According to a recent report by the Daily News, in an effort to provide assistance to the Tanzania Investment Bank (TIB) in their efforts to develop a line of credit for farmers, the Bank of China has opened negotiation talks with the Tanzanian bank.
In an interview that was reported by the Daily News, the Deputy Minister for Finance, Omar Yussuf Mzee, indicated the banks intention to begin borrowing from the Chinese bank in the near future.
“The TIB will soon start borrowing a leaf from the Chinese Bank on the best practices of extending credit to farmers to boost the country's agriculture production,” he said.
Mr. Mzee went on to explain that the Chinese bank is experienced in the practice of extending loans to farmers and will, therefore, likely help to improve the services that the TIB is able to offer to farmers in the region.
According to Mr. Mzee, the government is currently working to alleviate some of the effects of the economic crisis both through the development of agriculture and by addressing various issues impacting the sector.
In order to address the issue of cost, the minister explained that a portion of financing for the Tanzania agricultural sector was scheduled to be provided through an additional fiscal stimulus package, which would also help to reduce the overall budget deficit.
“As a way to improve the balance of payment,” Mr. Mzee explained in the Daily News, “the scope is to invest in some potential regions where there are favorable climatic conditions for agriculture.”
Currently, agriculture modernization or green revolution processes are already available to farmers in order to provide them with modern agriculture equipment and techniques.
In addition, the minister went on to indicate additional modernization efforts including providing farmers with fertilizers, high yield seeds and expanding farming land in several regions.
According to Mr. Mzee, the government’s decision to implement a crisis response to this issue was made, in part, in an effort to ensure that that the recent progress that has been made over the past few years in the implementation of poverty reduction and growth strategy (MKUKUTA) was not reversed.
According to the Daily News report, the National Assembly of Tanzania has approved a budget that will provide the economy with a fiscal stimulus package, in which the total expenditures are expected to increase to 28.3 percent of GDP, thus lowering the budget deficit to less than 4.0 percent.
“Though the intended fiscal stimulus could not be fully executed, but right now the developed world economy is making an about turn as the demand for the country's cash crops has started shooting up, hence the need to make a quantum leap in agriculture,” said the minister, “This will lead to the stockpile of our cash crops fetching market and hence boosting the country's balance of payment which might reduce the budget deficit even further.”
In addition to these factors, Mr. Mzee went on to explain that another mitigating factor was Foreign Direct Investment to Tanzania
“Tanzania continues to attract investors in the country,” said Mr. Mzee, “This is another source of revenue for the country which can mitigate the country's budget deficit.”