I.    Flourishing project

 

The project’s goal is to enhance the livelihood security of at least 72,000 poor people over a year in all districts of Coast Region by incorporating approximately twenty thousand people (approximately 70% women) into VICOBAs in rural areas and urban slums and linking at least 25% of them to formal financial services, including savings, credit, and insurance.   The project will be implimented in coast region. These region have a strong presence and there is potential for rapid scale up.  The project assumes an average of three beneficiaries of VICOBA activities per household.

 

FCT will implement this project in coordination with NATIONAL ECONOMIC EMPOWERMENT COUNCIL AND VICOBA-FETA.

 

 

 

The project’s four objectives aim to:

 

1. 1.       Develop strategies and implement VICOBA scale-up in the seven targeted regions, focusing on the financial sustainability of both the groups and the group promotion methodology;

 

1. 2.      Develop sustainable linkages with formal financial institutions to ensure that VICOBAs can access savings, lending, insurance, and other services targeted to their needs;

 

1. 3.      Expand the use of technological innovations that significantly reduce costs of outreach and client transactions; and 

 

1. 4.      Facilitate learning and knowledge management.

 

 

Flourishing Community Tanzania (FCT) will adjust its operations based on various lessons learned from implementation in Bagamoyo district in order to achieve larger scale and higher rates of financial sustainability.  To achieve scale, FCT will focus on developing his strategies for VICOBA implementation modeled on the bagamoyo experience, described above.  These strategies will implement VICOBA exclusively through local sub-grantee coordinators. 

 

FCT will create operational units at district levels to build technical capacity and support implementation, and will then franchise the VICOBA model’s proven methodology and tools to partner and other promoters.  Partner performance will be measured using industry performance standards and benchmarks developed by FCT and accepted by the savings-led industry at large.

 

Financial sustainability will be increased through the use of the FCT Trainers methodology, utilizing local qualified trainers who are trained in VICOBA to start groups on a fee-for-service basis. 

 

Providing clients with access to VICOBAs will allow them to access the most in-demand financial service: a safe place to save.  In addition, they will have access to small, useful lump sum loans as well as a social insurance fund for emergencies such as a child’s illness or the death of a family member.

 

FCT has significant experience linking members of VICOBA groups to formal financial services, particularly in Pwani, where we have linked more than 600 women in VICOBA groups.

FCT will create an innovative linkage model between VICOBA groups and ACB bank or other IMFs as VICOBA groups will be on demand rather than automatic, and groups will be trained on financial literacy and the opportunities and risks associated with linkages.  A group’s decision to pursue linkage will likely be based on its ability to take up economic opportunities. 

 

Finally, FCT will expand the use of existing technologies in order to reduce the cost to the clients of using commercial services.  FCT will look for mobile phone service provider to developed some sophisticated technologies including mobile banking units and ATM kiosks, which are reducing the costs of services and allowing VICOBA to reach farther into rural areas.  FCT will facilitate its VICOBA groups to selected Bank invest in the use of mobile phone cash transfers between VICOBA groups and MFIs in order to reduce the cost of making payments.

 

To implement this project, FCT will establish a project office in its head office based in Dar es salaam, staffed by a Project Director and Deputy who will also act as Linkage and Project coordinator.  The project’s staff will include district coordinators 2 Master trainers and trainers. 

 

The work will be supported by Deputy Director and supervised by project coordinator, This team will support Director, to run the project with the assistance of trainers, and Monitoring and Evaluation (M&E) officer.

 

Future vision for the groups.

 

 By the end of the project, FCT and its coordinators will have created approximately 1,000 VICOBA groups which will be able to maintain themselves and continue to operate after their training period.  The groups will have access to additional support through their local District Coordination a demand-driven fee-for-service basis, described further below.  At least 25% of the groups will be accessing formal financial services such as deposits, credit, or insurance by the end of the project period, and these services will be tailored to the needs of VICOBA-type groups.  All remaining groups will know how to access those services should they need them.  Finally, all groups will understand the opportunities and risks associated with commercial financial services, and the ways that they can utilize credit, savings, and insurance.

 

 

 

 

We believe that this project will set a precedent for MFI linkages with VICOBA groups. 

By documenting a process for developing and rolling out appropriate products for VICOBA linkages, we predict that, by the end of the project, additional MFIs in the targeted regions will be exploring linkages with VIBOBA groups.  The project will have established the relevant principles, guidelines, and benchmarks for such linkages. 

