This document was prepared by a volunteer in IDYDC in 2013 following the CERISE Social Performance Indicator methodology.

Tanzania, October 2013


IDYDC Microfinance is a Tanzanian MFI based in Iringa, in Southern Tanzania. The MFI is now registered as an independent Trustee. However it has been originally created as Microfinance Department by the IDYDC. MFI  is an instrument to help families of children and orphans that it was supporting with its activity.

At the moment, the financial situation is relatively stable and positive. Accounts are certified by an external auditor and MFI has been able to repay a significant loan from government. IDYDC reports to MixMarket since 2007, but not on Social Performance Standards. Given this situation, the MFI decided that it would be meaningful to assess whether, after almost 15 years of activity, the Microfinance Programme continues to be an instrument to attain the social objectives of IDYDC, and to which extent.

IDYDC’s activities now include OVC/MVC, vocational training, health and environment sectors.

The social audit has been realised using the Social Performance Indicators (SPI) tool developed by CERISE[1]. The tool has been implemented as accompanied self assessment of the NGO, using a mainly centralized approach. It has been conducted by a voluntary consultant in October 2013. This was at the end of a 4 months period of collaboration with the MFI.

CERISE has validated the results of this assessment in December 2013 and provided the necessary data to compare results. Comparison was with 3 Tanzanian 16 other African Urban NGOs that have been evaluated with the same tool. The test, as well as this summary report, have been shared with the management of the MFI, that approved them

Presentation of the MFI

Iringa Development of Youth, Disabled and Children Care (IDYDC) is a Tanzanian NGO established in 1991 to support street children. In 1999 it created a Microfinance Department, after a survey that highlighted how poverty and failure to cope with basic needs like housing and schooling was the main reasons for children who were supported by IDYDC to leave families and live in the street. In 14 years the Microfinance Programme has grown and stabilized a lot, becoming an independent Trustee in 2005.

Currently IDYDC Microfinance provides loan and saving services to the population of Iringa and Njombe Regions, in Southern Tanzania, which globally counts about 1,200,000 people. It targets vulnerable families in the regions, in accordance with the overall objectives of the NGO it is a part of.

Loans are provided only for business purposes, and a strong training system is associated to financial services. Beneficiaries are groups, usually family groups as it has been evaluated that involving the whole extended family in the business project is a good way to make sure that the loan is actually used for the business itself and not for other family needs.

All loans, notwithstanding their dimension and duration, get a 15% interest on the loaned amount.

A compulsory saving system is associated to repayments, as well as a voluntary saving service that the clients may decide to use.

Active for more than 10 years, the MFI is a stable and recognized reality in the region, and especially in Iringa town. A system of zones, managed by voluntary zone leaders (who are borrowers themselves) is the main architecture for the microfinance programme to work, both in terms of provision of financial services and creation of a social capital surrounding the financial activities.

Key Data (December 2012)

Starting year                1999

Legal form                  Trustee

Profit status          (Non)-Profit

Active borrowers         16,986

Active savers               14,668

Employees                         13

Target market    mainly urban

Methodology              solidarity groups (family groups)

Average loan amountUS$ XXX

Portfolio Yield                  16%

Gross loan portfolio          US$ 800,823.57

Gross savings                      US$ 30,086.41

Total assets                       US$ 373,883.70

Operational self-sufficiency         123.6%

Return on Assets                           17.72%

Financial Expense Ratio                   1.2%

Operational Expense Ratio                                              10.11%

Loan Loss Provision Expense Ratio    0%

Write-Off Ratio                                   n.a. (loans are not written off)

PAR30 / PAR90                   0.04% / 0.14%


The VISION of IDYDC Microfinance is:

IDYDC wants to see a community free from, diseases, poverty illiteracy and socially developed community where human rights are respected.

The MISSION STATEMENT of IDYDC Microfinance is:

IDYDC Microfinance exists to improve the living standard of the disadvantaged people (needy children, youth, widows, Women, widowers and generally poor people) in Iringa region and other parts of Tanzania through facilitating establishment of Microfinance activities.

In pursuing the mission statement, IDYDC Microfinance will ensure that there are commitment, transparency and volunteerism.



The overall assessment of IDYDC after the SPI audit shows a reasonable capacity to attain its social results. Comparably higher than similar Tanzanian MFIs, and roughly equal to African Urban MFIs.

The strongest point is social responsibility, which is probably linked to the fact that the MFI has been created within an NGO with more than 20 years of history and that is well structured. Also in terms of targeting & outreach and benefits for clients IDYDC is above the average of peers, while adaptation of financial services is a major area for improvement, mainly because of the choice to work with a single loan product.

The following graphs illustrate the results according to the SPI 3.3.1 application in December 2012 The first graph shows the results per dimension while the second graph gives a more detailed view on results per criteria. The maximum score per criteria is 100%.

