TANZANIA Agricultural Development Bank (TADB), has lowered interest rates on loans given to cooperative societies from 12 percent to nine percent to relieve farmers of loan repayment burden and boost lending to the agricultural sector.
The Bank's Managing Director, Japhet Justine announced the slashing of the interest rates on loans to cooperative societies at Mabira Village in Kyerwa District in Kagera Region on Tuesday at the launch of new coffee buying season for 2020/21.
At the launching event of the new coffee buying season TADB had also provided dummy cheque of 3.4bn/-to Karagwe and Kyerwa District Cooperative Union (KDCU) and Kagera Co-operative Union (KCU) each for new loans to enable them buy coffee from farmers.
Kagera Region is the main Robusta coffee producing area and contributes to about 30 per cent of the total coffee production in Tanzania.
The Managing Director said the reduction of interest rates would apply for new loans extended to the two cooperative societies in Kagera Region before being extended to other loan beneficiaries.
The government directed TADB, state-owned development finance institution (DFI), to lower interest rates on loans from 12 to 9 percent in May this year to ease financial burden on farmers whose primary societies acquire loans from commercial banks.
The Deputy Minister for Agriculture, Hussein Bashe said in Parliament last month that the government wanted to support farmers who bear the cost of credits provided to their cooperative societies through deductions on their money from crop sales.
TADB support to the two cooperative societies helped to clear debts that accumulated to 7bn/-, the Managing Director said. So far KDCU has managed to clear its debts and KCU would be able to do so very soon," he said.
Kagera Regional Commissioner (RC), Brig Gen Marco Gaguti, said the new loans to two cooperative societies came at the most opportune time when farmers are expecting to sell their coffee harvests and earn money from their primary source of income.
He called farmers to observe good agricultural practices so as to boost coffee yields and maintain quality so that their coffee fetch good price in the global market.
Kagera Co-operative Union (KCU) is a voluntary association of 125 Primary Cooperative Societies representing over 60,000 small farmers of the mainly Robusta Coffee in Kagera Region.