CRDB fresh policy supports smallholder farmers

CRDB Bank has designed special financing models that suit smallholder farmers through their farmer groups, AMCOS.

The credit facilities are designed to match seasonality and flexible repayment schedules thus helping borrowers to repay their loans after the sale of their produce while minimises defaulting rates.

CRDB Head of Agribusiness Mr Maregesi Shaaban said they have invested much in digital platforms to enable smallholder farmers to access banking services at their vicinities to cut the hassle to travel long distances for banking services.

Farmers now can be served even in rural areas,” Mr Shaaban said recently adding: “These online channels have played a great role towards enhancement of financial inclusion in Tanzania”.

The bank, the largest agri-loans issuer, invests heavily in the digital platform including SimBanking, CRDB Wakala and Internet Banking to help farmers and key off-takers to transact and get banking services 24/7 across the country network.

The investment saw CRDB’s exposure in the agriculture sector currently stand at 801bn/-(about 334 million US dollars) which translate to over 43per cent of total agricultural financing in the country.

“The bank is currently making a holistic evaluation of agricultural value chain opportunities available aiming at tapping more opportunities in this potential sector through strong value chain linkages among actors with more focus on value addition,” Mr Shaaban said.

Proper links among actors in the agricultural value chain have also helped CRDB to ring-fence cash flow, get reliable access to markets and minimise chances of defaults to borrowers in the agri-sector.

“Continuous capacity building and training helped CRDB customers to manage their businesses, keep proper records and implement succession plans as means of future-proofing their business continuity,” he said.

The head of agribusiness was reacting to the factors that contributed heavily to pushing up commercial banks’ agri-loans in the market.

According to the Bank of Tanzania’s (BoT) latest monthly economic review, the agri-loans jumped up 47.4 per cent for the year ending January, which was slightly higher than a quarter of the country’s current budget of 41.48tri/-.

The agricultural sector attracted over 12tri/- out of the total stock of credit extended to the private sector of around 27tri/- in the year ending January.

Dr Hildebrand Shayo, an economist-cum-investment banker, said lending in the agricultural sector has several unique characteristics that influence the financial requirements in the sector.

“Although it is widely acknowledged that the same agricultural sector is regarded as the highest degree of credit risk compared to other sectors in the economy,” Dr Shayo said.

However, he said, to minimise the risk, issues underlying the sector if addressed eliminate such threats.
“If infrastructure for irrigation is there, it can no longer pose a big risk to financiers,” Dr Shayo said.

Credit permits commercial farmers for cash or food crops to assume new investments and technology that allow farmers to increase their productivity and efficiency in agriculture as businesses.

Tanzania Pulses Network, National Coordinator, Zirack Andrew said since assuming the ministerial position of agriculture docket, last January Mr Hussein Bashe has been categorical in protecting the freedom of doing agriculture-related business, by repetitively insisting that the government will never involve itself in imposing export bans of agri-commodities.

“These stands have increased the confidence of those in and out of the sector to perceive it as a less risky sector.

“Now, the minister’s comments must have inspired confidence to many people that agribusiness in Tanzania is predictable and operates commercially like any kind of business,” Mr Andrew told ‘Daily News’.