In June, I was honored to receive the Vital Voices Economic Empowerment Award, presented to me by Bank of America Global Chief Strategy and Marketing Officer Anne Finucane for my work as a micro-leasing entrepreneur in Tanzania. Here is my story.
Since I founded my company SELFINA 20 years ago, I have seen the enormous impact a small investment can make in the life of a woman. And it doesn’t stop there – from one modest lease, a woman can create dozens of jobs, touching the lives of dozens more.
Women in Tanzania are increasingly interested in entrepreneurship. Over the years, the business and entrepreneurial environments have become more inclusive, but women still face many challenges. The greatest barrier to a woman’s participation in the economy is often her lack of collateral. Compounded by a lack of cultural acceptance for women’s entrepreneurship and a lack of access to networks, many women often don’t know how to go about starting a business.
When I visit Justina Malando and her family they always remind me of their first house where we conducted the first field appraisal. At the time, Justina leased 100 day-old chicks through SELFINA. Her business of selling eggs continued to grow and today Justina has 2,000 laying birds. From the proceeds she has constructed a modern family home, complete with floor tiles and a good roof. The whole family is very proud of her achievement.
In Tanzania, most women don’t own land. But the main collateral in this country is land. So a micro-lease allows a woman to finance her business. In this way, even women without credit history can access financing.
I decided to go into leasing as a way to solve this issue of women’s lack of collateral. At SELFINA, we believe that the life of a micro-lease starts with a partner – a bank, for example – a funder who wants to help make the difference in the lives of others. These partners provide the financial backing that allows us to work with so many women.
These women receive training in our offices where they learn business skills and the process of taking on a lease. They submit a business proposal and provide at least two guarantors for their lease. When the contract is approved, the asset is delivered, and the potential of each woman’s business explodes. With increased capacity, she makes small payments over a number of months, and at the end of the lease, we pass the ownership to her. For many women, this is the first time they get to own an asset in their own name.
Joyce Mbwette leased a sunflower pressing machine and through our sale-leaseback facility she acquired some working capital credit. With time Joyce has been able to grow sunflower seeds but also to pre-finance women surrounding her farm. With sunflower seeds from her farm and from the women in the village, Joyce now produces high quality sunflower oil which she sells at supermarkets in Dar es Salaam. She has also entered European market and exports crude sunflower oil to Switzerland.
Each lease provides women with the opportunity to build a better life. But in a broader sense, the leases have proven to be important tools for sustainable development in Tanzania, where micro-leasing in the long-term has lead to greater wealth creation. Because women are able to rent collateral rather than pay it outright, they are able to accumulate assets more easily.
Eventually, many women accumulate enough wealth to buy the materials they need for their business, freeing themselves from the poverty trap. Once they have finished working with SELFINA, many women are able to move on to larger credit institutions, including traditional banks.
Since its founding in 1991, SELFINA has financed more than 25,000 women with lease finance worth U.S. $16 million impacting more than 200,000 people in the country. Within the next few years, we hope to expand the model more broadly throughout Tanzania, and eventually beyond our borders to other countries in East Africa. If these countries are anything like Tanzania, women there are just as resourceful and eager to become entrepreneurs. With the help of a micro-leasing institution and a handful of the most basic resources, these women have the potential to build and lead something extraordinary.
It’s Global Entrepreneurship Week and today is Women’s Entrepreneurship Day. Join the conversations on Twitter using #GEW2014, #WomenWOW and @WomensDay.