Sero Lease and Finance Ltd. (SELFINA)
Approved to post Kiva loans from: Tanzania
Status Update - December 9, 2010
After failing to recover remaining outstanding funds from SELFINA, Kiva has concluded that no additional repayments are likely. Accordingly, we have defaulted all remaining active loans from SELFINA and have officially closed our partnership with the organization.
SELFINA has been a longstanding partner of Kiva's for three years, successfully paying back over $757,000 in loans since the partnership began in May of 2007.
Like many microfinance institutions, SELFINA uses a standard measure of portfolio quality called PAR30: the percentage of the Portfolio at Risk representing loans overdue by 30 days or more. To calculate this ratio, SELFINA originally tracked their loans manually on pen and paper and consistently reported that their PAR30 percentage as less than 5%.
As part of an upgrade of its backend systems, SELFINA initiated a major program to transition from manual loan tracking to computerized management information systems. This process uncovered a number of problems. After thousands of SELFINA's loans had been entered into the computerized system and a portfolio report was run, the portfolio at risk greater than 30 days was calculated to be well above 50%. In addition, SELFINA's loan portfolio was found to include many loans overdue by more than 365 days.
In April 2010, Kiva was alerted to these potential problems related to the quality of SELFINA's loan portfolio. (It remains unclear whether SELFINA was aware of this considerably higher rate of delinquency when they previously reported their PAR30 metric.) Kiva immediately paused SELFINA in order to investigate further.
With the much higher levels of delinquency, SELFINA was unable to mobilize continued debt financing and faced significant strains on its cash position and liquidity. In the first two months immediately following the pause of SELFINA, Kiva received some of the outstanding lender repayments. While for various reasons we were not able to immediately forward those repayments onto lenders, we took receipt of the funds in order to maximize Kiva's recovery of lender funds. These funds will be released to lenders within the next few days.
Kiva has learned that since June of 2010, SELFINA has not been able to pay other creditors to the organization. In addition, they have been unable to consistently offer repeat loans to those clients who are repaying, and have faced serious strains upon their equity (the internal funds used by SELFINA to cushion the organization against financial shocks).
Kiva, along with SELFINA's other creditors, have spent the intervening months negotiating a standstill agreement with SELFINA. In a standstill, an organization is given a grace period on repaying principal due back to all creditors. This gives the microfinance institution time to allow it to get back on its feet and stand a better chance of repaying all creditors in full — including Kiva lenders.
Unfortunately, the standstill negotiations with SELFINA's other creditors have broken down for the second time. While Kiva continues to engage with SELFINA's other creditors, developments in this area may be slow in coming. At this point, even if a standstill is negotiated, Kiva lenders are unlikely to be repaid significant additional amounts of money in the next six months.
While the partnership is now closed, Kiva will continue to pursue recovery of funds on these loans and apply funds proportionally to lenders if and as funds are received. In the meantime, as mentioned earlier, all funds transferred from SELFINA to Kiva as repayments will be applied to lender accounts in full, within the next few days.
Kiva will continue to work with SELFINA and its other creditors in the hopes of entering a standstill agreement that maximizes the chances of recovery of lender funds. In addition, a standstill would allow borrowers repaying the organization on time to continue to access important financial services. Updates will be posted to SELFINA’s partner page.
Partner Description:
SELFINA’s mission is to increase the incomes and employment of poorer businesswomen in Tanzania as described below:
- To be a major provider of microfinance (micro-leasing finance) to Tanzanian women.
- To achieve operating levels that will ensure sustainability and expansion to cover all regions of Tanzania.
- To be a credible and reliable MFI partner to banks and other financial institutions.
SELFINA’s objectives are:
- To empower women economically by supporting their efforts in enterprise development as a financial intermediary.
- To Develop women’s capacity / capability to assertively and competitively participate in business in this male dominated economy.
- To facilitate growth of the beneficiaries as businesswomen through sharing best practices with other women and other organisations inside and outside the countryl
- To take part in poverty alleviation initiatives in the country
Performance data:
By September 2007 SELFINA had financed more than 9,200 women with credit worth US$7.5 million. The repayment rate has remained above 99%. More than 18,400 jobs have been created and 46,000 lives impacted. There has been improved standard of living and increased capacity to meet basic needs.
