Julia Hazen

Goodbye Dar-es-Salaam

2007-09-06T02:51:42Z

Hello Blog Readers,
Much time has passed since my last substantial blog entry and I have returned to the States just a few days ago. My last weeks in Dar were bittersweet. Saying good bye to my friends and leaving the city that has come to feel like home was very hard but I am excited about the challenges that my last year at Brown hold.
I’d like to share with you a very exciting piece of news I just received. Ukombozi, the woodcarvers co-operative that I co-founded, has reached one of its primary objectives. The 13 artists of the group have saved enough money to rent their own store in the crafts market at Mwenge. They have taken a significant step towards economic independence and breaking out of poverty. They can now control the prices they receive for various carvings and have much greater control over production and sales than before and the most critical aspect is that now the co-operative will get the profit gained from their own sculptures. Getting their own stores was one of the original objectives and we succeeded far earlier (in one year) than any of us thought possible. We will continue our exports business and we are importing 240 sculptures right now and will try to sell them in the busy pre-holidays season. Thank you to everyone who has supported Ukombozi in the last year and helped the artists to achieve this critical success.
My work at FINCA also wrapped up very well. My colleagues and I presented our market research findings to the three Dar branch managers and the department heads of FINCA Tanzania headquarters. Our findings pertained to both FINCA’s operations and its geographical coverage. One of the most interesting things we did was to compare data on the concentration of FINCA clients and data on the number of businesses in a given area. This allowed us to identify areas in which clients were disproportionately located and areas in which there seemed to be a discrepancy between the number of borrowers and the number of businesses, which is potentially an under-served area. We then went to those areas to investigate the causes of the discrepancy. Our presentation served as a launching pad for a really productive discussion on strategy and the creation of a concrete action plan for working to implement some of our team’s suggestions and take advantage of the opportunities for growth that the team identified.
The market research team will continue to use the methods we developed for market research as they investigate a significant number of cities and regions in which FINCA has yet to build a branch. I am in fact pretty sad that I won’t be able to go with them on a very cool opportunity for travel.
Needless to say most of the findings are confidential for FINCA Tanzania staff (it is a competitive industry after all!), but one persistent theme I was captivated by was the trade-off between working to serve the very poorest micro entrepreneurs at the risk of losing profit and operational self-sufficiency and serving the “not so poor” business people who are a much less risky and more profitable investment. This trade-off is in play both within each branch and within the country. While formulating our suggestions, our team was conflicted between recommending very poor, very remote or very under-developed neighborhoods with poor business prospects and prosperous areas in which business was booming and there were many successful entrepreneurs. The same applies to identifying new cities and regions for expansion. Some of the cities on the research list are very remote and notoriously poor while a good deal of the cities are very prosperous, blessed with good industry and infrastructure (and the cash cow that is tourism).
A common criticism of microfinance is that it fails to serve the very poorest which in some ways is pretty intuitive. Microfinance is a market-driven and competitive industry and so it makes sense that MFIs will follow the most profitable and least risky opportunities in the name of working to become independent from donor money and other sources of lending. However, the original vision of microfinance was designed to cater to the poor, offering credit to people who couldn’t access it any other way, which is an argument against courting the “not so poor.” The lingering questions remain, “Who really ‘needs’ micro-credit? Is microfinance even effective in combating the myriad of challenges that the “poorest” face in their daily lives? Is it ‘okay’ if MFIs follow the logical market imperatives that lead them to serve the ‘not so poor’? Don’t the ‘not so poor’ arguably need micro-credit as much as their poorer counterparts if not more so given their greater ability to change capital into increased profit?”
Many of our findings challenged classical microfinance orthodoxy (think old-school Grameen). For example, in Dar-es-Salaam where the cost of living (and purchasing power) are exponentially higher than the rest of the country, many entrepreneurs capital needs exceed “micro” loans, challenging the orthodoxy that giving someone $50 dollars will allow them to “completely change their lives for the better.” For most businesses larger than the humblest market stalls, the owners need anywhere from a few hundred to a few thousand dollars. In Dar-es-Salaam in 2007, cell phones, home appliances, and other electronics are hot commodities with demand growing rapidly. Selling these more expensive items requires a much larger loan than selling fruit in a market or pastries on the street. Even someone who sells ‘mitumba’ (used clothes) buys a bale of 45 kg from Asia for around 200 dollars and he buys a few each week and therefore needs a much bigger loan than classical MFI models permitted. One can obviously argue that perhaps these bigger entrepreneurs don’t need loans as much as truly micro-entrepreneurs. However, given the number of challenges their businesses in face, additional capital can help to insulate these business owners against some of these obstacles and prevent them from sliding into deeper poverty. FT’s individual lending programs are catered to these “small” business owners and responds to both their greater capital needs.
FINCA Tanzania seems to be doing a really great job at responding to the shifting market demands by offering individual loans of much larger sums (up to almost $10,000 dollars), incorporating men into their lending programs, and working to make their programs more flexible and responsive to business owners’ needs.
On a more personal note, I enjoyed my time working for FINCA Tanzania immensely. My boss, Robert, taught me a lot about micro-finance and about the inner workings of FINCA. Also, my co-workers, Flora and Silas, were really amazing and I was glad to have had the opportunity to work with them so closely in our often crazy voyages to the far-flung corners of the city. I have only been back for a few days but I already miss Tanzania and all my friends there. Thanks to everyone who read my blog and I hope it has piqued your interest in microfinance and Tanzania. Asanteni wote wanaosoma blog yangu. Kwa herini!

