Thursday, March 20, 2008

Day 6: Tanzania Social Action Fund

The Tanzania Social Action Fund (TASAF) is a government funded organization that helps economically vulnerable families in rural areas earn income to support themselves.

TASAF specifically targets families and individuals that meet the following criteria:“(i) lack access to basic social and market services;(ii) have able-bodied but food insecure households; and (iii) have household with vulnerable individuals (i.e. orphaned, disabled, elderly, affected/infected by HIV/AIDS, etc).”

We visited to very interesting TASAF projects
The first project was an Apparel/ Sweater making Business which consisted of about 16 female workers with HIV/ AIDS. They make sweaters for customers who live on or near the Kilimanjaro Mountain where the weather is cold. The also make warm weather clothing for women, men and children. They all own a stake in the business and share its profits. They produce, market, advertise and sell their products themselves.

They were making plans to expand their business and acquire additional financing.

The second project was a chicken raising business. The business was managed by both men and women with HIV/AIDS. The workers buy and raise chickens to maturity, then sell them.

I think the decentralized approach TAFSA uses to reach people in rural communities. The manage initiatives and projects on a local level to really have an impact on people who without their help would have an extremely difficult time making ends meet.

People with HIV/AIDS face serious health issues and negative stigma in Tanzania and in Africa as a whole. I liked these 2 projects a lot because it is difficult for people with HIV/AIDS to find jobs to support their families.

Wednesday, March 19, 2008

Day 5: TechnoServe and the Private Sector

The TechnoServe Deputy Country Director for Tanzania, Alex Mkindi shared some great information with us about what his company does to help their clients. TechnoServe provides business solutions to rural and farming communities to alleviate rural poverty.

Alex has a Bachelors degree in Agricultural Economics from an African University and an Agricultural Economics Masters degree from the University of Nebraska. He really understood the Agricultural sector in Tanzania and did a great job explaining it.

He discussed the value chain for 3 dominant crops in Tanzania: cashewb (2nd largest), banana and coffee (3rd largest). TechnoServe helps and encourages farmers to form "farmer business groups" (similar to cooperatives) so that farmers can increase their buying power and reduce the value chain to increase their profit.

TechnoServe also provides agronomic, entrepreneurial and financial training to its rural clients. Lastly, Alex encourages his clients to practice crop rotation by planting sesame and cassava in the off season of the primary crops to make the best use of their resources.

TechnoServe recently received 46.9 million from the Bill and Melinda Gates Foundation and additional millions from Google to give rural communities a hand up instead of a hand-out.

Tuesday, March 18, 2008

Day 4:Discussions the University of Dar es Salaam

Dr. Donath Olomi and other educators from the University of Dar es Salaam’s (UDSM) Entrepreneurship department discussed economic history of the country as well as the opportunities and challenges that Tanzania faces. Tanzania had a socialist economy from its independence in 1961 to 1985. It only started to liberalize and privatize its economy in 1986, so there are still many socialist traits in its present day economy and business.

I found that Tanzania’s mining industry was very interesting. This sector was supposed to be very strong. Tanzania is rich with natural resources. However, because of bad contracts with foreigners Tanzania only received 3% profit from this lucrative industry, while foreign investors received a whopping 97%. I think that Tanzania and many other developing countries can learn from this. They need to make sure that foreigners don’t drain their wealth. They need to structure their contracts and joint ventures to ensure that foreigners bring wealth to their countries.

Monday, March 17, 2008

Day 3: National Micro-Finance Bank (NMB) - Up, Up and Away!

I really enjoyed our meeting with Hans Christiaanse at the National Microfinance Bank (not just because of the cool air-conditioned office and snacks). NMB formerly called the Cooperative Farmer’s Bank was privatized in 2005. 51% is still owned by the Tanzanian government and 49% is owned by Bank of the Netherlands a AAA Bond rated bank. Before it was privatized NMB focused on doing banking and payments for government initiatives and employees. However it is becoming a full commercial bank. It is currently the most successful bank in Tanzania, with the most assets on its balance sheet.

Since Tanzania is a developing nation, whose economy is heavily rooted in agriculture the bank focuses heavily or agricultural loans. Being part of farming cooperative is the best way to secure a loan to invest in capital. The bank sees cooperative loans as less risky. In addition cooperatives are able to pool their resources to negotiate better contracts. NMB charges 20% for Micro Loans and 14% for larger loans.

