Form agricultural bank, Tanzanian government told

01 March 2010, The Citizen
URL: http://www.thecitizen.co.tz/newe.php?id=17564

Dar es Salaam:  Stakeholders in agriculture have pressed the government to fast-track the establishment of the proposed agricultural bank that will give long-term credit to farmers with affordable conditions.

Speaking during a two-day workshop that ended in Dar es Salaam on Thursday, the stakeholders noted that the government was taking too long to set up the bank.   "Tanzanian farmers continue to face difficulties in accessing loans from commercial banks which complicate procedures before the loans are offered," said Prof Andrew Temu, a lecturer from Sokoine University of Agriculture.

The meeting was organised by the World Bank to discuss prospects of agriculture in relation to impacts of climate change.  Official statistics show that the sector has for a long time been mainly dependent on about 10 per cent of total loans disbursed by commercial banks to the private sector.

However, players see the increasing number of commercial banks that offer loans to farmers to be not sustainable.  "As a farmer, I still need to be convinced that commercial banks could offer solutions to our problems. We really need the instrument that will offer us long-term credit to procure modern farm inputs," said Mr Salum Shamte, the chairman of Agricultural Council of Tanzania.

In early September last year, the Bank of Tanzania (BoT) invited bidders to express interest for carrying out a feasibility study leading to the establishment of the Tanzania Agricultural Development Bank.

According to Tanzania National Business Council's (TNBC) agriculture working group, an initial capital of $500 million (about Sh660 billion) is required to start the financial institution.  It is expected that the private sector could be involved in providing additional funding of the project through government guaranteed long-term bonds.

The growth and development shortcomings of the agricultural sector in Tanzania are attributed to lack of cheap and long-term loans to peasants that make 80 per cent of the country's population.