Products and services:
A financial lease that enables borrowers even without credit history and collateral (as is the case with women) to access the use of capital equipment or other items.
Examples of lease equipment offered by SELFINA:
- Agricultural Equipment: power tillers, maize milling machines, animal feed mixers, sunflower oil extraction machines.
- Catering equipment: coolers, freezers, refrigerators, cookers, etc.
- Tailoring equipment: manual and electrical sewing machines, embroidery sewing machines, overlocks, chain stitch machines, handlooms, etc.
- Secretarial equipment: photocopiers, computers and printers, typewriters, etc.
- Other equipment for nursery schools, carpentry, handicrafts, water pumping, office cleaning, transportation, etc.
Status Update - August 31, 2010
SELFINA remains paused since there has been no resolution of the situation. Kiva has not received payments owed from SELFINA for two months, which explains an increase in the delinquency rate. The STAR risk rating of 4 is no longer appropriate, but Kiva does not have sufficient information to update the rating at the present time. However, Kiva is in contact with SELFINA and its other creditors to monitor the MFI's progress to resolve the situation.
Status Update - June 16, 2010
SELFINA remains paused as we seek to better understand the current situation at the organization. Kiva is in dialogue with SELFINA management and other funders of SELFINA about these issues. While paused, SELFINA has sent payments to Kiva for funds due to Kiva lenders and collected from borrowers. Kiva has not applied these funds collected to lender accounts as we seek to fully understand the situation and any implications it may have for future repayment of SELFINA loans. This has led to the increase in delinquency rate.
Kiva has not changed SELFINA’s star rating due to uncertainty about the current situation. Prior to any reactivation on Kiva that would allow for additional fundraising by SELFINA, Kiva would have sufficient information to review SELFINA’s star rating and may increase or decrease the assigned rating based on our understanding of organizational strength.
Status Update - April 9, 2010
This organization has been paused pending a Kiva examination into SELFINA organizational issues.
Original Description Sero Lease and Finance Limited (SELFINA) was incorporated in April 2002 as an indigenous MFI to assist women to build a solid economic base for themselves and for their families as a practical way to achieve economic and social emancipation of women.
SELFINA has taken a lead role as a pioneer of micro-credit in Tanzania through Micro-Leasing, with particular attention to widows and young girls. Customs and traditions in Tanzania normally make it difficult for women to own land and assets. Many women are therefore considered not creditworthy by financial institutions in the country as they lack tangible collateral assets. This leads to poor financial support hence poor access to basic needs and services for women with low incomes, the problem being even more acute for widows -who have to single-handedly take care of their families.
After failing to recover remaining outstanding funds from SELFINA, Kiva has concluded that no additional repayments are likely. Accordingly, we have defaulted all remaining active loans from SELFINA and have officially closed our partnership with the organization.
SELFINA has been a longstanding partner of Kiva's for three years, successfully paying back over $757,000 in loans since the partnership began in May of 2007.
Like many microfinance institutions, SELFINA uses a standard measure of portfolio quality called PAR30: the percentage of the Portfolio at Risk representing loans overdue by 30 days or more. To calculate this ratio, SELFINA originally tracked their loans manually on pen and paper and consistently reported that their PAR30 percentage as less than 5%.
As part of an upgrade of its backend systems, SELFINA initiated a major program to transition from manual loan tracking to computerized management information systems. This process uncovered a number of problems. After thousands of SELFINA's loans had been entered into the computerized system and a portfolio report was run, the portfolio at risk greater than 30 days was calculated to be well above 50%. In addition, SELFINA's loan portfolio was found to include many loans overdue by more than 365 days.
In April 2010, Kiva was alerted to these potential problems related to the quality of SELFINA's loan portfolio. (It remains unclear whether SELFINA was aware of this considerably higher rate of delinquency when they previously reported their PAR30 metric.) Kiva immediately paused SELFINA in order to investigate further.
With the much higher levels of delinquency, SELFINA was unable to mobilize continued debt financing and faced significant strains on its cash position and liquidity. In the first two months immediately following the pause of SELFINA, Kiva received some of the outstanding lender repayments. While for various reasons we were not able to immediately forward those repayments onto lenders, we took receipt of the funds in order to maximize Kiva's recovery of lender funds. These funds will be released to lenders within the next few days.