Wanderings in the Haven of Peace

2007-07-30T09:42:20Z

Sorry for the inexcusably long blog silence. Things here are at FINCA Tanzania have been really hectic. I am working with the newly formed Marketing Office. We have been undertaking a market survey of Dar-es-Salaam.
To situate our research within the city’s geography, Dar-es-Salaam is made up of three districts. Ilala is the central district that fans out from the downtown financial district through the city’s busiest market area, Kariakoo, out into a very large stretch of low-income urban, peri-urban and rural districts. Kinondoni is the northern district, which stretches up along the coast. It is by far the wealthiest district and contains almost all of the city’s posh neighborhoods, the university, as well as a cluster of lower-income areas and a fairly large peri-urban area. Temeke, the city’s southern district, is by far the poorest. There is an industrial zone and a port zone near the city center, a wide swath of very low-income areas and a large rural area. To explain more holistically, the richest areas are almost without exception along the coast, the middle class areas form a buffer between the posh seaside neighborhoods and the poorer neighborhoods that fan out into the countryside.
In our market research activities, we are trying to do three things:
1. to get a comprehensive picture of local small business and financial service use
2. to identify areas of potential growth through an assessment of unmet financial needs in underserved areas or populations
3. to assess the competition and FINCA’s relative market position.
To do so, we graphed the concentration of businesses in various areas of the city with information from National Census data against the concentration of Village Banking groups in those areas. We could then have a rough idea of the relative distribution of FINCA clients versus the actual distribution of businesses in the city. Since then, we have been in the field holding Focus Group discussions, conducting brief individual interviews, and talking with local leaders, industry associations and market groups. We have focused both on established economic centers and the newest areas of the city.
Looking at the large map we have one the wall of our office is a bit misleading. This research is particularly fascinating to me because so much of what goes on in this city remains undocumented and disorganized. It is pretty confusing because sometimes one place might have several different names-the name of the ward, the name of the nearest bus stop, the name of the nearest major landmark. Sometimes I go to an area and I literally have no idea what to expect when I get there-guided only by statistics from an Excel spreadsheet and some vague notion of its location on a map. Sometimes I am pleasantly surprised to find a busy market area set amongst farms and palm trees and sometimes I find myself in the middle of a deserted industrial zone. Or worse.... yesterday, I was walking down the street in an area of Temeke listening to two women walking behind me talking about what they would do with the money if they robbed me.
Completing the survey is often a bit trying. Inevitably, whomever I am speaking to will ask me what I am going to do with the information, why I am not writing their name down, and how it will help them. Sometimes, these questions are asked with a fair deal of bitterness as some people are used to foreigners appearing conducting “utafiti” (research) and simply bringing the information home with them, never to be heard from again. After such exchanges, I am acutely aware of the fact of power that conditions “market research exercises.” Some days, I am pretty uncomfortable with the extent to which this market research exercise objectifies the individuals and produces codified, polished knowledge from a chaotic and discordant reality.
In any case, my colleagues and I quickly learned that simply doing “market research” must be accompanied by “sensitization efforts.” As we discuss financial service use with local business people, we tell people about the variety of financial services available and particularly FINCA’s products and services. Many people were very enthusiastic about the possibility of accessing affordable credit. Even though microfinance is a fairly “hot topic” in development circles, a surprising number of people don’t know how or where to get a loan and still feel that credit is inaccessible to them. Hopefully, at least some of the people we talked to benefited from the exchange and will at least know a bit more about their financial options.
