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Sunday, 18 August 2019

BANK APPEALS FOR GRANTS TO SADC FARMERS




By our Correspondent in Dar es Salaam,

Tanzania Agricultural Development Bank (TADB) has called for new innovative approaches in serving smallholder farmers in order to revolutionalise SADC’s agriculture in earnest.

In an intervention to the 4th   Annual SADC Industrialization Week in Dar es Salaam recently, the TADB Managing Director, Mr Japhet Justine, said history shows that smallholder farmers have been bypassed by lenders for too long and now deserved a new deal.  
He emphasised the need to redress the perception that agricultural finance was a high risk undertaking.

“The role of the small guys (smallholders) is known and fundamental. There must be cash guarantee for de-risking lending to smallholder farmers by banks. It should be up to 50 percent of defaults and a fee
of one percent per annum --- the most affordable in the market,” he
suggested.

He also called for ‘grants or soft loans of hybrid’, suggesting that there must be goodwill in supporting plans, concepts, ideas and initiatives to test new or innovative approaches, methods and services
in rural areas.

Mr Justine gave example of cotton and coffee growers in Tanzania, saying coffee growers in Kagera region received financing through cooperative unions and eligible cashew nut growers benefitted in the
same way.
The support took the form of transactional finance.  Cotton growers were also supported to buy pesticides in 2018 and 2019 farming seasons and agro-processors were supported to buy raw materials.  The support took the form of working capital, he explained.

The MD also talked of the need to institute blended finance, “SPALF(equity-loan-grant) specially designed to de-risk financing for investment in bulk steel silos and modern processing machines,’ he
told experts. 
He also said co-financing should be encouraged, saying going by TADB’s experience such form of financing would allow partnership with commercial banks to promote large-scale agri-industrial projects.

The MD said it was an important sector of SADC economies as is for the whole of Africa.
But said as for Tanzania, the sector’s importance is appreciated by considering its contribution to the national economy. 
He said it contributes 29 percent to the GDP, 65 percent of Tanzania’s employment, 65 percent of industrial raw materials and 30 percent of export earnings.

Mr Justine said he believed in the last three years TADB’s impact had been felt by producers of cereals, cash crops, livestock and fish farming.

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