By Aisia Rweyemamu ,
NORWEGIAN Church Aid (NCA) Tanzania in partnership with Vision Fund Tanzania (VTF) has launched a two-year pilot project aimed at expanding financial inclusion for underserved communities through an innovative blended finance model.
The initiative, ‘ titled Unlocking Finance for Underserved Communities through an Innovative Blended Finance Model,’ was unveiled yesterday in Dar es Salaam following the signing of a Memorandum of Understanding between the two organisations.
Speaking at the launch over the weekend in Dar es Salaam, NCA Country Director Berte Marie Ulveseter said limited access to affordable credit remains a persistent barrier for many small entrepreneurs, particularly in rural areas.
“Across communities, many people have strong business ideas, but one challenge keeps coming up again and again—they do not have access to affordable loans,” she said.
She explained that conventional banking requirements such as collateral, credit history and stable income exclude a large number of small-scale entrepreneurs, forcing many to rely on costly informal lending or remain trapped in subsistence-level operations.
“We are introducing a different approach. Through this project, we are bringing together donor support, financial institutions and business development services to make lending possible for people who are usually left out,” she said.
Ulveseter added that the project will ensure loans are offered at affordable, single-digit interest rates, enabling entrepreneurs to expand their businesses without being overburdened by debt. Beyond financing, the initiative will also provide training, mentorship and business support services to improve enterprise management and loan repayment capacity.
The pilot will initially be rolled out in Morogoro and Kigoma, targeting at least 200 entrepreneurs, with a strong focus on women and youth.
She emphasized that the project is designed to be sustainable beyond its initial phase. “This is not a one-off intervention. As loans are repaid, the funds will be recycled to support more beneficiaries, creating a self-sustaining financing system over time,” she said.
Chief operations officer of Vision Fund Tanzania, Deogratius Siria, said the partnership has established a loan pool of over 200m/- to expand access to affordable credit for underserved borrowers.
He noted that both organisations contributed equally to the fund, combining financial resources and operational expertise to address structural barriers within Tanzania’s financial sector.
“Small and Medium Enterprises continue to face high interest rates, strict collateral requirements and complex procedures, which limit their access to formal banking services,” he said.
“By offering loans at single-digit interest rates, this partnership responds to the urgent need for affordable financing, strengthening financial inclusion and supporting sustainable economic growth.”
Siria added that the collaboration demonstrates how development partners and financial institutions can work together to deliver practical, scalable solutions that empower communities while maintaining transparency and sustainability.
Providing an overview of the project, NCA programme manager Sarah Shija said the blended finance model combines donor funding, private sector investment and business support to reduce lending risks and improve access for low-income producers.
She explained that the initiative incorporates a guarantee fund to cushion financial institutions against potential losses, concessional capital to lower lending costs, and interest subsidies to make loans more affordable. It also operates a revolving loan mechanism, allowing repaid funds to be reinvested in new borrowers.
Additionally, beneficiaries will receive training and mentorship to strengthen their business skills and ensure long-term success.
The initiative underscores a growing commitment among development actors to promote inclusive financing solutions that not only expand access to credit but also build resilient and sustainable livelihoods across Tanzania.
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