BoT loan scheme propels agriculture sector growth
DODOMA: The Bank of Tanzania’s (BoT) decision to introduce a special 1tri/- loan facility for banks and other financial institutions for on-lending at only 3 per cent per annum in 2021 has stimulated growth in the agricultural sector from 2.3 percent to approximately 14 percent, a latest report indicates.
In 2021, the lender of last resort unveiled policy measures to promote credit to the private sector and lower interest rates, with the aim of providing a strong impetus for increasing credit to the private sector and reducing borrowing costs, thereby hastening economic recovery.
Speaking exclusively to the Daily News and its sister publication, HabariLEO, during the 2026 National and International Nane Nane Exhibition held at the Dr John Samuel Malecela Grounds in Nzuguni, Dodoma, BoT economist Ms Cartas Chawene said the loans were issued to banks on the condition that they lend to the private sector at interest rates not exceeding 10 per cent.
Consequently, Ms Chawene said, the agricultural sector experienced notable growth following the introduction of the measures, expanding from single-digit growth to approximately 14 per cent.
She urged farmers to access the loans offered at discounted interest rates by commercial banks to boost their agricultural activities.
She said the loans target the entire agricultural value chain, including input suppliers and value-addition enterprises, urging stakeholders across the chain to apply for low-interest agricultural loans through their respective commercial banks.
She mentioned several banks that have embraced the opportunity, including CRDB Bank, NMB Bank, TCB and the Tanzania Agricultural Development Bank (TADB).
“I take this opportunity to encourage agricultural stakeholders to visit these banks because the initiative is still active, na utawasaidia wenyewe pia kuendelea kupata faida kwa sababu inakopesha kwa riba ndogo,” the BoT economist said.
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She mentioned several banks that have embraced the opportunity, including CRDB Bank, NMB Bank, TCB and the Tanzania Agricultural Development Bank (TADB).
“I take this opportunity to encourage agricultural stakeholders to visit these banks because the initiative is still active, and it will also help them continue to gain profits because it lends at low interest rates,” the BoT economist said.
When the BoT introduced the policy measures to promote credit to the private sector and lower interest rates, which took effect on July 27, 2021, it said the aim was to increase liquidity in banks and reduce lending rates.
The measures also included a reduction in the risk weight on loans, providing banks with an opportunity to extend more credit to the private sector than before.
The measures were introduced in accordance with the Bank of Tanzania Act, Cap. 197, and the National Payment Systems Act, Cap. 437, which provides the legal framework for the Central Bank to issue additional directives to banks, other financial institutions and mobile money providers regarding the measures adopted.
The fiscal policy was made after it was learned that the interest rates on loans charged by banks had remained high, at about 17 percent, despite monetary expansion and other measures adopted.
It was part of the government’s efforts to lessen impact of the COVID pandemic on economic activities and promote growth since the pace of growth slowed to 4.8 percent in 2020 from 7 percent in the preceding year.
