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The state-owned development finance institution (DFI) which started last year with Sh60 billion is talking with African Development Bank (AfDB) with the possibility to secure a long-term financing for retail lending to small and medium-sized entrepreneurs in Tanzania.
The bank has covered about 2,000 farmers so far and would want to cover the whole country but its current capital cannot manage the demand.
“We are still talking with the AfDB and pray that the discussion will be successful,” said the bank’s managing director Mr Thomas Samkyi as he spoke in the recent event to launch the African Economic Outlook report.
AfDB also said they were looking to partnering with the local lender. The bank normally partners with governments and banks to sectors and projects that it thinks bring economic change.
“The discussion is going on but it’s tough,” said the AfDB country director Dr Tonia Kandiero without explaining.
Mr Samkyi said, if they manage to secure the loan from the AfDB, at least 20 per cent of the money will be dedicated as credit to women entrepreneurs while 25 per cent will be given to the youth and the rest for all including women and youth.
However, even as the loan may boost credit extended to the private sector, the concern is on the interest rates charged by the banks and TADB in particular.
“If you really want to support the farmers, then interest rate should be in single digits,” said Mr Marwa Busigara, a farmer from Siga Company Ltd who also attended the function.
However, Mr Samkyi said the bank’s lending interest rate of about 15 per cent was the lowest when compared with the rates provided by the commercial banks.
TADB was established as an apex national-level bank with the key role of being a catalyst for delivery of short, medium and long- term credit facilities for development of agriculture in Tanzania.
Tanzania’s economy is growing above Africa average but the success is not reflected in the proportional poverty reduction levels as agriculture lags behind other sectors in growth.
According to the African Economic Outlook in the city launched last week, Tanzania economy was stable in the last decade and is expected to grow at 7.2 per cent this year mainly driven by the services, industry, construction, and information and communication sectors.
However, one of the challenges is that agriculture which employs over 70 per cent of the workforce grows by just 4 per cent, according to African Development Bank chief country economist Prof Chidozie Emenuga who is one of the authors of the AfDB report.
The African Economic Outlook is produced annually by the African Development Bank (AfDB), the Organisation for Economic Co-operation and Development (OECD) Development Centre and the United Nations Development Programme (UNDP).
Based on the latest Household Budget Survey poverty declined by one per cent each year between 2007 and 2012. It declined from 34.4 per cent to 28.2 per cent with a higher incidence of poverty in rural areas.
While macroeconomic indicators like inflation and exchange rate were stable the level of interest rates was too high and affects the borrowers who are mainly the private sector.
Urbanisation is also said to become a major development challenge in Tanzania.
“As cities grow, that does not automatically result into industrialization. In the city of Dar es Salaam and other major cities, unemployment is higher than in the rural areas basic infrastructure (roads, electricity, water, bus transit) have become highly insufficient to meet the demands of users and there is a lot of informal settlement,” said Prof Emenuga.
UNDP economic advisor for Tanzania Mr Rodgers Dhliwayo said that Tanzania was in the category of African countries with low human development index scoring less than 0.55.
“Tanzania has been slowly progressing but there is uneven development among the regions. A lot of inequalities need to be tacked for inclusive growth,” he said.
Deputy Minister for Lands, Housing and Settlement Development Ms Angelina Mabula said the government was reforming its legislations and plan the cities to address the issue of informal settlement.
“We are also gearing up to survey the lands countrywide and formalize settled areas,” she said.
Industry, Trade and Investment minister Charles Mwijage said agriculture was not doing well because of many challenges the sector face including post-harvest losses that eat up to 40 per cent of the produces.
“We want to address this through industrialization and that is why SMEs are given priority to transform the sector,” he said.
Copyright 2016 actualité africaine