Kitowo - Hail, bad prices, and low yields – Bad news well handled!

Today we went out to Kitowo and Pomerini.  Kitowo lies about 40 kilometers from Iringa in the Kilolo District, and Pomerini is several kilometers further along the same road. We had heard that there are some problems at Kitowo so we were interested in hearing about what had been going on. 

Arriving at Kitowo we are greeted by their new pastor and the chairman of the SACCOS.  We had chai with the pastor while the members gathered.  Kitowo was hit last year with a double whammy.  First there was a bad hail storm that destroyed much of the peas, the main cash crop for many in the area.  Maize farmers suffered because of extremely low prices, resulting from a glut on the market due to an extremely high yield of maize throughout the country. 

The result of this double whammy was that 50% of the member’s loans were not paid on time.  This is the worst repayment rate that we have seen so far.  However, this SACCOS did exactly what we have been telling them to do.  The Kitowo loan committee went to each member to discuss their situation.  They developed a “work out” plan for each borrower.  Some would take an extra 3 months, some an extra 5 months, a few an extra 6 months; but everyone is committed to paying their loans!  Two months into the plans everyone is performing as promised.

Of course this was not their only problem here.  Much of the money they had lent came from our central bank – the Iringa Hope Joint SACCOS (IHJS).  Their SACCOS had borrowed 10,000,000 TZS (about $6,000) and could not pay this back since they were not collecting from their members.  So what did the IHJS do?  They too have a loan committee.  This committee met with the Kitowo officers and made a SACCOS work-out plan.  So far the SACCOS is on track to repay their loan with 50% of it now paid back.

We were very proud of how this problem has been handled.  Many people have wondered how Iringa Hope would handle a farm disaster – and now we know.  We have felt that our leaders were more than capable of handling problems, and now they have shown it.

The people we interviewed today were among those who have had to delay payment of their loans.  The first person we met with was Konstansia Chahe, age 72, married with 4 children and 11 grandchildren.  Konstansia told us she had borrowed $400 to plant peas.  Her peas had just flowered and were beginning to set when the hail storm came and ruined the plants.  She said that she tried to salvage what she could, but there really was nothing left after the storm.  She still had the maize that she plants for food so she decided to sell some of this to pay back part of her loan.  She was able to pay $270 back from this.  To earn enough to pay back the rest (and have some money for buying food) she took a small amount of money and went into the mandazi and bagia business (two popular snacks).  She bakes these items and sells them at a local secondary school.  So far she has earned enough to pay back another $65 plus interest.  Her plan says that she will have paid it all back in two more months. 

Our second interview was with Pius Kigodi, aged 75, married with 9 children and 15 grandchildren.  Pius told us he still supports himself and his wife plus three grandchildren, whose parents have died.  Pius took out a loan for $200 to plant an acre of maize. He had been expecting to sell his maize for 50,000 or more a bag (like other years).  But, because of the bumper crop in Tanzania last year, the price fell to 20,000 TZS per bag.  As a result he lost money on his crop (he had to pay $24 in interest – so the $200 crop was below the loan plus interest).  He needed to have some money for his family so he only repaid $70 of his loan.  The SACCOS agreed to carry him until he can sell half of this year’s crop in April as “fresh corn”.  For now he is paying only the remaining interest The good news is that the type of maize that he is growing has two ears per stock so after harvesting one to be sold as “fresh corn” he will still have half of his crop left to harvest later in the year.  At current prices he will earn about $70 from this crop – but he is hoping prices will rise.  And what about the future?  He is already planning how to diversify his plantings next year and thinking about how to save enough in his SACCOS to get a loan (he must save 1/3 of the amount he wants to borrow).

Although it’s always disappointing to hear about people’s losses and struggles, we were encouraged to hear the stories of perseverance that we heard at Kitowo. 

After a long meeting we thought we needed to get going for our next stop of the day, but they had prepared a light meal for us, so we contacted our group that was waiting for us at Pomerin and told them to expect us a bit later.  

We had chai with the pastor while the members gathered.

50% of the Kitowo member’s loans were not paid on time.  This is the worst repayment rate that we have seen so far.  However, this SACCOS did exactly what we have been telling them to do.  The Kitowo loan committee went to each member to discuss their situation.  They developed a “work out” plan for each borrower.

We wanted to hear some of the member's stories about their work out plans so Sandy sat down to do some interviews.

The first person we met with was Konstansia Chahe, age 72, married with 4 children and 11 grandchildren. 

Our second interview was with Pius Kigodi,aged 75, married with 9 children and 15 grandchildren.  Pius told us he still supports himself and his wife plus three grandchildren, whose parents have died