The move is also designed to guarantee loans for the scheme to support development and growth of the sector. The banks are Tanzania Postal Banks (TPB) and National Microfinance Bank (NMB).
Speaking during a joint press conference meant for promoting the scheme, TADB’s Agency Fund Manager, James Mwakilima said that SCGS aims at encouraging commercial banks to increase their lending to smallholder farmers who are excluded from the formal banking services.
“We intend to provide credit guarantees for smallholder farmers when they access loans from eligible commercial banks such as NMB and TPB Bank where credit default up to 50% of principal loan amount will be guaranteed for each individual loan processed by commercial banks,” he said.
Mwakilima added that the scheme is funded by International Fund for Agricultural Development (IFAD) to the tune of USD 20Million (equivalent to 45billion/-).
“The funds will be provided in tranches through a loan to the Government from the IFAD that will be used to facilitate TADB to play a leading role as an apex agricultural development bank, and catalyze other banks and financial institutions to finance agriculture value chains,” he added.
For his part, TPB Bank acting Director of Credit, Ramadhan Mganga, the bank has managed to submitted 31 applications for individual smallholder farmers from varied areas across the country mainly from smallholder farmers in Iringa Rural district.
He added that TPB Bank is continuing soliciting bankable agricultural projects as well as implementing broad range of interventions that including provision of credit guarantees to Smallholder Farmers and capacity building programs.
“We implement SCGS not only through provision of credit but we focus in capacity building programs to capacitate smallholder farmers to be bankable,” he added.
According to the issued statement, so far, the SCGS, through TADB and its partner banks, has managed to guarantee the disbursement of loans of up to 3.3billion/- (the guaranteed amount is 1.65billion/-). These loans for farming inputs for primary production where a total of 824 farmers benefited, and the indirect beneficiaries are not less than 1,221 individuals. The total number of acreage cultivated is 2,245.4acres.
Technical Launching of SCGS took place on 27th February 2018. The event was attended by various stakeholders including Commercial Banks, Microfinance Institutions, Government Ministries, Academic Institutions, Research Institutions and NGOs that support agriculture and apex farmer organizations. Almost fifty percent (50%) of the registered Commercial Banks sent representatives to the event.