Microcredit scheme benefits coastal communities and marine conservation in Tanzania

Building strong and lasting local management of natural resources requires a combination of many different elements.

Various incentives can be put in place; for example, it is now common to see microfinance schemes embedded in community conservation projects. In East Africa, Village Savings and Loans Associations, also known as Village Community Banks, are particularly popular.

In the south of Zanzibar’s Pemba Island, Tanzania, dozens of community savings-based microfinance groups were established a few years ago by rural development projects, and continue to function today without the need for ongoing external support.

The sustainability of this approach was particularly interesting to Fauna & Flora International (FFI). We were on the lookout for a model that offered a lasting, community-based incentive tied to positive conservation actions, and which could be replicated when local initiatives scale up.

We also found inspiration in the Community Environment Conservation Fund, a model aiming to address livelihood-specific challenges through microcredit schemes. At that time, Pemba’s temporary octopus closures were providing encouraging conservation results and community support for the closures was growing.

In partnership with Mwambao Coastal Community Network and with support from the UK government’s Darwin Initiative and from Arcadia – a charitable trust of Lisbet Rausing and Peter Baldwin – we began by forming five groups, bringing together a total of 132 individuals, about half of whom were women and half men. Each group received seed funding to distribute in the form of loans to their members.

Working with GreenFi – an organisation helping our project and the community groups to start and manage eco-credit – we initiated the pilot. The scheme was given the local acronym Mkuba, which stands for Mfuko wa Kutunza Bahari (“Fund to care for the sea” in Kiswahili).

Borrowers have to commit to actions that contribute to effective implementation of local conservation measures; some join a daily patrol to increase surveillance efforts, others plant mangroves in areas suitable for recovery. Consultation with the fishers committee ensures the proposed actions are well-suited to supporting the local management plan.

Almost nine months since inception, a review of the model has revealed interesting first results and shed light on areas requiring attention. Many aspects are already truly encouraging.

More than 150 loans have been granted and repayments are near 100%. Those engaged in diverse marine-related livelihoods are all reflecting positively on the scheme and have established a clear link with the local management plan, resulting in broader understanding and active engagement with it. Patrols have almost tripled since group members became involved, strengthening compliance and safety within the closed area.

New businesses often struggle to succeed; however, an initial analysis showed a third of the borrowers evaluated their businesses as “good”, with the majority of the remainder as “fair” – just two individuals judged their businesses as “poor”.

Creating a community-run credit scheme has raised the profile of local marine management and demonstrated to many that it can translate into economic benefits, bringing new opportunities to an area where access to credit is usually difficult or costly.

Running this Mkuba is not without its challenges though.

The purpose of the loans must be scrutinised to ensure the scheme continues only to support environmentally sound livelihood activities and does not create perverse incentives.

If the opening period after a first closure brings positive results (primarily meaning more and bigger octopuses caught), a community is usually eager to repeat it. Encroachments in the temporarily closed area or diverging views about the closure are common, however, especially in communities with little experience of collective actions.

When agreeing to stop fishing a portion of their fishing grounds, villagers either face a noticeable reduction in their catches or need to go fishing further away, thus reducing time available for other activities. This represents a significant effort for those households that are strongly dependent on fishing for their daily subsistence and income.

Overcoming these issues requires building broader support within the relevant community and beyond. Such support can result from better understanding of the rationale behind closing an area, increased individual engagement in decisions and high levels of compliance (one is unlikely to comply if many others do not).

There is still unmet demand from other groups awaiting seed funding, but with Mwambao and GreenFi we want to ensure processes are streamlined before scaling up. Conditions of access to loans should be regularly reviewed and updated to best fit with evolving needs – something the fishers committee is undertaking with our support.

There is potential for technology to support the scheme too. GreenFi is developing an app for use with smartphones or tablets to help keep track of groups’ use of the funds and later to offer a way for external funders to contribute to this investment.

Once consolidated, we aim to trial the scheme in communities in more challenging situations to see how it can help bring sustainable local management to those areas where conservation measures are most urgently needed.