Rural villages in the catchment area served by The Olive Branch for Children (TOBFC) do not have traditional banks. People have to travel great distances to access a bank branch and often do not have the minimum deposit required to open an account. Individuals in the villages still need bank services – they may have savings they would like to deposit, they want to earn interest on their savings and, in some cases, seek access to loans.

 

To support accessible banking services for village residents, TOBFC started our Community Cooperative Banks program. Participation in these banks is open to anyone with a small minimum deposit, and the program ensures banking services are available to vulnerable members of the community. One of our Social Care Team managers, Lucy Ally, supervises this program.

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how community cooperative banks work

A minimum of 10 individuals come together to establish a cooperative bank. The creation of a new bank is supported by a TOBFC employee familiar with the community, such as a library facilitator, Montessori Kindergarten teacher, or a community care worker. The group registers with the respective local authorities. To begin banking activities they set an annual wrap up date, a share price, and an interest rate. TOBFC provides them with a lock box, locks, deposit and loan books, training, and support.

 

Every week, the members of the bank meet and are able to purchase shares if they have funds to invest. The group also reviews loan requests made that week by members and determines successful loan recipients. By awarding loans on a weekly basis, the bank balance stays at zero and the money works for the community.

 

On the previously established wrap up day, all loans must be repaid. That day, shares are returned and profits earned by the bank on loans to bank members are divided by share percentage.

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nurturing local economic development

The cooperative banking model has been very successful in the Mbeya Region of rural Tanzania. TOBFC has helped establish 170 banks since 2012, positively benefitting over 5,000 individuals. Most of the cooperatives are now able to completely function without the support of TOBFC. This supports local economic development and individual financial autonomy, which in turn fosters dignity and personal achievement.

 

The Community Cooperative Banks program helps vulnerable individuals access banking services, keeps money working in the communities for the benefit of the communities, and provides access to capital for small loans. Members have used loans for many activities, including to build houses, send their children to school, start businesses, and finance initial farming inputs. This essential program also supports two specialized banks for vulnerable youths.