 

VICOBA groups initiated during the project period will need no additional subsidy to continue operations, and trainers will be able to significantly augment their income through services offered to VICOBAs.  Qualified trainers will be able to reach new VICOBA groups in their existing areas without outside subsidy. Those Coordinators will need grant subsidies to expand into entirely new areas, since VICOBA groups are comprised of the poorest sector of society living in remote rural areas.  However, once the initial outreach is accomplished, all future aspects of group operations and linkages with MFIs will be commercially based. FCT will continue to raise funds to finance qualified trainers.

 

Objective 1:  Develop strategies and implement VICOBA scale-up in the six targeted districts.

Major activities under this objective include the establishment of strategies and implementation of the qualified trainer’s model to facilitate rapid and cost-effective scale-up.

 

 

Major Activities.

• Conduct district level assessments. 

 

Members of the Project Team will visit the districts in question and compile an inventory of VICOBA groups.  The team will assess the potential for districts-scale programming, and will consult with local government officials and existing financial service providers.  Based on the results, FCT will set up a team consisting of a FCT Trainers and an M&E Officer.

 

• Design district strategy.

 

  The team will outline strategies for each district, including steps necessary to roll out and scale up VICOBA, outreach projections, Wards on the districts that will be covered, and recommended number of VIVOBA groups needed to achieve region-wide coverage and scale (we anticipate 160 groups per district). 

 

• Call a conference with potential stakeholders.

 

•  The team will call a conference of potential stakeholders to inform participants about the project.

 

 

 

 

 

 

 

• Recruit qualified trainers

 

 FCT will recruit district Coordinators and  trainers.

 

Coordinators and trainers will be empowered to use the organization methodology, training and Micro Insurance Services, modified to fit the local context; capacity to administer the grant in a transparent fashion; and geographic coverage of the district.

 

• Train coordinators and trainers.

 

  Once the successful Field staffs are recruited, the Regional VICOBA Team and Consultant will lead a design workshop.  This workshop will define the potential scale of VICOBA growth for the next year and help the coordinators and trainers to identify their capacity-building requirements in order to directly implement VICOBA.  The coordinators will then undergo a series of trainings in VICOBA and the FCT Trainers model led by the Regional Manager and the Consultant.  Each partner will be fully trained in the VICOBA methodology and specific trainings will be designed to meet individual coordinators’ capacity building needs.  At the end of each training series, each trainer will work with the district Team to develop a final implementation plan and budget.  The scale of each implementation plan and budget will be adjusted to meet the capacity of each implementing coordinators and its trainers.

 

• Develop partner M&E system.

 

 Each Country M&E Officer will put an M&E plan in place for the partner organizations.  To some extent this M&E plan will be tailored to each partner’s capacity-building plan; however, each partner will be required to use the FCT MANAGEMENT INFORMATION SYSTEM, and will thus report to FCT using the same set of Performance Management Ratios.  This will allow the Project Director and Deputy Director to compare the performance of all 15 coordinators regularly and identify areas of concern.

 

• Select and trained  trainers.

 

District coordinators will adopt the FCT Trainers model, described earlier, to ensure cost-effective scale-up.  The initial cadre of qualified trainers will be chosen by coordinators after meeting specific criteria and passing interviews, and will be women who are literate, motivated, highly entrepreneurial, and well-respected by their peers.  Implementing coordinators will inform communities about the FCT Trainers assigned to them.  As the VICOBAs develop, additional trainers will be selected from and by members.  The FCT Trainers will be trained in VICOBA module by Experts from VOCOBA FETA and given the tools needed to manage an average of 10 groups autonomously and effectively.  She will receive a small fixed sum from the group for initial training and weekly/biweekly supervision of the groups, and will be closely supervised by the responsible trainer, which will also liaise with VICOBAs to review quality of services provided. FCT has manuals for VICOBA formation written for both for literate and illiterate client groups, and has also developed much simpler tools that can be used by qualified trainers to train groups.  The simple, one page  trainer report form can be used for the monitoring required for the MANAGEMENT INFORMATION SYSTEM and also for routine FCT Trainers performance assessments.

 

• Develop advanced training modules.

 

FCT and its coordinators will assess the need for new or advanced training materials.  For example, as clients link to formal financial institutions, they may need more advanced business development training.  FCT will develop or improve existing materials and train and certify Qualified trainers to perform such training.  In the event that trainings are too sophisticated or detailed for qualified trainers, the partner financial, insurance or business service organizations may offer them directly to VICOBAs.

 

• Train trainers in additional marketable skills.

 

 After the Qualified trainer has established her initial quota of groups, the implementing agency will train her in several important skills, which she can in turn market to the groups. These include:

 

1. 1.       Selection, Planning and Management (SPM) training.

