Dar es Salaam, The Tanzanian government has introduced a new medium-term strategy (2023/2027) for the Tanzania Agricultural Development Bank (TADB), unveiling three innovative financial products aimed at expanding agricultural finance accessibility and elevating farmers' guarantees by up to 75 percent.
The newly unveiled products are geared towards fostering lending initiatives in collaboration with financial institutions. This strategic partnership model includes wholesale lending and co-financing mechanisms, intending to stimulate agricultural projects across the nation. Additionally, TADB has revamped its Small Holder Guarantee Scheme (SCGS), amplifying guarantees provided to farmers from 50 percent to 75 percent. This enhancement aims to promote projects led by women, youth, and initiatives focusing on climate-smart agriculture in Tanzania.
Speaking at the official launch event, Mr. Frank Nyabundege, the Managing Director of TADB, announced the receipt of 80 million euros (equivalent to Sh 212 billion) in concessional funding from the France Development Agency (AFD), facilitated by the government. This funding is dedicated to bolstering the agricultural sector in Tanzania.
The new co-financing lending approach serves a dual purpose. It aims to bolster TADB's pivotal role as the apex agricultural development bank while catalyzing other banks and financial institutions to increase their financial backing for agriculture. Mr. Nyabundege emphasized the significance of the Small Holder Guarantee Scheme (SCGS), which, owing to its extensive branch network, enables partner financial institutions to effectively reach smallholder rural farmers, thereby addressing crucial bottlenecks in the agricultural value chain.
Through these financial products, TADB aims to provide comprehensive technical and financial support to smallholder farmers and agricultural Small and Medium Enterprises (agri-SMEs) in vital areas. The bank is dedicated to enhancing the participation of women and youth in agriculture. Presently, 46 percent of women and 44 percent of youth are involved in the sector. Additionally, TADB is committed to strengthening its capabilities through strategic partnerships, mobilizing financial resources for agricultural financing, expanding service outreach, enhancing governance, ensuring compliance, efficient risk management, and investments in both human resources and technological systems.
Mr. Elijah Mwandumbya, the Deputy Permanent Secretary for Economic Management at the Ministry of Finance, emphasized the government's recognition of the significance of the crop, livestock, and fisheries subsectors in poverty alleviation and food security. The government has underscored its dedication to the sector by allocating substantial funds to agricultural programs. He highlighted the government's directive to reduce interest rates to single digits across all financial institutions, coupled with various monetary, fiscal, tax, and regulatory incentives for agriculture. These initiatives aim to amplify financial inclusion, especially in rural areas, where a majority of the agricultural community resides.
Addressing the event, Ms. Celine Robert, the Country Manager of the AFD, acknowledged the bank's efforts to empower women, particularly in the agriculture sector. Despite progress, she emphasized the need for continued efforts in this regard. France reaffirmed its commitment to support these initiatives. AFD expressed its eagerness to collaborate closely with the Tanzanian government and TADB to address challenges in the agriculture sector, with a specific focus on promoting opportunities for women and youth.