ONGOING PROCESS TO DEVELOP THE NATIONAL GUIDELINE OF 10% LOAN ADMINISTERED AT LOCAL COUNCIL

For effective governance of 10% administered at local government for impactful empowerment of groups of women, youth and people with disabilities UNA Tanzania and President Office development of National Guideline is on going.

Morogoro: UNA Tanzania and President Office Regional Administration and Local Government Authorities are developing the national guideline for effective governance of free interest loan 10% loan set by Local Government Authorities. The 10% Loans are set to uplift economically disadvantaged groups of women, youth and people with disabilities household income. The presence of loans trace back in 1993 when the parliament of Tanzania made a resolution due to the limited access to fixed collateral required by the banks for loan granting decisions. 

In 2018, the Government of Tanzania amended Section 37 of Local Government Finance Act by adding that all Local Government Authorities to mandatory set aside 10% interest free loans from their own revenue for empowerment of women, youth and people with disabilities, by providing groups to carry out income generating activities to lift their households out of poverty. These 10% free interest loans are distributed by 4-4-2 principal (4% women, 4% youth, 2% people with disabilities (PWDs). 

To make sure the amendments of the Local Government Finance Act, 2018 are adequately implemented and well known to the citizens, the Government introduced the Regulation for Loan Provision and Management among Women groups, Youth and People with Disabilities in 2019. Despite 93.3 billion being issued across the country, still, there are several challenges  including lack of proper Machinery for Governance of 10% Loan, Economic empowerment skills to monitor groups development, No special desk confined to work on 10% loan, Ghost Groups, Defaulting, Insufficient amounts issued to groups, Lack of lenient mechanisms for PWDs to access smoothly, Short Period until start of Loan repayment.

With the presence of these challenges and several reports and studies done by PORALG, UNA Tanzania and other key stakeholders, it was observed that there is a need to develop a  national Guideline for effective governance of the 10% loans for empowering women, youth and people with disabilities in 2020. 

In this role, UNA Tanzania with consistency, being in the frontline in advocating for the 10% loans as dear to seeing more beneficiaries out of it, has been assigned by PORALG, to take lead in coming up with guidelines that will be used throughout the nation, defining the regulations into simpler terms and to inform the public on the availability of the loans all in purpose to make the 10% loans more effective and to be known by many who can benefit from it and moreover to empower a larger group of women, youth and people with disabilities. In this case, the need to have the national guidelines cannot be overemphasized.

UNA Tanzania conducted a strategic meeting with PORALG discussing the existing gaps and ways to improve the Regulation for Loan Provision and Management among Women groups, Youth and People with Disabilities. During this meeting, it was realised that the lack of proper machinery governing the 10% free interest loans was among constraints to the effectiveness of implementing Local Government Finance Act, 2018. 

In April 2020, as a follow up action to develop a proper machinery of governing the 10% free interest loans, PORALG consulted UNA Tanzania in developing a roadmap for the 10% free interest loans national guideline from the youth, online and offline, drawing success stories from the 8 regions, 3351 young people that it works with in this area, fetching challenges and recommendations to enrich the national guidelines.