 

This training is implemented alongside VICOBA in most FCT programs, and is the most frequently requested by members. It enables them to select, plan, and manage their income generating activities.  The project’s Management Team will standardize and enhance this training to improve its impact and marketability.

 

1. 2.      Financial Services Agent. 

 

This model of insurance distribution is described further below.  Organization will earn a com Management Information Systems on from selling insurance products for Micro Insurance Institutions to its VICOBA group members.

 

 

1. 3.      Linkage Supervision.

 

 As the project develops, trainers will play a role in monitoring the relationship between Selected Bank and the VICOBAs. Trainers may act as field staffs for Selected Banks to evaluate loan application from distant VICOBA groups.  Safeguards, including intensive oversight by the implementing Region Coordinators, will be needed to selected Bank conflicts of interest, such as trainers aggressively promoting insurance products to receive a com Management Information System.

 

 

• Identify Region Coordinators

 

  In Year 3 of the project, FCT will identify high performing Trainers  in each region that are prepared to become lead technical people, and work with them to increase their technical and training capacity.  At the end of the project we would like to leave behind at least one institution in each region that is able to fill FCT’s role of providing technical support to local trainers or new groups.  These activities will be a source of revenue for the institution.

 

 Objective 2:  Develop sustainable linkages with formal financial institutions to ensure that VICOBAs can access savings, lending, insurance, and other services targeted to their needs.

 

Major activities under this objective include partnering with Akiba Commecial Bank (ACB) to provide savings and lending products and services; partnering with Social fund for insurance products and services; and developing a Micro Vest Investment Fund to finance VICOBA groups.

 

Major Activities.

                                                                                

• Savings and Lending - Market survey and product design for investment products.

 

Flourishing Community Tanzania (FCT) has learned that the success of the linkage model depends to a large extent upon the appropriateness of the products that are offered to the groups.

 Significant linkage problems arose when products were not designed specifically for VICOBA groups.  Intervention will therefore begin with a FCT survey followed by product design and test marketing.  The market survey will assess the types of economic activities in which VICOBA group members will invest, the levels of return expected from those enterprises, the cash flows of households and their enterprises, and the outreach mechanisms that will be needed. Products will be designed that are flexible enough to meet the groups’ demands and that focus on maintaining the groups’ intermediation of their own funds.  Products and their pricing will also need to meet the prudential norms of the bank. 

 

• Develop training programs.

 

The Deputy Director will develop a training program for trainers, and coordinators to ensure that everyone understands the program, its requirements, and their responsibilities.  The M&E officer will set performance benchmarks for the linkage program and communicate widely on how these are to be achieved.  Once initial orientation is completed, the M&E officer will work closely with district Coordinators and their trainers to develop the processes and criteria for linkages.

 

• Orient VICOBA members.

 

 FCT’s previous experience has shown that a critical success factor is the orientation and expectations of the VICOBAs.  Trainers will orient groups to the features of the products being offered and the risks, responsibilities, and opportunities associated with linking to financial institutions.

 

 

• Develop linkage with Financial institution after VICOBA group have gone through their initial one-year cycle. 

Trainers will evaluate the group’s preparedness and desire to initiate the financial institution linkage using relevant MANAGEMENT INFORMATION SYSTEM indicators.  Initially this evaluation will be supported by the Project Coordinator report, but eventually we anticipate that qualified trainers will be able to make the assessment independently.  The group’s preparedness will be assessed based on their management of financial operations during previous cycles and the transparency of their group governance.  Linkages will be based on demand by the VICOBA group or members and will not be an automatic process.

 

• Closely monitor performance of the loans and impacts on groups and individuals.

 

 It will be important to monitor the performance of the linked VICOBA groups separately from the general VICOBA pool in order to determine the effects of the external linkages on the group.  FCT will closely monitor client satisfaction ratios and will also look closely at the portfolio at risk ratio and the debt to equity ratio in order to ensure that groups are not becoming overly indebted.  We will closely watch the return on savings number as this is a leading indicator of future satisfaction levels.  Group members who see their return on savings rates fall significantly because of forced savings or other requirements may quickly become dissatisfied with VICOBA groups.

 

• Closely monitor the performance of the groups and their impact on the Financial institution.

 

Financial institutionwill prepare cost/profit center financial statements and projected cash flows for the linkage products.  Cash flows will be prepared quarterly and profit and loss (P&L) and balance sheets prepared monthly.  Staff capacity building will be undertaken as needed.

              

 

• Strategic, operational, and investment planning review.

 

Annually Deputy Director will lead a strategy review at the annual planning meeting regarding VICOBA linkage banking.  This review will provide a forum to make decisions about the expansion of the VICOBA linkages and to develop plans for the following 12 months. 

