In a bid to enhance the agricultural sector, the Bank of Tanzania (BoT) has urged financial institutions to provide affordable loans to farmers. Ms. Sauda Msemo, the Deputy Governor of BoT, highlighted the challenges faced by farmers due to high-interest rates on loans. Speaking at the Agri-finance Training Programme organized by the Tanzania Agricultural Development Bank (TADB) in collaboration with BoT Academy in Dar es Salaam, Ms Msemo stressed the need for accessible loans to support the agricultural industry.
Despite a slight decrease in lending rates to an average of 15.56% in July from 16.02% in June, according to central bank data, farmers still find it difficult to afford loans. The agricultural sector contributes significantly to the country's Gross Domestic Product (GDP), accounting for 26.2%. Lowering interest rates for farmers could significantly boost this vital sector.
Ms Msemo emphasized the importance of training financial institutions to enhance their technical skills. She pointed out that insufficient technical expertise in areas such as product design, transaction structuring, and portfolio risk management acts as a barrier to financing interventions in the agriculture sector.
BoT has allocated funds amounting to 1.0 trillion shillings for banks and financial institutions to lend to farmers at an interest rate of less than 10%. This initiative aims to support the growth of credit and investments in agriculture, benefiting smallholder farmers and agricultural Small and Medium Enterprises (agri-SMEs).
TADB's Managing Director, Frank Nyabundege, highlighted the objective of the training program, which focuses on producing innovative professionals in agricultural finance. He mentioned that the program would strengthen the technical capabilities of partner banks, ultimately facilitating increased provision of agricultural financing solutions to the agriculture sector.
As part of the initiative, 20 partner banks, including CRDB, Absa Tanzania, NMB, Stanbic Tanzania, NBC, Azania, Tanzania Commercial Bank, Finca Microfinance, Equity, and People’s Bank of Zanzibar, will undergo a one-week fast-track pilot training program. The training aims to simplify agri-loan procedures, making it easier for farmers to access the financing they need for their agricultural activities. Additional banks participating in the program include Maendeleo Bank, Kilimanjaro Cooperative Bank, Uchumi Commercial Bank, Tandahimba Community Bank, and Mufindi Community Bank.