THE government will revive the Export and SMEs Credit Guarantee Schemes to boost production and exports, the Minister for Finance and Planning, Mwigulu Nchemba said.
Presenting the government budget estimates in the Parliament last Thursday, the Minister said a total of 600bn/- is expected to be used where the Bank of Tanzania (BoT) will provide 280bn/- and the World Bank (WB) will provide a concessional loan worth 150 million US dollars.
He said reviving of the export and SMEs credit guarantee scheme was one of the government’s measures to increase production in order to increase exports and reduce imports.
“In implementing this, the government will continue to collaborate with producers of agricultural products, livestock, fisheries, manufacturing, and processing industries to ensure that we increase productivity,” he said.
Exporters have been facing a lack of a clear and steady source of finance to support their production and export undertakings.
In particular, most exporters do not have the required collateral to obtain loans from Commercial Banks under the existing procedures and conditions.
In order to address this issue, in the mid-2000 the Government introduced the Export Credit Guarantee Scheme (ECGS) and the Small and Medium Enterprises Credit Guarantee Scheme (SME-CGS), both aimed at enabling borrowers with weak collateral to access loans through financial institutions which would, in turn, be guaranteed by the Government through the Bank of Tanzania.
The ECGS and the SME-CGS were established by the government in 2003 and 2005 respectively.
The objectives of the two schemes are; to promote economic development in general by encouraging high-value exports, such as horticulture and floriculture, and other value-added exports that will generate high levels of employment and foreign exchange earnings.
Also, to promote and support Small and Medium Enterprises (SMEs), which have a significant role in the economy, by creating an enabling environment for its expansion and facilitating access to financing resources.
The objectives are in line with government efforts of promoting economic growth and poverty reduction as outlined in other policies, and national and international initiatives.
However, Tanzania Exporters Association (TANEXA) says even after the establishment of these schemes, the problem of accessing loans by exporters continued and the Guarantee Schemes are underperforming.