                        Results by dimension   Results by criteria

Add photo graphs

MFI-A in 2012    MFIs of same size   Regional average


Asterisks indicate the priority score for the dimension according to the MFI’s governing documents and declaration by the management (part 1 of the assessment)

This dimension analyses the capacity of the MFI to actually target the people or groups it is supposed to target according to its social objectives. IDYDC proves to be quite effective, thanks to its active targeting policy based on a codified set of vulnerability indicators. However, due to lack of resources, geographical targeting is pretty limited. Being effective in Iringa town, where poorer areas are targeted, but failing to reach the most rural and isolated areas in other districts. Moreover, no recognised tool is used to assess poverty condition of clients, but internally defined vulnerability criteria, which are in any case well managed by the staff.

In terms of individual targeting, 70% of clients are women, and about 20% are less than 33 years old. There is not a registration of the poverty status of the clients in terms of poverty threshold.

If resources would allow, it would be good to increase the outreach especially to rural areas and remote districts. Introducing recognized poverty assessment tool would be appropriate only in a perspective to approach big international donors. Nevertheless in a normal situation the cost does not justify the benefit. However, classifying clients for their poverty status, using the existing poverty indicators, and registering it at loan request stage would be an important element to make it possible to verify the impact on poverty reduction of the loans

I am called Catherine Mwakatundu a chair person of Amani group. I am a widow who is taking care of three children after the death of my husband two years ago. It took almost three months to start business due to the death of my husband who was supporting the family in all aspect. It’s when I decided to convince other two women to be as one team, is where we got the idea of dealing with small shop with different things like soda, soap etc. IDYDC has helped us in kind and financially by providing us with Business training and Loan. Our future plan is to make sure that everyone from our group should have her own project which will be created from the profit made by our business.



This dimension analyses the capacity of MFI to adapt its services to very different and diversified needs of clients. IDYDC does not provide a wide range of products. Actually, it chooses to use one only product, and then to diversify and adapt services to clients in other ways. This choice is based on the necessity to have a very simple product in order to facilitate clients in understanding the product and get confident with it, and also to facilitate internal management and record, which is still totally paper based. However, clients themselves are calling for bigger differentiation of products at the annual clients’ meetings.

Even if this standardized approach is reflected in a limited availability of specifically tailored products, a 96.47% retention rate proves that clients evaluate positively the services they receive. Indeed, even if the product is completely standard, there is flexibility in defining the repayment period, and services from zone leaders, including collecting repayments from beneficiaries and then bringing them to the loan officers, are appreciated by clients.

The MFI is also pretty flexible on late payment. Any time it happens, the loan officer and the director contact the beneficiary in order to assess the reason for late payment and only in rare cases fines are applied. Following the assumption that these would not really help and motivate the client to catch up with the repayment schedule. Since the interest rate is fixed, increasing the repayment period ends up in a reduction in the effective interest rate for the client that needs it.

Finally, the MFI has a very strong training strategy that is appreciated by the clients. No loan can be disbursed before the group leader has attended to a training session on business management , entrepreneurship and bookkeeping.

Therefore, the introduction of a new product for non-business related expenses would be a necessary step forward in serving clients, while there is no need to change the overall lending and interest policy of the MFI

The Muungano Group consists of 4 members,   we are dealing with Women Saloon business. We have improved a lot after taking a loan from IDYDC which also has helped to increase profits .Things have really changed in our family. We used to eat mainly beans, now we can afford different foods even rice and meat now and then. It is no problem to pay the houserent and our children have sufficient clothing and they are attending schools. The only problem with IDYDC is that we get smaller loans than we wish for. My name is Siamini Omary, I am a chair person of the Muungano Group.


This section analyses the MFI’s capacity to provide economic benefits and capacity building by fostering clients’ involvement in MFI activity and decisions. The key aspect of IDYDC’s strategy is the utilization of zone leaders. They are clients that play an important double role. On the one hand they provide MFI services at client like grouping them, making the first assessment for loan requests, checking clients’ problems in case of late repayment, collecting instalments by clients, passing information and so on. On the other hand, they represent clients towards the MFI.

This happens in formal way, by reporting at district zone leaders meetings, and in informal way, during their at least weekly interaction with loan officer and the programme director and programme officer. This leads to higher scores in Client participation and Social Capital/empowerment criteria rather than Economic benefit. In this case it should be remarked that the MFI strategy is, when good economic performances occur, to increase the number of clients who receive a loan rather to give economic benefit to borrowers.

In terms of the impact of operational costs, even if no formal strategy exists to reduce them, they have been reduce from 13% to 11% in the last three years.

IDYDC’s performance is in line with that of peer urban MFIs in Africa, and remarkably higher than that of peer Tanzanian MFIs.

This is Msigala group: we are four members and we are dealing with tailoring business, mainly by making school unforms. Our business has improved really a lot after training and loan from IDYDC Microcredit program. Now we can buy all production material at a time. This allows us to meet our customers’ needs much more in time than it was before, and this has increased the profit. Our plan is to ask more loans which will help us to add more tailoring machines and other equipments.


