THE annual growth rate of bank credit to the agriculture sector has increased by 61.9 per cent in the year ending August compared to 50.1 per cent of the previous year and negative growth of 22.1 per cent in the corresponding period 2018.
According to the Bank of Tanzania (BoT) monthly economic review for September, the agriculture sector credit increased at a faster rate, followed by building and construction and mining and quarrying sub-groups.
During the period under review, credit to the private sector expanded by 8.2 per cent to the stock of about 19tri/- higher than 5.2 per cent (about 17.5tri/- ) registered in the corresponding period in August 2018.
The strong credit growth to agriculture sector was attributed to accommodative monetary policy, as well as measures implemented to improve business environment.
For example, in September NMB Bank approved and extended 9.35bn/-to 2,997 smallholder cashew nut farmers from Mtwara, Lindi, Ruvuma and Coast regions through Tanzania Agriculture Development Bank (TADB)’s Small Credit Guarantee Scheme (SCGS) to finance farmers who are in great need of financial assistance to procure farming inputs for the new season.
The SCGS aims to encourage financial institutions to increase their loans to smallholder farmers who, in the past years, have been side lined from the formal banking services.
This will be achieved through provision of guarantees to smallholder farmers when they access loans from selected eligible banks.
TADB has enabled some of the partners to start lending to the agriculture sector through this product and the support that the bank provides in terms of capacity building.
The scheme has also supported community banks like Tandahimba Community Bank (TACOBA), Mufindi Community Bank (MUCOBA), UCHUMI Bank Limited and others to serve their customers and raise funds.
As the administrator of the fund, to date, TADB has already disbursed 19.7bn/- to eight banks including NMB.
The TADB pipeline under review sits at 56bn/-, supporting more than 10,795 Smallholder farmers in 22 region across namely Kagera, Katavi, Dodoma, Mtwara, Arusha, Kigoma, Njombe, Iringa, Mwanza, Mara, Shinyanga, Simiyu, Lindi, Mbeya, Ruvuma, Songwe, Morogoro and Kilimanjaro, Coast, Singida, Manyara and Dar es Salaam regions engaged in 15 value chains.