Despite the challenges of the research, I have had the privilege of meeting many extraordinary people. Many people I interviewed shared with me their thoughts and opinions on financial services and spoke very candidly about the problems they face in their businesses. Around 40% of respondents cited capital as a major problem. Many of them buy new inventory every day or every other day to replenish their meager stock. Other common issues cited are things like the quality of inventory available, transport, storage, and police harassment.
I also was able to meet several local labor leaders. I came to discover an incredibly complex network of vyama and vikundi (groups and associations) that govern small business in the city. Each market has an association and within each market, each sector has an association. Within each sector association, there might be several ‘vikundi’ of people who might work together in a variety of ways-from coordinating production, procuring supplies, organizing storage and security or creating financial schemes to help finance their businesses themselves. For example, I met one man in Chanika (which is at the very edge of Dar-es-Salaam) who coordinates a kikundi that coordinates cassava distribution, uniting farmers from the surrounding Pwani region and vendors who bring the produce to crowded urban markets. Further, there are national industry associations and a myriad of umbrella organizations (such as Vibindo) that bring together small business owners from across the country.
Many of these groups have already organized financial schemes such as SACCOS (Savings and Credit Co-operative societies) or ROSCAs (Rotating Savings and Credit Association). SACCOs pool the savings of their members and then disburse loans from that collective pot of savings to its members and sometimes non-members. In our research, we have come to discover that SACCOs are the most popular choice of financial services, with far more customers than any microfinance institution in the city.
I have really relished the opportunity to explore parts of the city that I had no idea even existed. This city is changing astonishingly quickly. On Friday, my colleague Flora and I visited an area called Kibada, which is now a very sleepy little village along the coast. However, 27,000 people are slated to be moved to Kibada from another more crowded area, Kurasini, which has designated as a new industrial port area. It’s a little disconcerting to imagine what this quiet tropical hamlet will be like in a year or two when it’s population will have multiplied by six.
In other areas, the growth of the city is literally visible as you drive past. In Segerea, many middle to upper income people are building houses. There is a preponderance of hardware shops, cement dealers, glass dealers, wood dealers etc and there are dozens of half-finished houses half-hidden behind the palm trees all along the road.
Two of the most interesting places I visited were markets that were built by the government in the last few years, Mchikichini (Karume) in Ilala and Tazara-Vetenary in Temeke. Both of these markets were built specifically for small businesses after the government led a major campaign to “clean up the streets” (i.e. displace all the vendors operating “illegally” in public places). Many vendors were told simply to pack up their inventory and leave and some businesses were literally bull-dozed, destroying all the inventory inside. These new markets provide a solid infrastructure for these businesses but there are many caveats as well. The Tazara-Vetenary Market is situated in a fairly industrial zone and there is no bus-stop near by, rendering it fairly inaccessible. Further, many of the businesses in that area are visibly under-capitalized as there was a long period of time between being displaced from their roadside premises and moving into the new market area, during which many business people were forced to use their capital and savings to finance their daily needs. Also, some of these markets are huge, rambling structures with hundreds upon hundreds of vendors, many of whom sell the same product. High concentrations of one industry render these markets extremely competitive environments.
The market research project has kept me very busy, perhaps too busy. I haven’t had as much time to work on Ukombozi as I would have liked, but we have our first corporate gift deal and I am personally importing another round of larger sculptures to market at crafts fairs and exhibitions in the fall.
Other than that, life here feels uncannily comfortable. Weekdays are really busy between work, teaching English and my awful commute (which is a story for another blog posting...). On weekends, I hang out with friends, go to the beach, eat endless plates of nyama choma (roast meat) and ndizi (bananas) and generally just enjoy the Bongo lifestyle.

