Empowerment Loans: How 10% allocated budget helps women, youth and people with disabilities | Big Bold Cities

Empowerment Loans: How 10% allocated budget helps women, youth and people with disabilities

three colored squaresEmpowerment Loans: How 10% allocated budget helps women, youth and people with disabilities


In order to increase the confidence, voices and economic empowerment of women, youth and people with disabilities (PWDs,) the Ilala Municipal council in Dar es Salaam, Tanzania, has allocated 10% of their budget revenues, which is given to vulnerable groups as interest-free loans. Although private financial institutions administer the loans, the government’s involvement sends a message that it is government of all people, for the people and by the people.

Democratic Challenge

Due to cultural norms and prejudice toward women and PWDs in Tanzania, these groups have been limited in their employment opportunities, education, and access to financial opportunities.

According to research done in 2015 by the British Council in Tanzania and named Youth Voices in Tanzania, over half of youth are fearful that they will not achieve their dreams, while almost one-quarter mentioned financial security as one of their biggest fears.

There is a high dependency and poverty rate among these groups and as a result, their participation in governance and political processes has also been very low.

How Did They Do It?

After realizing that women, youth and PWDs lack employment, face financial restraints and have limited access to other opportunities, the government of Tanzania directed all the municipal authorities in Tanzania to allocate 10% of their annual revenue specifically for special groups.

Ilala, one of five municipalities in the capital city of Dar es Salaam, is a leading example because it collects more revenue than other municipalities—More than 56 billion Tanzania shillings (about 24 million USD) every year.

The national government’s directive started to be implemented in 2014, and it served as a spur for Ilala municipality to make sure it was effective in its revenue collection, so as to allocate the 10% for special groups while accomplishing other municipal duties like salaries, building improvements and modernization of markets.

Ilala Deputy Mayor Omary Kumbilamoto said the municipality is collecting as much revenue as it can, and insisting on tax collection, so that these funds can help these groups.

“We will give Tsh 2.1 billion, from June 24th, specifically for youth; the loans are for groups which wanted to buy motorcycles and tricycles,” Kumbilamoto said.

The Ilala Municipality Head of Social Welfare and Youth, Francisca Makoye, said a local decision was made that out of the 10% mandated by the national regulation, women’s groups will get 4%, youth groups 4% and PWDs groups 2%, given as loans without interest. The 2 percent for people with disabilities was added for the 2018/19 cycle; previously, the funding was split evenly between women’s groups and youth groups.

Makoye’s department deals with all of the coordination of loans for women, youth and PWDs.

“The budget will be allocated after the municipality has deducted other costs, like salaries, to strengthen health facilities, cleanliness, education and other municipal basket funds,” she said.

For the year 2018/19, Ilala collected Tsh 44 billion in revenue. After the deductions and other calculations, Tsh 36 billion remained, and its 10% was 3.6 billion.

Kumbilamoto said the purpose is to raise incomes so that families can be financially free. No-interest loans have benefits for women, youth and PWDs compared to loans from other financial institutions which require high interest, he said.

“These groups were neglected and even if they obtain the loans and fail to repay the loans, then those institutions would take their assets and it turns out that they are experiencing more poverty,” Kumbilamoto said.

Makoye said women’s groups have accessed the loans at a higher rate than the other groups. Youth businesses have lower uptake because they want quick results and quick progress, and PWDs often have a negative mindset that they are unable, Makoye said.

In order for groups to obtain the empowerment loans, Makoye said, they must meet certain criteria:

  • They must be organized in groups of five.
  • The group’s business must be registered with the municipality.
  • Group members must have identification documents through the village government authorities and the ward government.

The municipality and a loan committee review applications and make a decision to offer a loan. Each group must pay Tsh 30,000 (about USD $13) to obtain a certificate from the social welfare department, which enables them to open a bank account. After the loans have been distributed to their accounts, all groups receive education on best practices for using the funds. Loan repayments usually start after a one-month grace period.

The loans are intended as seed money for entrepreneurs just starting out. To encourage improvement and boost motivation, the Ilala social welfare department gives ‘best entrepreneur’ awards to recognize the work of youth, women and PWDs who have obtained the loans.

