This Policy is the basis for creating effective coordination, regulation and supervision of the SG programs implemented by OMC in the country. The policy will serve as a guide to all staff and stimulate the growth of microfinance in the diocese of Morogoro. The expected outcome of this policy would be to increase formality and improve saving culture which in turn will facilitate economic growth, employment and poverty reduction especially among women and youth.
Trusts group will open bank accounts with suitable financial institutions for the security of members' funds. The selection of an institution will be determined by whether the institution has products that are suitable for use by the Trusts, including reasonable rates, special SG products, accessibility and digital platforms that interact with all mobile phone companies.
Once the units are trained and saving for at least 4 weeks, 2-8 units will join to form a trust. The trust will have a mobile and bank account where all unit members will deposit their savings. Once the loan appraisals and guarantees are submitted by the unit the trust will issue loans directly into member mobile accounts. This means that each member's account details will be kept at the trust level. The trust meets once every 2 weeks to review loan appraisals and disburse loans and monitor payments from the units. The trust will have a four-member leadership committee. This means that if the trust is formed by less than 4 units then units will elect more than 1 representative to the trust. The trust reserves the right to refuse admittance to a unit or to expel non-compliant units. Individuals from rejected or expelled units may be allowed to join other units and re-apply. Individuals may NOT join a trust on their own but only as part of a unit. Each trust will have a written constitution that is binding on all member units.
The unit will consist of 8-10 members. Each unit will elect one or more representatives to the trust. These elected representatives will attend trust meetings, form the trust leadership committee and report back to their units. The unit leaders will deposit the members' shares into the trust account and submit approved loan forms to the trust. Each unit will meet once every week (unit meetings should not fall at the same day and time as the trust to enable representatives to attend trust meetings). Units are allowed to have their own by-laws to govern unit matters such as fines, loan guarantees, social activities and meeting day and time. However, trust laws will take precedence over unit by-laws in case of conflict. There will be no entry fee charged to the members. Members will be facilitated to freely mobilize each other to form a unit while considering key points including:
Group members will make savings on a weekly basis in their unit meetings; and in the form of shares. The share value will be set by the trust. Once the share value is determined, members are allowed to buy the amount of shares they want. Members will buy shares per week voluntarily without any pressure but rather motivation from the Community Volunteer or Field Officers and with the knowledge that the size of the loan and level of dividends is determined by the number of shares one has. The shares bought will be recorded in both the trust journal, and individual member passbooks using a stamp pad and stamp symbol for the trust. Group members will be allowed to leave with the passbooks to their homes. However the trust journal will be kept in the lockable cash box and only accessed during the trust meetings.
The trust will offer loans to members only. The Loan Fund is comprised of member savings and the profits of the trust (from service charges). All members have the right to borrow up to a maximum of 3 times the value of their shares. The monthly service charge for loans is determined by the members at the beginning of the cycle, in the form of a percentage value. It cannot be changed during the cycle.
Loans may be disbursed every two weeks at the trust meeting and repaid every 4 weeks. Weekly repayments are allowed, paid straight into the trust account and recorded at the trust meeting. All loans should be repaid within a maximum of 12 weeks during the first cycle. The borrower is free to pay in whatever amounts s/he wishes at each meeting, but must pay the monthly interest every 4 weeks and repay the total amount within the agreed-upon period. In order to receive a loan the member will follow the following steps:
The activities of the trust runs in ‘cycles’ of about 9-12 months, after which, if agreed among members, part of, or the entire accumulated savings and profits are shared out among the members. The Loan Fund (which includes profits) is divided by the total number of shares purchased by members during the cycle, to calculate the share value. Each member then receives his or her payout according to the number of shares purchased.
Groups will not be forced to share-out all their accumulated incomes. End of cycle earning calculations will be conducted to determine the financial status of the trust as well as the current individual earnings of each member before the decision on how much is shared-out is made. Similarly, individual members will be allowed to withdraw their entire savings if they want to. The remaining earnings (shares plus profit) will be converted into shares using the new share value and recorded as “initial shares” before the start of the new cycle.
Each trust has a Social Fund, to use for small grants or no-interest loans when members are in distress. This is mandatory in the first cycle, but optional in future cycles. In order to receive a loan the member will follow the following steps:
The trust leadership committee approves the SF loan/grant
The money is deposited directly into the member's mobile money account by the trust secretary. In the case of the death of a member the SF form will be filled out by the unit leader on behalf of the deceased family. Rules for the social fund must be clearly stated in the trust constitution as shown in the example below:
The initial units and trusts will be set up by OMC field officers (FO). The field officers will take each new unit and trust through the OMC SG model training as set out in the training guide. At the end of the first cycle the FO will identify training committee members from among the unit members. The criteria for the CT will be as follows:
The FO will conduct training for Training Committees (TCs) using the Committee training guide. After the training the Field Officer (FO) will monitor the committees to ensure they set up new units and trusts and pass on the message properly. These Training Committees will work on a voluntary approach. The TC trains the units and trusts how to keep records but is never allowed to enter anything into records themselves, touch their money or take loans from a group they are training.
Each trust has a four-person Management Committee elected for one cycle. Trusts develop a Constitution that contains the Social Fund, share-purchase and loan policies of the group. Each member has one vote in electing the Management Committee and developing the constitution. Trusts should hold elections every year at the AGM where ALL members are invited and leaders should not be able to be re-elected more than two times consecutively. Every member should be aware that they have the chance to be elected to a leadership position, not just a few dominant members.
Each unit has a Unit Leader (Balozi). The unit leader represents the unit at trust meetings and reports back to the unit. If the trust has less than 4 units then each unit elects an assistant to the leader (Balozi msaidizi) so that the trust meeting is attended by at least 4 people. Unit leaders have to be elected every cycle.
A complete kit of equipment and record-keeping materials for the Trust will consist of the following:
The trust leadership will provide passbooks and stamps to each unit that joins the trust. The passbooks will be paid for by the members.
The Trust will be required to pay for the Trust kit from the start.
At Trust level records are maintained in three ledger books, which will be printed by OMC and paid for by the trust. These ledgers includes: