In a recent announcement, the Tanzanian Minister for Finance and Planning, Mwigulu Nchemba, unveiled the government's plans to revive the Export and SMEs Credit Guarantee Schemes. These schemes aim to address the crucial issue faced by exporters who often struggle to secure adequate financing. Minister Nchemba presented the government's budget estimates in Parliament, outlining a significant investment of 600 billion Tanzanian Shillings (TZS), with the Bank of Tanzania (BoT) contributing 280 billion TZS and the World Bank (WB) providing a concessional loan of 150 million US dollars.
The primary objective of revitalizing the export and SMEs credit guarantee scheme is to strengthen production, boost exports, and reduce reliance on imports. Minister Nchemba emphasized the government's commitment to collaborate with key stakeholders in sectors such as agriculture, livestock, fisheries, manufacturing, and processing industries. This collaborative approach aims to ensure increased productivity and successful implementation of the scheme.
A major obstacle faced by exporters has been the lack of a reliable and accessible source of finance to support their production and export activities. Existing procedures and conditions set by commercial banks often make it challenging for exporters to obtain loans due to stringent collateral requirements. In response, the government introduced the Export Credit Guarantee Scheme (ECGS) and the Small and Medium Enterprises Credit Guarantee Scheme (SME-CGS) in the mid-2000s. These initiatives were specifically designed to enable borrowers with limited collateral to access loans through financial institutions, with the government providing guarantees through the Bank of Tanzania.
The ECGS and SME-CGS were established in 2003 and 2005, respectively, with the overarching goal of promoting economic development. These schemes encourage high-value exports, including horticulture, floriculture, and other value-added products, which are expected to generate employment opportunities and increase foreign exchange earnings. Moreover, they aim to support the growth of Small and Medium Enterprises (SMEs), recognizing their significant role in the Tanzanian economy. By creating an enabling environment and facilitating access to financial resources, the government aims to foster the expansion of SMEs, in line with broader national and international initiatives focused on promoting economic growth and poverty reduction.
However, despite the establishment of these credit guarantee schemes, the Tanzania Exporters Association (TANEXA) has reported ongoing challenges in accessing loans, indicating that the schemes have not been operating to their full potential. Acknowledging these concerns, the government is determined to revitalize the schemes and address the obstacles faced by exporters. This commitment seeks to empower and support exporters, ultimately fostering economic growth and creating a favorable environment for their success.
The revival of the Export and SMEs Credit Guarantee Schemes is expected to unlock the untapped potential of Tanzanian exporters. By ensuring affordable access to financing and mitigating the collateral-related challenges faced by borrowers, these schemes aim to invigorate the country's export sector. In the long term, this will reduce Tanzania's dependence on imports and strengthen its economy.
As the government's plans take shape, exporters can anticipate improved access to financial resources, enabling them to expand their businesses, create employment opportunities, and make significant contributions to the country's foreign exchange earnings. The revival of the Export and SMEs Credit Guarantee Schemes marks a promising new chapter for Tanzania's export-oriented industries, instilling confidence and fostering growth amidst persistent challenges.