The forum will involve representatives from each financial institution, all FCT district coordinators and project Coordinator and Project Management staff.

 

• Insurance – Implement the Memorandum of Understanding (MoU) between Micro Insurance Institutions and FCT. 

 

This MoU has been signed and outlines the business relationship underpinning the provision of micro-insurance services to poor and financially vulnerable populations, including VICOBA members that are underserved by conventional insurance and finance services.

 

• Pool market knowledge and conduct situational analysis.

 

 Micro Insurance Institutions and FCT will review clients’ needs, country regulatory requirements, FCT operational requirements, and insurance supplier requirements to determine countries where insurance products will be rolled out.  If needed, Micro Insurance Institutions, FCT, and region coordinators will conduct further quantitative and qualitative market research, with Micro Insurance Institutions providing technical expertise and guidance.

 

• Develop prototype products for VICOBA members. 

 

Micro Insurance Institutions will use the market knowledge collected to develop a range of products, and will cover costs associated with product development. Prototypes must be approved by FCT before roll out.  Potential products include life insurance, crop insurance, and credit insurance.

 

• Establish a product price. 

 

Micro Insurance Institutions will present the prototype product to insurance suppliers and ask them to bid on offering the product. Micro Insurance Institutions will conduct an internal analysis to ensure that the successful bid fulfils their income requirements.

 

• Product specification. 

 

Based upon the external pricing supplied by the chosen insurance company and the internal income requirements from Micro Insurance Institutions , a final product specification will be drawn up for FCT’s agreement.  Once the product is agreed, Micro Insurance Institutions will configure its Management Information System (MIS) to handle the new product and provide FCT with an operations manual. Micro Insurance Institutions will also train FCT trainers and Region Coordinators in the new product and provide back-office administration once the product is launched.

 

• Identify local trainers. 

 

We anticipate that trainers who have been trained to form and link VICOBA groups will act as the local agents to market and distribute insurance products to members, and be paid by FCT after the organization given a com Management Information Systems by Micro Insurance Institutions.  Micro Insurance Institutions, FCT district Coordinators will train the trainers to understand, market, and distribute the products. The trainer will be supervised by district Coordinators using parameters developed by Micro Insurance Institutions.

 

 

• Banking product development.

 

Micro finance Institution selected will establish regular meetings with Region Coordinators and trainers to ensure that products remain relevant to targeted members, and will develop new products as needed.

 

 

Objective Three:  Expand the use of technological innovations that significantly reduce costs of outreach and client transactions.

 

Accessing rural VICOBA groups in a cost-effective manner was one of the challenges highlighted in the evaluation of FCT pilot linkage program, where VICOBA members complained of the costs of traveling to the Bank branch to process transactions.  The proposed project also seeks to build on opportunities for mobile phone banking illustrated by the M-PESA.

Major activities under this objective include introducing mobile banking and ATMs and adopting mobile phone banking for money transfers.

 

 Major Activities.

 

• Expand mobile banking.

 

Selected Micro Financial Institution will expand the use of the mobile banking unit in all targeted regions to facilitate VICOBA outreach.  The unit will use armored, all terrain four wheel drive vehicles fitted with ATM machines.  The vehicles will carry two bank employees and two armed police guards, and will have solar power, GPS tracking, and satellite technology to allow real-time transactions. The vehicles will cover 26 service selected Bank products weekly in nine project districts.

 

 

• Introduce mobile phone banking in all projects targeted regions.

 

 FCT and Selected Bank will seek to adopt a mobile payments scheme similar to the M-PESA system adopted in Tanzania, in all project regions by building on the system developed by Vodacom and Tigo.  FCT will work with Selected Bank to accept mobile payments and distribute loans via appropriate mobile technology, with the potential to greatly reduce the cost per transaction for clients. Trainers acting as airtime agents will buy and sell airtime to VICOBA members to facilitate their Selected Groups loan payments and to fulfill other purposes such as phone transfers for insurance premiums or payouts. 

 

 

Objective 4:   Facilitate learning and knowledge management.

 

This project will provide important tools, models, and lessons on providing access to financial services for poor communities in Tanzania.  Main activities under this objective will include:  M&E using FCT’s Management Information System tailored for schemes targeted towards the poor — is one of the most pro Management Information Systeming risk management tools in the development sector.

Major activities.

• Introduce performance management ratios for VICOBA programs across the proposed project. 

 

Financial ratio reporting has enabled partners and commercial funders to rate and compare MFIs, resulting in increased investment confidence. FCT will distribute knowledge, Micro Insurance System and micro insurance products to all Region Coordinators and will require regular reports from the system.

