VisionFund Tanzania Microfinance Bank and Norwegian Church Aid (NCA) have launched a Sh200 million affordable loan fund aimed at expanding access to credit for women, youth and small entrepreneurs across several regions in the country.
The initiative seeks to reduce the cost of borrowing and address the financial barriers that prevent many small businesses from accessing formal banking services.
VisionFund Tanzania and NCA contributed equally to the fund, combining financial resources and operational expertise to support underserved borrowers.
Under the arrangement, entrepreneurs will access loans at interest rates ranging between six and nine percent, significantly lower than the current market average of about 21 percent.
The two organisations say the programme is designed to support small businesses that struggle to secure financing due to high interest rates, strict collateral requirements and complex banking procedures.
NCA provides concessional funding, subsidises interest costs and absorbs part of potential losses through a loan guarantee arrangement. This support allows borrowers to access loans at affordable rates.
VisionFund Tanzania manages the operational side of the programme, including borrower assessment, loan disbursement, monitoring and loan recovery.
The bank also uses digital systems to streamline operations and reduce delays in loan processing and management.
The initiative aims to reach borrowers in several regions, especially those living outside major cities where access to financial services remains limited.
Speaking in Dar es Salaam on today, NCA Resident Director Berte Marie Ulveseter said the partnership aims to support entrepreneurs who have viable business ideas but lack affordable capital.
“This partnership shows how institutions can work together to provide financial solutions for people who need them most,” she said.
She added that access to affordable credit will help communities grow their businesses while strengthening local economies.
Ms. Ulveseter said many small entrepreneurs in Tanzania remain excluded from formal financial systems despite having strong business potential.
According to her, the new loan fund will help bridge that gap by offering loans that are both accessible and manageable.
VisionFund Tanzania Chief Operating Officer Deogratias Siria said the initiative will also include financial literacy and entrepreneurship training for borrowers.
Mr. Siria said the training will help entrepreneurs manage their finances better and use loans productively.
“We want borrowers to access loans responsibly and use them to grow their businesses in a sustainable way,” he said.
Mr Siria explained that many small entrepreneurs fail not because of lack of opportunities but because they lack financial management skills.
The training programme will therefore focus on financial planning, record keeping and basic business management.
According to VisionFund Tanzania, combining financing with training will improve loan repayment rates while helping borrowers strengthen their businesses.
The programme also includes governance structures to ensure transparency and accountability.
VisionFund Tanzania and NCA have established joint committees to monitor implementation and evaluate the performance of the fund.
The committees will oversee loan distribution, monitor progress and ensure that the programme reaches the intended beneficiaries.
If borrowers face repayment difficulties, VisionFund will first work with them to resolve the situation through restructuring or other support mechanisms.
If losses still occur, NCA’s guarantee arrangement will absorb part of the financial risk.
Recovered funds and unused capital will be reinvested in the programme to ensure its sustainability.
It goes without saying that affordable credit remains one of the biggest challenges for small businesses in Tanzania.
Although the country’s banking sector has expanded in recent years, many entrepreneurs still struggle to obtain financing.
High lending rates and strict collateral requirements often discourage potential borrowers, particularly women and youth who lack formal assets.
Small and Medium Enterprises play an important role in Tanzania’s economy because they create jobs and stimulate local economic activity. However, limited access to finance continues to slow the growth of many businesses.
The initiatives such as the VisionFund–NCA loan fund can help reduce these challenges by providing affordable and accessible financing.
By lowering borrowing costs and sharing financial risks, the programme creates opportunities for entrepreneurs who would otherwise remain outside the financial system.
Improving financial inclusion has become a priority for many development organisations working in Tanzania.
It is obvious that when small businesses gain access to credit, they can expand production, create employment opportunities and increase household income.
The Sh200 million loan fund therefore aims not only to support individual businesses but also to contribute to broader economic development.
For women and young entrepreneurs, access to affordable credit can open new opportunities for business growth and financial independence.
Through their partnership, VisionFund Tanzania and Norwegian Church Aid hope to demonstrate how collaborative financial initiatives can strengthen inclusive and sustainable economic development in the country.
