Paving new routes to credit access in northern tanzania

For decades, the route to economic development in Tanzania has been hampered by poor road infrastructure that limits the rapid, low-cost exchange of goods and services within regions and across the nation. In recent years, however, the Government of Tanzania has expanded its investments in road construction, and this new national commitment in improved commerce and communication is producing profitable business opportunities for small entrepreneurs based in rural areas.

To help entrepreneurs in northern Tanzania’s Karatu District capitalize on the completion of a paved road between the district and the city of Arusha, ADF is providing the Karatu Development Association (KDA) with financial resources to expand its micro-lending services from its current base of 600 clients to 1,400 clients. With this enhanced capacity, KDA will be able to provide most of the district’s sustainable small businesses with direct access to credit and extend loans to new business ventures.

Karatu is located between Arusha and two of Tanzania’s most popular tourist destinations, the Serengeti National Park and the Ngorongoro Conservation Area. The district can thus expect an increase in international visitors over the next few years as more tourists take advantage of the improved overland route. KDA’s financial resources will help local entrepreneurs develop products and services related to the tourist industry, and they will assist local farmers in obtaining the credit they need to expand their yields and sell maize, beef, and other products to buyers in Arusha and other growing urban markets.

With financial support from ADF, KDA will be positioned to expand the size of its loan portfolio from a current baseline of US $60,000 to US $280,000 over a period of five years. The ADF grant is also expected to help the micro-credit program triple its annual income and generate healthy earnings that will cover the program’s annual operating costs and help KDA make sustainable reinvestments in its portfolio. Ultimately, KDA’s goal is to create a regional credit institution with the capacity to expand its client base and provide new financial services for small businesses across the Karatu District.

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