“As the group has grown and they have reached a level where they request more than Tsh 50 million loan, we ask them to go for bank loans and leave other small entrepreneurs for the municipal loans,” Makoye said.

The Ilala Municipal economist, Ando Mwankuga, said the 10% allocation doesn’t cause any loss for the council, because the revenues come from the society and will work for the society, enabling specific groups to participate in the economy. Most of the municipal revenues come from city service levies, business licenses, alcoholic VAT, building taxes and market taxes.

“We must make sure we collect all the revenues by any means, but also serve the societal needs as well,” Mwankuga said.

How is it going?

Ilala Municipal economist Ando Mwankuga said unlike 2014/15 when the project kicked off, now there is high awareness among citizens who want to obtain loans.

“At some point, we decided to stop the process because of the slow pace of groups who wanted loans, and we started afresh again,” Mwankuga said.

Groups which have received loans since 2014/15

  • For the year 2018/19, 374 groups (including 19 groups of PWDs, receiving 287.9 million in loans)
  • 2016/17, 218 groups
  • 2015/16, 186 groups
  • 2014/15, 8 groups

Makoye said many groups are disciplined in repaying their loans; for example, groups which received loans in February 2019 have already completed their repayments. Examples of beneficiaries include:

Mama Africa

The Mama Africa group includes five disabled women who run a small shop at the Kariakoo business area of Ilala, where they make shoes and batik.

Group leader Agnes Peter said they heard about the municipal loans from the media.

“We had this idea before, but it was in a slow progress because we didn’t have enough capital,” Peter said.

After hearing about the program, they organized themselves in a group of five and followed the instructions.

“We finally got Tsh 3 million, and we topped up our materials,” Peter said.

“Now we make shoes and batik (African print).”

A member of another business group, Mpoki Abraham, said the municipal program has rescued them from begging in the street, allowing them to earn their income.

“Most of the beggars in Dar es Salaam are disabled, but we don’t want to beg, we will try what we can,” Abraham said.

Abraham said due to the physical challenges she and her partners face, they have trouble finding markets for their products.

“We need to walk a long distance to find customers, it is a challenge for us,” she said. “But we request the municipality to offer us another loan which we can use to buy a tricycle, this can help us find more customers.”

She said the municipal loans without interest have helped them to leverage economic growth, have the power to manage their rights and get access to information.

They received their first loan in May 2019 and they are now enjoying their grace period until July, when they will start repaying the loan.


Juhudi Group, located in the Tabata ward of Ilala, is a group of five women who make shampoo, glass cleaners, disinfectants, tile cleaners, hand soaps and bleach. Their small industry is inside the house of group leader Leah Ally.

Ally said before the municipal loan empowerment program, they had a challenge of obtaining timely loans. Even if you could get loans, they had high interest. And the lender could take your properties and send you back to extreme poverty if you failed to pay, she said.

“For example, last year we got a Tsh 300,000 loan from DCB Bank, and the interest was 10%,” Ally said. “But finally we heard from our village leader that the municipality gives these loans without interest. We followed the procedure and in February we got Tsh 10 million, we will pay Tsh 10 million net, no more cents, no interest.”

She said after obtaining the loan they bought more machines, raw materials and recruited people to search for markets.

The Juhudi group started repaying its loans in April and the goal is to finish at the end of 2019 and request more.

“Our goal is to have our own industrial area, to buy modern machines and to provide employment for youth and other women,” Ally said.

Another group member thanked the municipality for these initiatives and said they want more opportunities from the government rather than from private institutions.

“We will do business and we will pay tax, I think that is the only way women can contribute in pushing the development wheel,” Juhudi member Fatma Saleh said.


The program has had successes but also challenges, including:

  • Low uptake among youth groups
  • Some groups disappear before repaying loans
  • Challenges engaging PWDs to participate
  • Lack of entrepreneurship skills in the target groups
  • Poor business environment overall, e.g. in 10 months of the financial year of 2018/19, 16,252 businesses have closed in Tanzania.
  • Lack of trust among group members
  • Politicians may use the 10% municipal loans to attract support or reward supporters.

Innovation Point of Contact

Ando Mwankuga
Ilala Municipal
Head of Social Welfare
Ilala Municipal
Deputy Mayor