Mwenge English class and Microfinance Market Research

2007-06-23T16:41:40Z

So the big news around here is that the Tanzanian National Football team (the Taifa Stars) beat Burkina Faso (1-0) in Ougadougou this weekend. If they beat Mozambique in September, they will proceed to the African Cup of Nations in Ghana in 2008. Needless to say, the Taifa Stars victory is quite a big deal and the team was even greeted with a heroes' welcome at the airport and invited to Parliament.
Besides working for FINCA, I have also been pursuing some of the projects that I was working on last year. I work with a community of Makonde wood carvers in a neighborhood called Mwenge. In 2004, the artists founded an English school which meets nightly in the market. Most of the teachers are foreign students from the nearby University of Dar es Salaam. Going to teach at Mwenge is my favorite part of the day. The carvers have taught me most of my Kiswahili and a lot of what I know about Tanzania and I was so happy to return after six months away to see how much some of my students had progressed. We try to focus on communication skills with a focus on how to talk to the foreign tourists who come to the market to buy sculptures.
The class is facing some challenges because there is a conflict between the national artists' association and the students over control and management of the class. All the students have been asked to write a formal letter of application and the teachers have been asked to draft a 'curriculum plan' that includes a provision for a test that allows people to 'graduate' from the class and move onto other adult education programs. The fundamental question that presents itself in codifying the policies and practice of the class is "How do we, as a community, set up a more formal and permanent framework without sacrificing the flexibility, openness and warmth that currently define the class?"
After some conversations with both students and co-teachers, I strongly disagree with the idea that there is some limit to what the students can learn from the class. Despite the fact that all of them are very poor and many live very far away and have families of their own, the carvers show an amazing amount of dedication and courage by showing up to class every single day. Most of the students have only been able to complete primary school but often articulate how important they believe education is and how much they would have liked to continue studying. Hopefully, we will be able to find some resolution with the national artists' association and all of our students will be able to continue studying.
I am also working with a co-operative called Ukombozi Art which we founded in 2006 to connect the carvers directly with lucrative foreign markets. Our website can be found at www.ukomboziart.com where you can read about our history and even view some of our products currently for sale in the US.
Working at FINCA is also going well. I helped prepare some of the new marketing materials and also worked on a presentation for an exhibition with the US embassy next week. I have been working out of the headquarters for the last two weeks and will hopefully soon start to travel to some of the branches up-country to do some market research and help one of the branch managers become more comfortable with the monthly performance reporting process.
The current buzz in microfinance is shifting to a market-driven model driven more by a greater concern for customer satisfaction and efficient service-delivery. Microsave (a Kenyan consulting firm) has developed a really great microfinance qualitative market research methodology, which will hopefully facilitate a greater understanding of the customers needs and the attributes they look for in choosing financial services. This is important not only because microfinance itself has become a competitive industry but also because MFIS (microfinance institutions) must also compete with informal financial services (like local money lenders and rotating savings schemes), SACCOS (savings and credit co-operative societies), and even the practice of borrowing money from friends and family.
I am really excited to dive into some of the research activities, but as I have discovered, developing appropriate research methods is extremely important to the quality of the research findings and I don't want to rush into it unprepared.