This Cooperative model reminded me of Muhammed Yunas’s micro financing model. This model of using collective efforts and reputation seems to work in developing countries where physical asset collateral is hard to come by.

What surprised was that Tanzania does not have a national ID number equivalent to the Social Security number used in the US. This makes it difficult to perform credit checks and hold borrowers accountable for loan defaults.

The policy that restricts land ownership in Tanzania was also surprising. The Tanzanian government owns100% of the country’s land and leases it out its citizens and residents. In light of this, I wondered what type of collateral Tanzanians used to secure their loans, if the did not own land. According to Mr. Christiaanse they use farm equipment, crops, the home they built on the leased land or have someone with means cosign their loan.

A third revelation that surprised me was that NMB only introduced ATMs to its customers 11 months ago. Nonetheless, bank lines were still pretty long. In addition, all NMB were connected in early 2007 throughout the country.

During our visit, we noticed that Customer Service in Tanzania was lacking. Poor customer service coupled with new technology and new ways of doing business I though it may be difficult for NMB to find qualified employees. Mr. Christiaanse confirmed this. To solve this problem the bank sends its top managers (first and second tier) to Holland to that they can have a better understanding of customer service and the business model.

By going private, Tanzania has significantly sped up the development of its banking industry. NMB has accomplished a great deal in only 2 ½ years. This growth is encouraging. Fertile soil is being laid for the Tanzanian entrepreneurs.

Day 3: Reginald Mengi - Meeting the Media Mogol

Day 3 of our trip was the most inspirational and enlightening. We meet with Reginald Mengi founder and Executive Chairman of the IPP Group the first part of the day. The IPP Group is one of the largest East African industrial groups. It consists of a Financial Consulting firm, soft drink bottling partnership with Coca Cola, IPP Bodycare Ltd a soap, detergent and toothpaste manufacturer and IPP Media which is composed of 11 newspapers, 2 television channels and 3 radio stations. Reginald Mengi is also an avid philanthropist.

He shared his business experience and life lessons with us. It was great. His words were simple, clear and they really connected with everyone in the class.

He shared his business experience and life lessons with us. It was great. His words were simple, clear and they really connected with everyone in the class.

(1).Mantra: “I must, I can, I will.” Do not leave room for doubt. Evict it from you mind. Don’t say if I can or I hope I will. Once you have a vision, commit to you goal and you will accomplish it. If you aspire to do something and you don’t really believe you can do it, you have failed before you got started.
(2). “Start small, but think big.” Mengi’s first business was manufacturing ball point pens on a very small scale. He bought the pen parts and put them together. A pen is a common, small thing but it became the foundation of his conglomerate. He advised us not to out rule any opportunity and to always think big, even though our start may be small. Think lake, not fish bowl.
(3).No one can increase the value you put on yourself, so always set a high value on yourself.
(4).1st Priority: Commitment, 2nd Priority: Competence
(5).To run a successful business, be confident, delegate wholly with trust, be honest in negotiations.
(6).Build a sense of belonging with your employees, “it’s our business.”
(7). “Money is a blessing.” Find ways to say thank you to: God, Customers and people in general.
(8).Do not pollute your pollute the environment in your business.
(9). “There is no such thing as individual happiness.” Here the example he gave: If you see a man walking down the street alone laughing, you will say that he is crazy. If you see 2 or 3 people walking down the street laughing together, you will say that they are happy.
(10). “Fear is the biggest enemy for an entrepreneur.” Every opportunity has inherent risk. Understand and weigh business risks.

Sunday, March 16, 2008

Day 2: Off to Zanzibar

The two hour boat trip from Dar es Salam to the island of Zanzibar was picturesque, but quite hot. We visited the Palace Museum, the House of Wonder and Stone Town. The Palace Museum was on the verge of falling apart. With the crumbling walls, leaky ceiling, dust build up, humidity and heat I am not sure if the pieces on display will survive much longer. My favorite part of the museum tour was learning about Princess Seyyida Salme, Sultan Seyyid Said’s youngest daughter who wrote, “Memoirs of an Arabian Princess.” She seemed strong willed and determined to learn about the world and live a limitless life, which was commendable for a women living in the last 1800’s and even more so for a muslim woman.

Tourism seems to be a big contributor to Zanibar’s economy. The restaurants in Stone Town and the beaches were very tourist friendly.