Delivery of micro credit services for poverty reduction : the case of Changamoto Life Preservation Fund

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Southern New Hampshire University
Changamoto LPF as an NGO located in Zanzibar extends service to over 500 individuals. A major concern of Changamoto LPF just like other semi formal microfinance institutions that are not for profit NGOs, is the problem of inadequate loan amount and high transaction costs even if repayment rate is now high. The gap between requirements for credit and the supply is too big and a major constrain to Changamoto LPF. It is a challenge that needs to be overcome in order to enhance sustainable means to income generation. Besides resource requirements, capacity constrain to manage micro financing services, lack of entrepreneurial skill inhibits product improvement. An assessment of the organization was undertaken to derive findings that would form the basis to justify seeking more support to maximize the effectiveness and efficiency of providing microfinance services not exclusively to the poorer but also to minimize leakage to the less poor. To begin with, attention was given to identify the main characteristics, features, aspirations and needs of Changamoto LPF in relation to credit delivery for poverty reduction. Henceforth, the organizational assessment extended to the Changamoto LPF culminated in project proposal writing as justification to potential donors to secure soft loan or grant thus increase loan portfolio and widening outreach to the needy individuals or groups in the community, as well as to enhance core networks in credit delivery. Support is also required to consolidate ongoing effort to improve management of Changamoto LPF to operate more efficiently so that members of the communities are motivated to undertake viable ventures that would change their economic well being for the better. The organization can best deliver effective and sustainable service to their clientele if management itself has the skills and capacity to manage and monitor credit delivery to meet the sector goals and enhance poverty reduction and gender equity at large within the emerging economies. In this context, complementary services like infrastructure require more public sector investment. (Author abstract)