TANZANIA – Tanzania Agricultural Development Bank (TADB) has signed a Memorandum of Understanding with African Guarantee Fund for Small and Medium-sized Enterprises (AGF), that will allow the state-owned development financial institution to disburse up-to US$20 million worth of loans to agribusinesses in Tanzania.
According to ACF, the partnership has come at the right time, as it is in line with the recently launched Five Year Development Plan 3 (FYDPIII) which aims at: increasing the country’s capacity for production; building a competitive economy that will stimulate the country’s participation in trade and investment; and stimulate human development.
“SMEs constitute 95 per cent of businesses in Tanzania, and 35 up-to 50 per cent of the country’s GDP. They are the backbone of growth in production, employment and innovation, it is therefore crucial to us as we are moving at realizing Vision 2025 to provide an enabling environment for agricultural SMEs in Tanzania,” said the Commissioner for Financials Sector Development, Dr. Charles Mwamwaja.
“I would therefore like to congratulate TADB and AGF for this meaningful partnership that will see more agri-SMEs access more and affordable financial support, and ultimately contribute to the transformation of agriculture, the economy and lives of Tanzanians,” noted the Commissioner.
Access to credit is the major constraint facing most SME due to high interest rates, lack of collateral, absence of institutions to lend their businesses and more often than not, they do not know how to go about it.
TADB’s Managing Director, Japhet Justine, said that the partnership is a great opportunity as it allows room for lower interest rates and lending conditions that are affordable and friendly.
“We are proud to be one of the initial institutions in the country to spearhead the FYDPIII. This deal realizes one of our roles as a Development Finance Institution in mobilizing low-cost sustainable financial resources for affordable agricultural financing and enhancing financial inclusion,” said Justine.
In the new FYDPIII, the government of Tanzania has reiterated its commitment in promoting the private sector and non-state actor’s participation in economic development.
“This deal realizes one of our roles as a Development Finance Institution in mobilizing low-cost sustainable financial resources for affordable agricultural financing and enhancing financial inclusion.”
Commissioner for Financials Sector Development – Dr. Charles Mwamwaja
Interventions to further deepen industrialisation, driven by Science Technology and Innovation (STI) capabilities for value addition in manufacturing and productive sectors including agriculture, fishing, livestock are mentioned as its top priorities.
On his part, AGF Group CEO, Jules Ngankam said, “AGF views TADB as a very strategic partner in achieving significant impact within the SME sector in Tanzania. TADB as a government owned DFI, has the required capacity to lend to SMEs and particularly in the critical agricultural sector.
“Through the MoU, AGF will consider providing individual guarantee relating to loans granted to Tanzanian agri-SMEs on a case-by-case basis. With the backing of such guarantees, TADB is proposing to disburse USD 20 million of loans to Tanzania agri-SMEs.”
While this partnership is of great importance to SMEs owners and prospects in Tanzania, it is also a trailblazing opportunity for women-led or owned businesses.
Through the Affirmative Finance Action for Women in Africa (AFAWA) partnership that AGF has with the African Development Bank Group (AfDB), the fund will also be able to extend the AFAWA Guarantee Facility to TADB to increase financing of Tanzanian women-owned agri-business.
In other related news, Tanzania may soon start exporting meat to Saudi Arabia following ongoing negotiations between the two countries.
The East African nation used to export meat to the Kingdom of Saudi Arabia, but this was suspended 19 years ago due to a foot and mouth disease break out in the country.
“What is needed now is for exporters from Tanzania to make sure they adhere to the required standards, including obtaining a Halal Meat Certificate. This is a requirement for anyone wanting to export meat to an Arabic country,” said Tanzania’s ambassador to Saudi Arabia, Ally Jabair.
Although Tanzania is one of the leading countries with a huge animal population in Africa, the country is lagging behind Keny, Egypt and Somalia in as far as exporting meat to the Arabic markets is concerned.
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