For Pact WORTH members, formal banking boosts incomes and resilience

November 18, 2016
Krispina Christian and her fellow WORTH members gather near a school in northern Tanzania.

There is an excited buzz in the air as more than 50 women, some with young children in tow, gather in an open field outside a school in Tanzania’s Kituntu ward. The women are dressed in elaborately printed cloth. Some are wearing matching shirts, while others have matching skirts or head wraps. They are young, old and in between.

They are all eager to tell their stories of hope and change. They are members of Pact village savings and loans groups, known as WORTH. While each of their stories is different, they all started from the same vulnerable place.

The women are part of the more than 2 billion adults around the world without access to formal financial institutions. They save, borrow and manage their day-to-day expenses without access to banks, institutional savings accounts, debit cards or credit lines. When a family member becomes ill or a fire damages a home, they can be forced into risky and expensive deals with moneylenders.

For more than five decades, Krispina Christian lived without a reliable lifeline. As a 56-year-old woman in the rural highlands of Tanzania, she had meager financial resources for life’s daily necessities. She dreamed of a modern life and wanted to leave something of value to her three grandchildren, whom she cared for. But Krispina couldn’t imagine how that life could ever be hers.

Krispina Christian delivers a powerful story of change in her life.

Domitina Thomas lost four of her five children to illness. When her fifth child, a boy, fell ill, she sold everything she owned to care for him. Like Krispina, she dreamed of more for herself and her son but didn’t know how to turn things around.

When life’s challenges mounted, Krispina and Domitina struggled to survive. But today, they have a lifeline.

Since joining their local WORTH group, part of Pact’s Pamoja Tuwalee project, which supports children affected by HIV and their caregivers, the women have developed financial literacy skills, built up their savings and developed microenterprises with their newly acquired business skills.

But most important, WORTH has helped them move into the formal financial sector. Through a partnership with the Postal Bank of Tanzania, Domitina and Krispina now have their own bank accounts, can access loans from a formal financial institution and even have access to mobile banking.

Postal Bank, a national bank with a mission to reach people without access to formal financial institutions, reviews WORTH members’ business plans for growth prospects and risk. For those who qualify, the Bank provides individual loans ranging from 100,000 to 500,000 Tanzanian Shillings (approximately $44 to $224). Loans are offered at various terms – from 4 to 12 months – and always at 3 percent interest, which is significantly lower than interest rates from risky moneylenders.

Support from Pact empowerment workers helps the women to be good banking clients, according to the local branch manager, Micky Malay.

So far, 278 WORTH women have received loans totaling 108 million Shillings (about $48,300) from Postal Bank, and the repayment rate is an astonishing 100 percent.

“Women have little formal financial information here. For many, this is the first time they have had formal bank accounts,” said Malay.

In addition to bringing them into the formal financial sector, Postal Bank also provides training on topics including market identification, product development and markets, and links them to markets where they can sell their goods.

Today, Krispina has a thriving farm where she brews local beer, grows grasses to sell and makes bricks for construction work in the area. Because of the loans and training she received from WORTH, she was able to qualify for a loan from Postal Bank that has helped her construct a better home for her and her grandchildren. She is on her way to the modern life she always dreamed of. Most important, she has plans to build a kiosk for selling her goods, which she will leave to her grandchildren when she is gone.

Domitina Thomas tells her story while her fellow WORTH women listen.

Domitina now has a food vending business and raises poultry and goats to eat and sell. With a Postal Bank loan, she was able to renovate her house and improve the property. But the part of her story she was most eager to tell was not about the success of her businesses. It is that her son, who she once struggled to support, is now 35 and healthy.

Krispina and Domitina are no longer part of the 2 billion unbanked. They are productive economic agents on the path out of vulnerability.