Posted on April, 22, 2016 at 10:32 am
By Rosemary Mirondo
Dar es Salaam — Tanzania Agricultural Development Bank (TADB) will issue loans to over 1000 young Tanzanians during the next five years as it seeks to play an increasingly important role in helping the country to realise its Vision 2025.
The vision envisages creation of a Tanzania that will have graduated from a developing country into a middle income one, supported with a sound industrial base.
The loans will be issued at affordable rates of between seven and 12 per cent, according to the bank's head of corporate planning and policy, Mr Francis Assenga.
"The target will be specifically on those who have graduated but failed to get employment... .with our loans, they would be able to empower themselves and create employment at the same time," he said.
The loans will be issued in line with the government's National Youth Agri-Strategy which will be launched during the next few weeks.
The strategy will be coordinated by the Ministry of Trade, Industry and Investment, TADB and other institutions related to the youth.
According to Mr Assenga, TADB's focus is to finance agriculture-based enterprises that are operated by young Tanzanians. The aim is to enable them to develop enterprises related to agriculture and its entire value chain including packaging, agro processing, livestock production, farm mechanization trading among others.
The projects to be financed will be those that are market-driven, according to the TADB managing director Thomas Samkyi.
"We specifically focus on the youthful population, women and small holder farmers in registered groups or others who support people in such industry categories," he said.
The utmost aim is to make sure that its loans are accessed by those that cannot get such services in the traditional means due to lack of collaterals. TADB therefore works with guarantors.
"These small, medium and large scale farmers and agro processors lack adequate collateral to secure loans in accordance with Bank of Tanzania regulations which require all loans to be adequately secured... .we therefore work with guarantors," he said. The challenging aspect to this however, he said, is that high costs of agriculture production requires financing to be cheap because if guaranteeing costs are high, the overall financing costs increases thereby making it difficult for the loans to be repaid.
The Private Agricultural Sector Support (Pass) is one of those guarantors that TADB works with.
Pass was established in the year 2000 and operated as a project till 2007 when it was registered as Trust, not for profit organization but with the mission of facilitating commercialization of subsistence farming.
Founded by the Government and Denmark and funded by Danida, the Pass Trustis an independent organization that offers agribusiness advice and financial linkage services.
It operates as a service provider between the agricultural and financial sector where the clients comprise of youths, small-scale farmers' groups, individual farmers, agro processors.
Since its establishment, it has reached out to 323,000 farmers and facilitated loans of about Sh414billion, according to managing director Nicomed Bohay.
"In 2015 alone, we supported loans of Sh56 billion that have been invested in agricultural-related projects in areas of crop production, inputs, irrigation, tractors, agro processing and crop trading and transportation," he said.
He said the support has created thousands of jobs in the rural areas mostly to farmers, agro pastoralists, agribusiness companies, women and farmer groups
Contrary to widely held claims and beliefs, Pass believes that farmers are not challenging groups to loan as perceived because out of Sh314 billion they supported in loans, the repayment rate stands at 95 per cent.
Besides, collaborating banks are progressively getting more proficient in financing agricultural investments because it pays.
MORE INFO: BREAKDOWNS OF PASS' SUPPORT IN 2015
Forty per cent of the loan projects issues under Pass' support last year (2015) were in crop production. Five per cent were in livestock production, two per cent in farm mechanism, 14 per cent in agro processing, 17 per cent in crops trading, 20 per cent input trading while another one per cent went to transportation and fish farming.
Source: http://allafrica.com