Loan Purpose

During the research period, CRS and Floresta gathered data on which types of loans were most prevalent within VSLA groups in Sierra Leone and Tanzania.  While both organizations recorded information on agriculture, business, education, health, and household improvement loans, only CRS gathered data on start-up, consumption, and household food loans.  Floresta recorded information on loans for personal use whereas CRS did not.  The overall results of the data analysis showed that most of the loans taken out by members of both CRS SILC and Floresta VICOBA groups were business loans primarily for agricultural trading and microenterprise development.  The next largest categories of loans accessed by group members were for agricultural, education and health purposes.  The amount of household food loans taken out by members in CRS SILC groups was significant with 10% of total loan value.  More details on the results from CRS and Floresta can be found below.

Sierra Leone Results

In Sierra Leone, a total of 1,671 loans were accessed between the months of March 2009 and March 2010. The total value of the loans (as of March 2010) was $51,607. The pie chart below shows the proportion of spending per loan type.

  • Business loans make up 48 percent  of total loan value, and are primarily used to buy and sell agricultural produce such as palm oil, rice, cocoa, and coffee. In addition, loan recipients utilize business loans for imported food items and clothing.
  • Agricultural loans account for 25 percent of total loan value and are primarily utilized to purchase improved seed varieties and tools, rehabilitate cocoa and coffee plantations, and hire labor (especially for women farmers).
  • Education loans are 12 percent of the total loan value and are used to purchase school uniforms, learning materials and other school-related items. 10 percent of total loan value was spent on household food.
  • Most of these loans are accessed between June and September (the “hungry season” in Sierra Leone). For more information on loan seasonality, refer to the Loans and Seasonality page.
  • Starting up petty trading operations accounts for 2 percent of total loan value. In CRS’s operating areas, petty trading is usually conducted with agricultural produce.
  • Health loans also make up 2 percent of total loan value. These loans are utilized to pay for medicinal drugs as well as hospital and doctor visits.
  • Household improvement is 1 percent of total loan value, typically to buy furniture, repair homes, and other related activities.


Tanzania Results:

A total of 682 loans were accessed between April 2009 and March 2010, with a total value (as of March 2010 ) of $75,702. The pie chart below shows the proportion of spending per loan type.

  • Business loans were 60 percent of all loans taken. They are typically used for microenterprise development and agricultural trading in Tanzania.
  • Loans for education purposes make up 20 percent.  Similar to Sierra Leone, education loans are used to purchase of school uniforms and materials.
  • Agricultural loans are 12 percent and are typically spent on agricultural inputs and livestock, as well as the development of forest tree nurseries.
  • Finally, 5 percent of the loans were used for health purposes, and 3 percent for household improvements.

Floresta does not collect data on start-up and household food loans.

(For more information on the different loan types, please refer to the Research page.)

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