Government of Tanzania launches new TADB strategy to improve access to finance

The government has launched a new medium-term strategy (2023/2027) of the Tanzania Agricultural Development Bank (TADB) with three financial products aimed at expanding access to agricultural finance in Tanzania and raising farmers' guarantees up to 75 percent.

The products aim to promote banks' lending appetite by partnering with financial institutions to provide wholesale lending and co-financing to stimulate agri-related projects in the country.

Apart from wholesale lending and co-financing, TADB has also revised its Small Holder Guarantee Scheme (SCGS), which will increase the coverage of guarantees given to farmers from 50 percent up to 75 percent, hence promoting women-led, youth-led, and climate-smart agricultural projects in the country.

Speaking at the official launch today, November 1, 2023, the bank's managing director, Mr Frank Nyabundege, said the bank, through the government, has received concessional funding worth 80 million euros (equivalent to Sh 212 billion) from the France Development Agency (AFD), which is seeking to improve the agriculture sector in the country.

The new co-financing lending approach intends to enhance the bank's capacity to play its leading role as the apex agricultural development bank and to catalyse banks and financial institutions to increase financing for agriculture.

“Based on their wider branch network, the utilisation of SCGS will enable our partner financial institutions to reach the majority of smallholder rural farmers to address the pressing bottleneck in the agricultural value chain,” he added.

Mr Nyabundege added that through these financial products, the bank will provide technical and financial support to smallholder farmers and agri-SMEs to achieve key impact areas.

He said, "We will increase the engagement of women and youth in agriculture, where currently 46 percent of women and 44 percent of youth are involved in agriculture. Finally, the bank is striving to build its capacity through partnerships and mobilisation of financial resources for agricultural financing, expanding service outreach, enhancing governance, compliance, risk management, and investing in people and systems."

Speaking at the official launch, the ministry of Finance deputy permanent secretary for Economic Management, Mr Elijah Mwandumbya, said the government recognises the immense importance of the crop, livestock, and fisheries subsectors in poverty alleviation and food security in the country. Thus, it has confirmed its dedication to the sector by committing sufficient funds to programmes designed in the agricultural space.

Mr. Mwandumbya also cited that the government’s directive for all financial institutions to reduce interest rates to single digits, along with other monetary, fiscal, tax and regulatory incentives for agriculture, all aim to increase financial inclusion, especially in the rural areas where the majority of the agricultural community resides.

“In 2022/23, the government committed a total of Sh751.1 billion, equivalent to a 155.3 percent increase from Sh294.16 billion committed to the agriculture sector the previous year. The huge increase indicates the real government commitment to transforming the sector,” he said.

For her part, ADF country manager Ms Celine Robert said that despite many efforts taken by the bank to empower women who are mostly in the agriculture sector but are still vulnerable, more effort needs to be taken.

She said France is fully committed to support, and AFD is looking forward to continuing to work closely with the government and the bank so that it can address the challenge in the agriculture sector, especially in promoting women and youth.