The following dimension evaluates an MFI’s commitment to accountability and its effort made to ensure its activities do not have negative effects. Social responsibility extends to employees, clients, the community and the environment.

In this section, IDYDC scores a remarkable 80%, significantly higher than other Tanzanian, and urban African, assessed MFIs. The Microfinance Institution is a creation of a structured NGO, that over the more than 20 years’ of activity adopted most of the necessary arrangement to make sure that the organization works responsibly towards its members and partners. These include a financial and human resources regulation, a code of conduct, representation of employees at board of governors level, and so on. This is reflected into the MFI, which itself actively works to represent clients (through zone leaders) and let their observations and complaints reach the top management level. The only remark, on this regard, is that this is strongly related to personal relationship between zone leader and clients. Rather than a structured system, but this level of informality can be considered something normal for a medium size MFI like IDYDC.

An interesting feature is the possibility of integration between Microfinance and other activities of IDYDC. This is a “passive integration”, making MFI clients easy recipients of IDYDC’s campaigns like those on AIDS prevention, alcoholism prevention and against domestic violence, and an “active integration”, with the creation of a specific micro credit mechanism to implement a water sanitation programme in rural communities run by IDYDC’s environmental department. This is an area where IDYDC could characterize itself for original and innovative interventions.


Clients during the Training at idydc hall 

Water and Sanitation Demonstration during clients’ training

Summary table

Targeting and Outreach**** (48%)


  • effective individual targeting using codified vulnerability indicators:
  • good coverage of Iringa town, with branches in all districts of Iringa and Njombe Regions
  • no internationally recognized poverty assessment instrument is use


  • no internationally recognized poverty assessment instrument is used
  • totally paper based administration and records system, which reduces reliability of data and possibility to implement and monitor the pro-poor strategy

Adaptation of services** (40%)


  • loan management is pretty flexible, especially taking into consideration late payments
  • client retention rate as high as 96%
  • extensive and compulsory training strategy
  • there’s only one loan product (but emergency loans are offered)
  • Effective Interest Rate for a starting loan that does not get any mitigation action is over 45%


  • there’s only one loan product (but emergency loans are offered)
  • Effective Interest Rate for a starting loan that does not get any mitigation action is over 45%

Benefits for clients**** (44%)


  • Zone leaders are the key actors to check the actual benefit to clients in terms of poverty reduction and to assess any problem or necessity in the lending process
  • there is no clear strategy to reflect good economic performances into economic benefits for clients


  • there is no clear strategy to reflect good economic performances into economic benefits for clients
  • resources are not enough to make sure that all foreseen meetings with clients and zone leaders actually take place regularly every year

Social Responsibility**** (80%)


  • strong internal human resources policy
  • actual representation of clients at management level and of employees at board level
  • integration between the MFI and the NGO is is a part of, especially in the environment sector

Conclusion and Recommendations

IDYDC Microfinance is a fairly well recognized reality in its area of operation, especially in Iringa town. It is considered a reliable partner both by clients and the government, and this is surely an asset. Rising portfolio over the years, associated with reduction of impact of operating costs and very high client retention rate make the picture of a healthy organization. Good reputation of the MFI in Iringa town, the utilization of an easily understandable loan product, a strong training strategy and proximity to clients assured by zone leaders are probably the main reasons for IDYDC to be chosen by its clients

The MFI is already aware of the necessity to increase and diversify loan products for its clients, as this is a regular request from the clients themselves. As soon as the preliminary steps that it has already undertaken will end into concrete action and results, this will be a good asset for the clients. Non-business related loans, for expenses like school fees, funerals of house construction are going to be the starting point.

Any other recommendation that could be originated by this assessment would not be realistically feasible without an improvement of the Information Management System. Records are totally paper based, and this is a severe limitation to activities in terms of reliability of financial data, efficient utilization of time and human resources and possibility to perform retrospective analyses that would be necessary for any further expansion of the activity and for proper prioritization, including implementation of pro-poor strategy. The impression is that IDYDC is now managing the biggest portfolio and outreach that are possible with the available resources. Introducing an MIS software would make it possible to dedicate time and efforts to expand products and outreach without increasing human resources. It will be after a necessary buffer period to make the staff fully confident and accustomed with the new system.


Proposal for building capacities

Within the SPI assessment process, a capacity building projects has been prepared. It is on the basis of the priorities identified by the consultant and the management of IDYDC. Such a project focuses on three main objectives, ordered in terms of priority:

  1. computerization of the accounting and records management system MIS – Management Information System
  2. capacity building on loan officers and zone leaders on targeting OVC/MVC families’ in rural areas
  3. Revision on MFI policy documents and business plan procedure

The project can be completed in 12 months with an investment of about 65,000 USD, or 52,000 EUR. That is  If all the blocs of activities are to be implemented. The document is to be considered the basis for medium term planning and/or fundraising to find the resources to implement at least part of these activities.

Summary report completed in August 2014

by Marco Pasini

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