ASA Tanzania

Debt : July 2023

BIO has granted a USD 7 M loan to ASA Tanzania, a microfinance institution

Amount

$ 7,000,000.00

Type of investment

Debt

Development impacts

Local economic growth
Financial inclusion
Gender

Beneficiary locations

Africa: Tanzania

Investment field

Financial Institutions

Activity

KK.64.191 Microfinance institution

Organisation

ASA Tanzania

Website

https://tanzania.asa-international.com/

Domicile

Tanzania

ASA Tanzania is one of the biggest MFIs in Tanzania in terms of portfolio size. The institution provides micro-loans to women microentrepreneurs with a basic set of 2 products and highly standardised processes deployed by all the subsidiaries of the ASA Group.

ASA TZ was created in 2014, it operates with 174 branches and serves more than 201 k customers. It is supervised by the Central Bank of Tanzania and is looking to obtain the deposit-taking licence from the BoT. The proceeds of the loan will be used to support the dynamic growth of the MFI loan portfolio.

ASA TZ is a fully owned subsidiary of ASA International Group that BIO financed in 2019 with subordinated debt.

Development impacts

Local economic growth
BIO’s investment will be only used to support the growth of the Microfinance loan portfolio dedicated to women entrepreneurs, mostly running small grocery or clothe shops.

The loan portfolio is expected to double by the end of 2024, generated exclusively through microfinance loans.
Financial inclusion
Unique focus on financial inclusion by providing access to small loans (average loan size of USD 216) to women entrepreneurs (99%), mostly low income without access to credit from traditional banks.

Unique lending approach based on individual lending via client groups, with group members only responsible for non-financial obligations (no joint liability) and no formal collateral required beyond 10% security deposit (drawn under the credit) and 2 individual guarantees from relatives.
Gender
ASA TZ is 2X-eligible based on Employment (45% of total staff, 55% loan officers) and Consumption (almost exclusively women clients targeted with products and services addressing the specific needs of women entrepreneurs and key obstacles for women to access finance e.g. lack of collateral) criteria, but shows very critical level of women representation at senior management (0 women out of 12) despite 3 women out of 7 at Board level.

E&S Impact

ASA Tanzania will update its policies and lending manuals to reflect the current practices and its E&S ambitions. This will include the update of the exclusion list to be EDFI aligned and the role of the Sustainability Manager. Also, the local entity will finalise the external Client Protection Principle audit and will work to fill the gaps potentially identified.

Situation at the time of investment

ASA Tanzania developed some very ambitious Environmental and Social policies, identifying the main risks it faces. With the support of the group it undergoes a yearly Client Protection Principles internal audit to check the respect of clients’ rights. Salaries paid to the employees are above national minimum wage and even above the estimated living wage.

Risk Category: C