 

• Roll out the Micro Insurance System specifically tailored for VICOBA programs.

 

FCT’s Micro Insurance System developed in conjunction with selected Micro finance Institutions, allows field level feedback and management information reports to be tailored to the needs of trainers, District Coordinators, and stakeholders.  FCT heads up the SEEP working group that is developing a set of standards and ratios to be incorporated in the Micro Insurance System, allowing a standardized reporting system to be established that enables districts to compare the scale, efficiency, and effectiveness of their VICOBA groups.

 

 The Micro Insurance System will be released as soon as the project starts.  It will be used to evaluate the scale, efficiency and effectiveness of the VICOBA groups; it does not look at individual level impact and is intended principally as a management and output reporting tool.

 

• Assess VICOBA group-level impact. 

 

FCT will collaborate with VICOBA- FETA to lead an independent, rigorous impact assessment in coordination with the project team.  The firm will design the impact assessment in the first quarter of the project, to include a baseline in selected Districts in three months and follow up evaluations after every six months.

 

• Share learning with partners and stakeholders

 

  FCT values the opportunity to participate around successful models for providing financial services to the poor.  We will enthusiastically participate in a sample-based audit and independent evaluation of performance and VICOBA group-level impact, and will maintain and provide data that is sufficient for stakeholders to undertake this analysis, track group longevity, measure income distribution in groups over time, and make comparisons between different experiences.  Any documentation produced will be made available in the public domain.  FCT also has its own goals as a learning organization, and will share adaptations and innovations developed by this project throughout the organization so that our field offices (trainers) and technical units (district Coordinators) can learn from those experiences. 

 

  The proposed project will extend those efforts and build upon the community of practice established around VICOBA. 

 

Flourishing Community Tanzania’s agenda will focus on:

 

1. 1.      Effects of competition – In all targeted districts, the proposed project will build on   

FCT’s successful coordination with ACB and assess whether competition with other financial Institution encourages the design of relevant, well-cost affective products for VICOBA groups.  Similar competitive situations will be evaluated in each targeted district.

 

1. 2.      Performance norms – FCT has led the development of Financial Performance Ratios for savings-led programs.  The next step is to determine what performance levels characterize “good’ and “bad” performance by comparing performance ratios from district Coordinators and trainers and comparing this to impact data.  This will enable the project to determine the acceptable range of performance to maximize client impact.

 

1. 3.      Cost to client – The project will introduce several technological adaptations that should significantly lower transaction costs for clients.  The project will monitor these closely to assess their actual impact on costs, and will also track costs to clients associated with the project’s planned use of Implementing district Coordinators and trainers, to ensure that costs are in line with or lower than project projections.

 

1. 4.      FCT Trainers income – The project will track the degree to which trainers are able to augment their income through fee-for-service training, and will monitor client satisfaction related to level of fees and quality of services.

 

1. 5.      FCT will facilitate direct linkages between VICOBA groups and MFIs.

 

1. 6.      Financial literacy and household financial patterns – The project will assess whether VICOBA develops financial patterns for poor households that then make them better at making financial decisions with formal financial institutions (i.e., better at knowing when to borrow/save), and whether VICOBA develops financial patterns for poor households that then make them better clients for the financial institution (i.e., more stable, lower default). The project will also track whether VICOBA increases the impact of later gaining access to formal sector loans, and what percentage of VICOBA members need formal financial services.

 

1. 7.      Household outcomes – The project will review the impact of VICOBA on key household outcomes, e.g., smoothing consumption, social networks, empowerment, stress, etc.

 

1. 8.      Investment – The project will examine whether VICOBA changes individuals’ investments in microenterprise or agriculture.

 

1. 9.      Micro insurance Services – Micro insurance is a relatively new field and this project focuses on taking insurance products to the extremely poor.  The project will closely monitor product development, roll out, uptake, and pay out.

 

1. 10.   HIV/AIDS – VICOBA has been promoted as an appropriate livelihood security program for HIV/AIDS-affected households.  We will test to see how the program will link VICOBA members with formal financial institutions impacts HIV/AIDS-affected participants.

 

1. 11.  Gender – We will track gender and power changes within individuals, households, and communities, since a FCT Strategic Impact Inquiry on the effects of VICOBA on women members reported increased harmony and cohesion between women and their husbands, greater levels of participation in village affairs and politics, improved self-esteem, and an enhanced image of the women among other community members.

 

1. 12.  Exclusion – The project will assess the demographics of participants versus the general population to gain a better understanding of which groups need to be targeted with explicit outreach in order to a selected Banks exclusion.