day. Before she gets a loan she has to attend eight meetings, which will cost US $4.80 in bus fares. She thinks her problems are beyond her ability to solve, and it will be difficult to take a loan from such financial institutions.

Although both men and women face the problem of access to finance, it is affects women more for a number of reasons. First, women have less access to property, which can be pledged as collateral. This is due to property laws and traditional customs which deny women control over property. Meritta was refused a loan because she did not have any property of her own to pledge. Meriana, a woman engaged in food processing and struggling to formalize, has build her own house, using her own income. When she wanted to pledge it as collateral she consulted the family (including her in-laws) first. They categorically refused to allow her to pledge it, saying that the house is a very important asset for the family and should not be pledged as collateral. This means that even if the laws allow women to have the same rights over property as men, unless customs and traditions change, some women will continue having no real control over property.

Secondly, bank officials are said to treat women-owned businesses differently. Matrona thinks that the bank officers do not consider women seriously. She says when men go to a bank they are taken seriously, but when women apply for loans they are not treated seriously. Bank officials doubt whether a woman can repay the loan. They fear that a woman will not use the money for her business. However, Urbania, the most upwardly mobile of the women, thinks that banks do not discriminate against women. She feels that some women are not serious about their businesses and so the banks ignore them.