Global Development Institute Blog

An innovative ‘revolving motorcycle project’ set up by the Tanzanian Federation of the Urban Poor and supported by an academic at The University of Manchester is helping a group of young men in Arusha find new opportunities.

Dr Nicola Banks, of the Global Development Institute (GDI) has been working in Arusha, northern Tanzania, researching the social impacts of youth unemployment. After seeing first-hand how young people were struggling to earn a living, Nicola decided to do something to help.

Youth unemployment is a big problem in Tanzania. In the low-income community where Dr Bank’s research is based, around 70% of young men lack stable jobs.

One of the most popular ways for young men to earn a living is by becoming a Piki Piki (motorbike taxi) driver. But most drivers do not own their own motorcycles outright, instead spending a majority of their weekly earnings on renting their vehicles. This can cost around 6000 Tanzanian shillings a day (£1.85), leaving the drivers with very little money to live on, let alone save for longer term goals.

Dr Banks, an ESRC Future Research Leader at GDI, learned about the value of revolving loan funds through being exposed to the work of Shack/Slum Dwellers International whose Tanzanian affiliate, the Tanzania Federation for the Urban Poor, supported by the NGO, Centre for Community Initiatives is involved with her research. It was easy to share the idea with a local Piki Piki driver who was struggling to save money for university.

She said: “My research in Arusha shows above all that life is incredibly tough. It is an ongoing struggle for young people. I was lucky enough to meet an inspiring young man called Bakari who was well educated, very hardworking and had grand plans. But I was frustrated after the meeting as I knew unless there was a radical change in his life, there wasn’t going to be anyway he could meet those plans.”

Working with the SDI Federation in Tanzania and another NGO Tamasha Vijana who specialise in participatory development with young people, Bakari and some of his fellow Piki Piki drivers designed a revolving loan fund drawing on the capacities of the organized urban poor especially the women’s federation leadership. SDI’s experience with revolving loan funds has developed from its commitment to community empowerment and the first schemes were designed by women pavement dwellers living in Mumbai in the 1980s. Such designs can be understood as blending asset transfer programmes, traditional savings groups and social enterprise models. They are now illustrating a new and innovative model for working with young people in Tanzania which builds on similar schemes elsewhere in east Africa such as motorcycle group in Jinja recently visited by GDI students on fieldwork.

Along with Executive Director of the GDI, Professor David Hulme, Dr Banks personally donated the group’s first motorcycle. Now the project is up and running, the group has purchased their second motorbike and are close to buying their third. Long term, the scheme has the potential to triple the take-home income of the drivers, allowing them to plan and invest for the future.

Dr Banks said: “The concept of the savings group is simple. The first member receives a motorcycle and puts the 6,000 shillings usually spent on rental into a group savings account instead. Once there is enough money to purchase a second bike, two drivers then save until there is enough to buy a third and so on.

“Once all six members of the savings group own their own bike they continue to save until a seventh motorcycle is bought. This motorcycle is passed onto another savings group for the process to start again, potentially making it a scalable and sustainable business model.”

Bakari said: “I have always struggled with my life, but life always goes on. I have never stopped struggling and that is why I joined this project. But now, in my community, I am a role model. I am confident, I am no longer afraid of life. My life is my own responsibility, and not that of anyone else.” These sentiments echo those of the Federation who believe that development will be secured through self-reliant projects that build the strength of the community and enable them to engage with the government to get the infrastructure and services they need to advance their needs and interests. And this includes seeking more capital to replicate schemes such as this through the Federation’s loan fund, Jenga.

Every year an estimated 800,000 young men and women enter the labour market in Tanzania. These include school and college graduates and people who have migrated to urban areas from the countryside. The University has produced a short film about the scheme, its impact on the community and its potential for the future.