Kiva has learned that since June of 2010, SELFINA has not been able to pay other creditors to the organization. In addition, they have been unable to consistently offer repeat loans to those clients who are repaying, and have faced serious strains upon their equity (the internal funds used by SELFINA to cushion the organization against financial shocks).
Kiva, along with SELFINA's other creditors, have spent the intervening months negotiating a standstill agreement with SELFINA. In a standstill, an organization is given a grace period on repaying principal due back to all creditors. This gives the microfinance institution time to allow it to get back on its feet and stand a better chance of repaying all creditors in full — including Kiva lenders.
Unfortunately, the standstill negotiations with SELFINA's other creditors have broken down for the second time. While Kiva continues to engage with SELFINA's other creditors, developments in this area may be slow in coming. At this point, even if a standstill is negotiated, Kiva lenders are unlikely to be repaid significant additional amounts of money in the next six months.
While the partnership is now closed, Kiva will continue to pursue recovery of funds on these loans and apply funds proportionally to lenders if and as funds are received. In the meantime, as mentioned earlier, all funds transferred from SELFINA to Kiva as repayments will be applied to lender accounts in full, within the next few days.
Kiva will continue to work with SELFINA and its other creditors in the hopes of entering a standstill agreement that maximizes the chances of recovery of lender funds. In addition, a standstill would allow borrowers repaying the organization on time to continue to access important financial services. Updates will be posted to SELFINA’s partner page.
Partner Description:
SELFINA’s mission is to increase the incomes and employment of poorer businesswomen in Tanzania as described below:
- To be a major provider of microfinance (micro-leasing finance) to Tanzanian women.
- To achieve operating levels that will ensure sustainability and expansion to cover all regions of Tanzania.
- To be a credible and reliable MFI partner to banks and other financial institutions.
SELFINA’s objectives are:
- To empower women economically by supporting their efforts in enterprise development as a financial intermediary.
- To Develop women’s capacity / capability to assertively and competitively participate in business in this male dominated economy.
- To facilitate growth of the beneficiaries as businesswomen through sharing best practices with other women and other organisations inside and outside the countryl
- To take part in poverty alleviation initiatives in the country
Performance data:
By September 2007 SELFINA had financed more than 9,200 women with credit worth US$7.5 million. The repayment rate has remained above 99%. More than 18,400 jobs have been created and 46,000 lives impacted. There has been improved standard of living and increased capacity to meet basic needs.
Products and services:
A financial lease that enables borrowers even without credit history and collateral (as is the case with women) to access the use of capital equipment or other items.
Examples of lease equipment offered by SELFINA:
- Agricultural Equipment: power tillers, maize milling machines, animal feed mixers, sunflower oil extraction machines.
- Catering equipment: coolers, freezers, refrigerators, cookers, etc.
- Tailoring equipment: manual and electrical sewing machines, embroidery sewing machines, overlocks, chain stitch machines, handlooms, etc.
- Secretarial equipment: photocopiers, computers and printers, typewriters, etc.
- Other equipment for nursery schools, carpentry, handicrafts, water pumping, office cleaning, transportation, etc.
Status Update - August 31, 2010
SELFINA remains paused since there has been no resolution of the situation. Kiva has not received payments owed from SELFINA for two months, which explains an increase in the delinquency rate. The STAR risk rating of 4 is no longer appropriate, but Kiva does not have sufficient information to update the rating at the present time. However, Kiva is in contact with SELFINA and its other creditors to monitor the MFI's progress to resolve the situation.
Status Update - June 16, 2010
SELFINA remains paused as we seek to better understand the current situation at the organization. Kiva is in dialogue with SELFINA management and other funders of SELFINA about these issues. While paused, SELFINA has sent payments to Kiva for funds due to Kiva lenders and collected from borrowers. Kiva has not applied these funds collected to lender accounts as we seek to fully understand the situation and any implications it may have for future repayment of SELFINA loans. This has led to the increase in delinquency rate.
Kiva has not changed SELFINA’s star rating due to uncertainty about the current situation. Prior to any reactivation on Kiva that would allow for additional fundraising by SELFINA, Kiva would have sufficient information to review SELFINA’s star rating and may increase or decrease the assigned rating based on our understanding of organizational strength.
Status Update - April 9, 2010
This organization has been paused pending a Kiva examination into SELFINA organizational issues.
