Islamic Microfinance in Tanzania


11 April 2011


Tanzania eco-Volunteerism’s (TeV) honey project is a community development program providing rural poor communities of Tanzania with an innovative microfinance model that is in complete compliance with Islamic guidelines for business and finance. TeV’s microfinance activities are sustainable, scalable, and market-driven and include interest-free loans (qard hasan), savings (wadiah), and insurance (takaful).


TeV’s mission is to invest in communities by introducing sustainable beekeeping. The investment of beehives benefits a large number of poor at the grassroots level who are involved in apiculture. TeV empowers communities by offering each family two Langstroth Hives (beehives) on an agro-based, qard hasan loan. Each loan is interest or riba-free and does not require any form of physical collateral or al-rahn. Each family will harvest honey and will benefit from a revenue stream based on fair-market-value sales to TeV.


TeV will then export the raw honey to wholesalers at a profit, capitalizing on market opportunities.


Each family will have two years to pay back the qard hasan to TeV. The revenue stream that each family will produce from selling their harvested honey will be partitioned into three segments: 25% will translate into loan repayments to TeV, 25% will contribute to the cooperative farming savings fund (wadiah) called Asali Saccos, and 50% will be new cash at the disposal of the participant families. Earnings per family will further increase if they decide to invest their savings into more Langstroth Hives to produce more honey. Furthermore, TeV will insure (micro-takaful) families’ hives to mitigate potential financial harm impacting the participants. The cost of insurance is included in the cost of the initial purchase.


TeV focuses on capacity building of farmer communities in addition to offering products. The principles of self-help and the trust within the communities are key to economic and socio-cultural freedom for Tanzania’s millions of poor Muslims.


TeV intends to have the following impact through this program:


  • Reduce poverty – income from honey sales enables families to reduce poverty through access to more spending on education and health services.
  • Empower women – interest-free loans will be distributed to the matriarchs of participant families. TeV will empower women by enhancing their contribution to household income and assets, encouraging independent control over decisions that affect their lives.
  • Conserve the environment – revenue from the Langstroth Hives reduces the dependency on natural resources like cutting trees to sell as fire wood and charcoal.
  • Empower communities- each community is given considerable independence for managing its own operational apiaries, such that each one remains decentralized as encouraged in Islamic teachings
  • Inculcate a culture of savings – one quarter of the revenue stream earned from the sale of their honey to TeV will be allotted to a savings account called Asali Saccos, a cooperative farming program that encourages a culture of savings amongst beekeeper families. Each year participants will be able to invest their savings to purchase more Langstroth Hives.



TeV’s approach to poverty alleviation is more inclusive than the conventional one, as it provides poor, rural Tanzanians with a medium of revenue through the implementation of an innovative, niche business model that does not emulate the traditional micro-finance concept. By enabling communities to participate and own new technology in beekeeping enhances financial, social, and environmental sustainability. TeV provides fair-market-value prices to their micro-suppliers of honey.


The use of the “Langstroth Hive” in Tanzania is also an innovation. Although these hives were invented over 150 years ago, many Tanzanian beekeepers are unfamiliar with its technology. Too many local beekeepers rely on inefficient bark beehives which yield lower amounts of honey in comparison. Moreover, the quality of honey produced from the uneconomical bark method is inferior to the quality of honey produced by Langstroth Hives. This is because that method allows wood shavings to enter the harvested honey. TeV’s Langstroth Hives will represent a technical shift in industry operations.




TeV’s interest-free loans to its participants are cyclic in nature; they are disbursed to participants, returned to TeV, and disbursed again. TeV’s advocacy of financial inclusion and entrepreneurship is coated by the principle of risk-sharing through its partnership with Tanzania’s rural poor communities. In order to reduce repayment vulnerability families are grouped in clusters of 10 owning 20 beehives to enable repayment through peer participation. Furthermore, TeV further reduces the likelihood of default by only demanding repayment when revenue from harvested honey is constant and by spreading repayment over two years.


In order to reach clients, TeV has devised a masjid-wide approach; depending on each community’s Imam to guarantee a potential participant’s honesty and integrity. Imams form the core group in the social collateral model.


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