MICROCAPITAL BRIEF: Standard Chartered Bank Tanzania Arranges, USAID Guarantees Local-Currency Bond for Tanzanian Microfinance Institution (MFI) Promotion for Rural Initiatives and Enterprise Limited (PRIDE Tanzania)

Standard Chartered Bank Tanzania, a division of the London-based international bank Standard Chartered PLC, recently arranged a bond issue for Tanzanian microfinance institution (MFI) Promotion for Rural Initiatives and Enterprise Limited (PRIDE Tanzania), which is reportedly the first MFI bond ever issued on the Tanzania Stock Exchange.

The bond issue was oversubscribed at TZS 17.4 billion (USD 12.2 million), 22 percent above the original expectation of TZS 14.5 billion (USD 10 million). The issuance was subsidized by a 75-percent risk-sharing guarantee by the Tanzanian office of the United States Agency for International Development (USAID).

Mr Iddi Simba, board chairperson for PRIDE Tanzania, urged small-scale traders and farmers to come up with viable business proposals to benefit from the funding. As of 2009, PRIDE Tanzania reported total assets of USD 39 million, a gross loan portfolio of USD 26.9 million, return on assets (ROA) of 3.12 percent and return on equity (ROE) of 24.2 percent [1].

For a suite of tools from USAID intended to improve the impact of international development efforts, you may visit http://www.kdid.org.

By John Howard-Smith, Research Associate

About Standard Chartered PLC: Standard Chartered PLC was formed in 1969 through a merger of two banks: The Standard Bank of British South Africa, founded in 1863, and the Chartered Bank of India, Australia and China, founded in 1853. The bank has approximately 1,750 branches in 70 countries. Since the 1990’s, Standard Chartered has focused on developing its franchises in Asia, Africa and the Middle East. As of 2008, Standard Chartered had extended USD 385 million in loans to 52 microfinance institutions, with an average loan size of USD 7 million.

About Promotion for Rural Initiatives and Enterprise Limited (PRIDE Tanzania): Founded in 1994, Promotion of Rural Initiative and Development Enterprises Limited (PRIDE Tanzania) is a microfinance institution that provides credit to micro- and small-scale entrepreneurs in Tanzania. The organization uses a “modified Grameen” methodology wherein borrowers form groups to guarantee each others’ loans. Loans range from TZS 50,000 (USD 36) to TZS 100 million (USD 72,706). As of 2009, PRIDE Tanzania reported total assets of USD 39 million, a gross loan portfolio of USD 26.9 million, return on assets (ROA) of 3.12 percent and return on equity (ROE) of 24.2 percent.

About the United States Agency for International Development (USAID): The United States Agency for International Development (USAID) is a government agency that provides international economic and humanitarian assistance. It focuses on areas such as economic growth, agriculture and trade, global health, democracy, conflict prevention, and humanitarian assistance. Under the Development Credit Authority (DCA), it provides partial credit guarantees that cover defaults on loans made by private financial institutions to institutions that lend to underserved borrowers

[1] Standard Chartered Contribution to MicroCapital: “Standard Chartered / USAID partner to arrange and issue the first local currency bond for a Microfinance Institution in Tanzania”

MicroCapital’s Microfinance Universe profile: Standard Chartered PLC, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Standard+Chartered+PLC

MicroCapital’s Microfinance Universe profile: Promotion for Rural Initiatives and Enterprise Limited (PRIDE Tanzania), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=PRIDE+Tanzania

MicroCapital’s Microfinance Universe profile: United States Agency for International Development (USAID), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=United+States+Agency+for+International+Development+(USAID)

Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/

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