Why did you join the Investment Committee of SME Impact Fund? “ I wanted to become a member for several reasons. First of all to learn more about financing in the agriculture sector. In the 15 years’ time I worked for the central bank of Tanzania, I only dealt with governments. Every sector has its own financial needs and challenges. Moreover I wanted to contribute to the development of individual farmers. I bring a lot of knowledge to the committee in how to approve loans, analysing applications, checking the financial backgrounds and the risk securities.” What are the main challenges of investing in SMEs in Tanzania? “ There are so many challenges. To start with it’s the lack of knowledge and skills of a lot of SMEs. They often venture without a proper operation. Till recently SMEs in rural areas also faced land administration challenges. It was difficult for them to get formal ownership of their land, so they couldn’t use it as security for obtaining a loan. In general I think most of the financial institutions don’t offer sufficient support for SMEs in Tanzania. It’s not only difficult for SMEs to obtain a loan, but the interest rate on loans is extremely high and there is a lack of non-financial support for these entrepreneurs. If they would monitor SMEs closely, they can provide advice and coaching where needed and more SMEs would perform on a higher level.” What is the strength of SME Impact Fund according to you? “ I’m impressed with the non-financial services and products SIF offers to entrepreneurs at various stages of their business needs. For example business advice about bookkeeping, financial planning and investment decisions. SIF also monitors their SMEs closely so they can detect potential problems at an early stage. SIF always has the intention to work together with the SME on solutions, they show appreciation and respect for the SMEs, which I find very positive. There is always room for flexibility and input from the SME. A lot of SMEs apply for a second loan, which means they are satisfied with the services SIF offers.” If SMEs cannot repay their loan, SIF works together with the SME in selling their pledged assets. What’s your opinion about this? “ I think it’s a good thing to involve SMEs in selling their assets if they cannot repay their loan. If you work together the process goes faster and you can get a better price, which is beneficial for both parties. That’s why it is so important to select SMEs that have the mind-set and willingness to pay back their loans. Fortunately the percentage of SMEs that don’t repay their SIF loan is very low.” How can SIF grow in the near future? “ By expanding their services to other regions or subsectors in Tanzania, like the fishing industry or animal farming. How do you define the agribusiness? It doesn’t only have to be crops. If you look at it from a broader perspective, you can reach more SMEs. I am sure SIF is going to grow bigger and be more successful if you listen to all the positive testimonials of SMEs.” The Investors Committees foremost responsibility is to approve the fund’s investment objectives and to advice on other matters relevant to investments like how to invest wisely, how to grow the fund and evaluate the investment performance.
