In a joint initiative with Tanzania Electric Supply Company (TANESCO), Akiba Commerce Bank (ACB), a commercial bank in Tanzania, has launched Umeme (“Electricity”) Loans, which carry terms of six to twelve months and cover the cost of connecting electricity. The loan bears an annualized interest rate of 19.5 percent, which must be paid for up-front.
Currently, about 14 percent of the country’s households are connected to the national power grid. Mr William Mhando, Managing Director of TANESCO, was quoted as saying, “In the end, this [loan program] should see us realizing the goal of connecting at least 30 percent of Tanzanians come 2015 as demanded by the government.”
A new connection can run about TZS 500,000 (equivalent to USD 320) while monthly electric power costs about USD 15 for a small house. Mr John Lwande, ACB’s managing director, said, “Basically, these will be very affordable loans because the utmost aim is to help people get connected to the electricity.” Mr Mhando added that TANESCO will try to engage other unnamed commercial banks in the service in order to make it accessible to more people.
By Carol Kim, Research Associate
About Akiba Commercial Bank (ACB): ACB is a commercial bank in Tanzania that focuses on serving the poorest Tanzanians and their enterprises. ACB commenced operations in August 1997 as an initiative of approximately 300 Tanzanian entrepreneurs. As of 2009, ACB reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 55.3 million, a gross loan portfolio of USD 30.1 million and 15,600 active borrowers.
Sources and Additional Resources:
The Citizen: “Bank to Give Loans for Power”, June 2011 http://thecitizen.co.tz/business/13-local-business/11640-bank-to-give-loans-for-power.html
ACCION Ambassadors: “Let there be Light! Microfinance for Electricity”, June 2011 http://accionambassadors.wordpress.com/2011/06/06/let-there-be-light-microfinance-for-electricity/
MicroCapital.org: “MICROCAPITAL BRIEF: The Coalition of Tanzania Microfinance Practitioners and Service Providers Limited Merges With The Tanzania Association of Microfinance Institutions (TAMFI)”, August 9, 2010, https://www.microcapital.org/microcapital-brief-the-coalition-of-tanzania-microfinance-practitioners-and-service-providers-limited-merges-with-the-tanzania-association-of-microfinance-institutions-tamfi/
MicroCapital.org: “PRESS RELEASE: ACCION Investment in Tanzania’s Akiba Commercial Bank to Expand Microfinance Services”, May 29, 2008, https://www.microcapital.org/press-release-accion-investment-in-tanzania’s-akiba-commercial-bank-to-expand-microfinance-services/
MicroCapital’s Universe Profile: Akiba Commercial Bank (ACB), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Akiba+Commercial+Bank
Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/
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