The Tanzania National Microfinance Bank (NMB) has set aside at least TZS500b to provide credit for agriculture development in the country over the next 5 years.
This is part of the NMB five-year strategy aimed at revamping agricultural financing in Tanzania. This strategy, named “AgriBiashara” (“AgriBusiness”), was launched on August 3rd 2016.
The facilitated access to credit is expected to aid farmers in achieving improved cultivation practices, higher yields and ultimately increased household income while increasing the export volumes of agriculture products.
Speaking at the launch of the AgriBiashara business plan, NMB Managing Director, Ineke Bussemaker, said the bank recognizes the important role the agricultural sector plays in the Tanzanian economy.
She also added that NMB has taken deliberate efforts to expand the financing and designing products and services targeting at developing the sector.
“Access to credit has been a major stumbling block in allowing players in agriculture to be employed in the sector and its value chain. The new plan and structure of agribusiness financing which we are launching today, will provide an innovative solution in access to financing in agricultural sector,” Ineke concluded.
Agriculture is Tanzania’s economy mainstay, contributing USD 13.9bn to its GDP (nearly 30%) and 67% to total employment during 2014.
The Tanzanian agriculture value-added net output increased by 61% during the period 2009–2014, from USD 8.6bn to USD 13.8bn, exceeding by 5% the growth of value-added agricultural output in Sub-Saharan Africa during the same period.
Tanzania Agriculture Financing
According to the National Agriculture Policy of Tanzania, agricultural financing is an important element in the modernization and development of the sector.
However, public and private sector agricultural financing in Tanzania is inadequate. Unavailability of long-term financing has limitations in terms of investment for medium and large-scale farming.
As a result, Tanzanian agriculture is characterized by smallholder producers who are unable to borrow from financial institutions due to lack of collateral.
“This calls for concerted efforts to improve this situation and make agriculture more attractive for investment by all farmers based on their scale of production,“ the Policy indicates.