Karibu Dar es Salaam

2007-06-11T11:42:22Z

Hello blog readers,
This summer I am working for a microfinance organization called FINCA Tanzania. FINCA Tanzania is affiliated with the American organization FINCA International, based in Washington DC. FINCA Tanzania has been operating since 1998 and has over 37,000 clients across the country. Specifically, this summer I will be doing market research on ways to improve service delivery and customer service to increase client satisfaction. I will be visiting various branches of the bank across Tanzania talking to clients, branch managers etc. to try and get an idea about their experience with FINCA and how it could be improved. One reason that this is an important thing to think about because micro-finance is a competitive market and FINCA is trying to establish itself as the market leader in Tanzania.
Today is my first day and I met Robert (my boss), the chief operating officer, Jason (the managing director and fellow Brunonian) and a ton of other people in the office. I have been trying to learn all I can about FINCA's policies, procedures and products before I launch myself into the field in a couple of weeks. Everything seems pretty straight-forward and clear-cut now, but knowing this city and the way things actually happen, I can only imagine some of the challenges that FINCA loan officers face in actually implementing the policies.
Perhaps a few words on Dar es Salaam are in order. I spent six months here last year and absolutely love this city. Dar es Salaam is the economic, cultural and social capital of Tanzania (although technically not the political capital) and by far the largest city in the country. No one is exactly sure of how many people live here but estimates say between 3.5 and 5 million people. Also, Dar, like many cities across Africa and the developing world, is growing at an incredibly fast rate, perhaps around 400,000 people a year. Dar's growth is fueled by rural-urban migration or people leaving the very difficult conditions of village life in search of economic opportunity and better access to services (such as health and education) in the city. Many of these migrants are men, who leave their families at home. Consequently, driving around the city, you see a tremendous amount of young men everywhere, many just sort of lounging around in the shade and also selling things at traffic lights.
Dar is a bit of a crazy and complicated place. Dar is busy cultivating a cosmopolitan image as a regional hub and the changes are visible almost everywhere. The most notable is the recent construction of Mlimani City, the second largest mall in Sub-Saharan Africa (which is (in)conveniently located down the street from my house). It was finished in November when it only had two big stores and I went back the other day and was totally blown away. Walking into Mlimani City is like walking literally on dusty dirt roads with enormous potholes and piles of trash lying everywhere into any shopping mall in suburban America. They have since added a really fancy cinema, tons of clothes and electronics stores etc. The mall (and other places like it in the city) are really changing people's consumption habits around the city-in Shoprite, they were selling imported fruits in a country that grows of tons of delicious fruit. I saw a little girl and her dad buying all this Barbie stuff.
Maybe the best way to describe this city is an anecdote which some of you have inevitably heard before, but to me, really captures the city. So, when you are riding in a bus downtown, you come out upon the most magnificient vista of the turquoise Indian ocean, the permanently blue skies and bright sun with white beaches and fancy houses stretched out along the bay...Then, all of a sudden, you are hit with the most awful smell in the entire world, like trash, rotting something, low tide....And it never ceases to surprise me when it happens-I am always so taken by the scenery that I am always taken off guard when the smell rudely hits me in the face.
So I gues thats Dar and my job in a little nutshell-I will write again soon once I get a chance to get really into the work at hand.

Julia Hazen

Goodbye Dar-es-Salaam

Suggested Reading about Dar es Salaam and microfinance

Wanderings in the Haven of Peace

Mwenge English class and Microfinance Market Research

Karibu Dar es Salaam