Sustainable Financing in the Mbola MVP?
The MDP Tanzania Team finished our first week here in Tabora town and the Mbola Millennium Village. We spent the last week with MVP staff members being introduced to teachers, farmers, nurses, committees, and business groups in the Mbola MVP cluster (made up of 15 different villages). We have only begun to scratch the surface of the health system, school meals, the water scarcity problems, the agriculture and tobacco industry, the Miombo woodlands, and just exactly how the project has changed the anatomy of the village. Beyond this, the question of how sustainable the MVP model is, has been on my mind while exploring all of these sectors.
Sustainable Financing in the Mbola MVP
After spending an orientation day with the Business Enterprise and Development Coordinator and learning about The Mbola Millennium Savings & Credit Cooperative Society (SACCOS) as well as the MVP input credit scheme I am left with both questions and perhaps some answers about the future financing prospects beyond MVP.
The Mbola Millennium Savings and Credit Cooperative Society (SACCOS) has been in operation for one year, has 312 members, about ~$2000 USD worth of capital, and collects a 2000Tsh (~$2 USD) membership fee for operating costs. The members are in charge of electing the board and committees and eventually will hire staff when their banking facility opens in the Ilolangulu Village this year. We spoke with the Chair of the Credit Committee and the Board Secretary, who told us of their plans for membership drives, opening branches across the villages, expectations that most loans will be for agricultural operations and of their goal to register 50 farmers from the MVP input credit scheme.
Perhaps the SACCOS is a more viable loan model for Mbola, as less than 1% of MVP input loan recipients paid back in the 2008/ 2009 season, which was the first season that farmers were expected to pay back in full, in cash. Inputs were free the first year and farmers paid produce back to the school meals program in the second. Two of the main reasons given for low repayment rates of were poor understanding of the loan and people just wanting/ expecting free inputs. For the 2009/ 2010 season only 101 farmers were given input, including the 53 who paid back in full and new applicants. The project staff is waiting to see if more farmers will pay back given low yields this season and now that they can see how the system works.
The challenges of getting farmers to payback a loan in cash are big and trying to understand their decisions will be one of our greatest challenges this summer. It will be interesting to explore how the tobacco industry interacts with food security as 70% of farms grow tobacco and they earn the most money from tobacco production. A model like the SACCOS, in a place where it seems tobacco income is being generated, might be the most appropriate and sustainable as farmers and community members have to buy into it and there is oversight from community members for loan recipients. I suppose two of the questions there is do farmers have the 2000Tsh to become members and will they invest their money in farm improvements?
In the meantime, some head teachers are worried that low yields this season will affect the school meals program and perhaps the overall food security of the community. The SACCOS is still a few months away from being fully operational in terms of loans and it will be interesting to see if any of the wealth generated by initial input subsidies and other project initiatives will be used to help farmers get through this summer, which is the dry season here.