BoT challenges banks to offer affordable agri-loans

DAR ES SALAAM: Bank of Tanzania has challenged financial institutions to provide affordable loans to farmers so as to boost the agricultural sector.

Bank of Tanzania (BoT)’s Deputy Governor Ms Sauda Msemo said banks are trying to lend farmers but the cost of money is still a challenge in the market.

“Banks are trying their best to lend money to farmers, however, loans provided still have high-interest rates and the majority of farmers cannot afford,” said Ms Msemo during the Agri-finance Training Programme organised by the Tanzania Agricultural Development Bank (TADB) in collaboration with BoT Academy in Dar es Salaam on Monday.

The overall lending rates slightly decreased to an average of 15.56 per cent in July from 16.02 per cent in June, according to latest central bank data.

The agricultural sector contributes 26.2 per cent of the country’s Gross Domestic Product (GDP) thus enabling the environment for the farmers to access loans with bearable interests will boost the sector.

Additionally, the Deputy Governor stressed that since agriculture plays vital role in determining a country’s economy, training for the financial institutions is highly needed since they will be adding more knowledge in bringing solutions to challenges.

“However, lack of sufficient technical skills to support product design, transaction structuring, and portfolio risk management for agri-finance can act as a barrier to increased financing interventions in the agriculture sector,” said Ms Msemo.

BoT has set aside some 1.0tri/- funds for banks and financial institutions to lend farmers at less than 10 per cent interest rate.

TADB’s Managing Director Frank Nyabundege said the viewpoint behind the programme is to produce innovative, creative, and positive-minded professionals in agricultural finance.

“The training programme is an important step towards fortifying the technical capabilities of our partner banks. Ultimately, this initiative will contribute to the increased provision of agricultural financing solutions to the agriculture sector,” said Mr Nyabundege.

The programme will enhance and enlarge the technical capacity of banking professionals to understand and assess the opportunities and risks for lending to the agriculture sector with a view to supporting the growth of credit and investments in agriculture to smallholder farmers and agri-SMEs.

He said some 20 partner banks will embark on a one-week fast-track (pilot) programme training aimed at simplifying agri-loan procedures.

The banks are CRDB, Absa Tanzania, NMB, Stanbic Tanzania, NBC, Azania, Tanzania Commercial Bank, Finca Microfinance, Equity, and People’s Bank of Zanzibar.

Others are Maendeleo Bank, Kilimanjaro Cooperative Bank, Uchumi Commercial Bank, Tandahimba Community Bank, Mufindi Community Bank.

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