Original Description Sero Lease and Finance Limited (SELFINA) was incorporated in April 2002 as an indigenous MFI to assist women to build a solid economic base for themselves and for their families as a practical way to achieve economic and social emancipation of women.
SELFINA has taken a lead role as a pioneer of micro-credit in Tanzania through Micro-Leasing, with particular attention to widows and young girls. Customs and traditions in Tanzania normally make it difficult for women to own land and assets. Many women are therefore considered not creditworthy by financial institutions in the country as they lack tangible collateral assets. This leads to poor financial support hence poor access to basic needs and services for women with low incomes, the problem being even more acute for widows -who have to single-handedly take care of their families.
Repayment Performance on Kiva
| This Lending Partner | All Kiva Partners | ||
| Start Date On Kiva | Nov 17, 2007 | Oct 12, 2005 | |
|---|---|---|---|
| Total Loans | $1,184,825 | $2,061,712,330 | |
| Amount of raised Inactive loans | $0 | $379,125 | |
| Number of raised Inactive loans | 0 | 306 | |
| Amount of Paying Back Loans | $0 | $151,582,105 | |
| Number of Paying Back Loans | 0 | 180,570 | |
| Amount of Ended Loans | $1,184,825 | $1,864,456,995 | |
| Number of Ended Loans | 2,687 | 2,517,148 | |
| Delinquency Rate | 0.00% | 11.58% | |
| Amount in Arrears | $0 | $10,582,819 | |
| Outstanding Portfolio | ($31) | $91,420,687 | |
| Number of Loans Delinquent | 0 | 34,389 | |
| Default Rate | 12.57% | 1.83% | |
| Amount of Ended Loans Defaulted | $148,940 | $34,072,925 | |
| Number of Ended Loans Defaulted | 866 | 91,307 | |
| Currency Exchange Loss Rate | 0.00% | 0.47% | |
| Amount of Currency Exchange Loss | $0 | $12,915,654 | |
| Refund Rate | 0.91% | 0.55% | |
| Amount of Refunded Loans | $10,775 | $11,263,070 | |
| Number of Refunded Loans | 26 | 9,868 |
Loan Characteristics On Kiva
| This Lending Partner | All Kiva Partners | ||
| Loans to Women Borrowers | 100.00% | 78.52% | |
|---|---|---|---|
| Average Loan Size | $440 | $393 | |
| Average Individual Loan Size | $441 | $585 | |
| Average Group Loan Size | $675 | $1,914 | |
| Average number of borrowers per group | 3 | 8.3 | |
| Average GDP per capita (PPP) in local country | $1,900 | $5,593 | |
| Average Loan Size / GDP per capita (PPP) | 23.18% | 7.03% | |
| Average Time to Fund a Loan | 0.88 days | 9.14 days | |
| Average Dollars Raised Per Day Per Loan | $500.43 | $43.02 | |
| Average Loan Term | 9.5 months | 11.5 months |
Journaling Performance on Kiva
| This Lending Partner | All Kiva Partners | ||
| Total Journals | 2,048 | 1,228,670 | |
|---|---|---|---|
| Journaling Rate | 73.65% | 41.93% | |
| Average Number of Comments Per Journal | 0.07 | 0.02 | |
| Average Number of Recommendations Per Journal | 9.01 | 0.55 |
Borrowing Cost Comparison (based on 2009 data)
| This Lending Partner | Median for MFI's in Country | All Kiva Partners | ||
| Average Cost to Borrower | N/A | 21.00% PY | 27.12% PY | |
|---|---|---|---|---|
| Profitability (return on assets) | N/A | 0.2% | -1.71% | |
| Average Loan Size (% of per capita income) | N/A | 134.00% | 0.00% |
Country Fast Facts
- Country:
- Tanzania
- Capital:
- Dodoma
- Official Language:
- Kiswahili (official), Kiunguja, English (official), Arabic, many local languages
- Population:
- 49,639,138
- Avg Annual Income:
- $1,900
- Labor Force:
- agriculture: 80%, industry and services: 20%
- Population Below Poverty Line:
- 28.20%
- Literacy Rate:
- 70.60%
- Infant Mortality Rate (per 1000):
- 43.47 deaths
- Life Expectancy:
- 60.07 years