On the southern slopes of Mt Kilimanjaro, a small bank owned by 330,000 members of the Evangelical Lutheran Church in Tanzania's Northern District is improving the lives of poor Christians, while still managing to make a profit - writes Fredrick Nzwili.
"When we started, the projections were that we would make profits after three or five years," said Fahanaeli Andrew Kihunrwa, general manager of the Uchumi Commercial Bank Ltd in the town of Moshi. "But in one year and three months we started making profits. So people have been wondering how we did it."
Kihunrwa explains, "The simplest answer they find is that this is church-based. God is with them."
Members of the Lutheran church agreed to form the UCB in 2003 as a financial institution that would offer people financial services at low rates of interest, while directing savings to ethical investments. The people, due to their poverty, could not access loans from or open savings' accounts with mainstream commercial banks.
"On Sundays, the basket would go around with messages such as, 'Yes! Form your bank', 'Contribute to you bank'," Kihunrwa says. Because of the positive response from congregations, the church-based bank opened its doors to the public in 2005.
The Christians in this area of Tanzania are mainly Lutherans, who are peasant farmers. They grow coffee, bananas and cereals, while also keeping livestock. Due to unpredictable weather patterns and declining global coffee prices, however, the farmers found themselves becoming ever poorer. More than 50 per cent of them live on less than one US dollar a day, and some believe the main cause of their poverty is a lack of knowledge and an inability to access capital.
"So, we agreed, that in addition to providing commercial banking services, the bank would also have serious concerns about the levels of poverty among the members of the diocese," explains Kihunrwa.
In earlier years, the people in this area of Tanzania had lost savings in co-operative societies that had been formed on the basis of many promises but which then collapsed.
"The people did not want to hear anything about cooperatives. But when they heard we were assembling, through the parishes, an institution that would help in financial services, they said as long as it is under the church, then they could re-form," Kihunrwa explains.
Confidence in the bank is shown by the fact that, currently, 64 Lutheran parishes out of 151 have created savings and credit societies. Put together, the people's savings make a substantial total, and the bank can then make loans. It also channels some government development money to members of the diocese.
Arthur Shoo, a member of the Lutheran Church in Tanzania and now director of programmes for the Nairobi-based All Africa Conference of Churches, explains that local people are now getting loans where once they would have had no chance of receiving credit from established commercial banks.
"Lives are changing," says Shoo. "With loans, the people are buying better dairy animals, which they keep for milk. They are also refurbishing their houses. They are also able to send their children to school since they can access loans for education."
The Evangelical Lutheran Church in Tanzania is a member of ECLOF Tanzania. ECLOF used to be known as the Ecumenical Church Loan Fund, which was founded in Geneva in 1946 by leaders of what would become the Word Council of Churches and bankers who sought to harness credit in the service of the most needy.
With grateful acknowledgemnts to ENI: www.eni.ch