Outgrower schemes, also known as contract farming are systems that link networks of unorganised smallholder farmers with domestic and international buyers. These schemes provide benefits to players along the supply chain.
Buyers can improve their control over crop supply, often at pre-agreed prices, as well as crop quality standards. And farmers can access more secure markets, often receiving technical and financial support by cultivating within outgrower schemes.
The 5bn/- loan facility from Azania Bank is part of the bank’s support to President John Magufuli’s initiatives to widen economic opportunities that come from the agricultural sector, according to the bank’s business development director, Nyansaho Rhimo.
According to Rhimo, the loan will be provided to Magole Joint Cooperative which has a total of 115 groups and 1,200 members. “It should be noted that this loan does not mean we will be dishing out money to the groups but it shall cater for procurement of agricultural inputs and equipment depending on the needs of the smallholder farmers,’’ he noted.
Commenting on the banks initiative, the Minister of State in the Prime Minister’s Office, Police, Parliamentary Affairs, Labour, Employment, Youth and the Disabled, Jenister Mhagama commended the bank for the decision to provide agricultural inputs and equipment instead of providing money.
Saying it will help to avoid unnecessary disputes and misuse of the money.
“I am very happy with your decision to help these groups and it is my hope that other financial institutions shall borrow a leaf from you and help others countrywide,’’ she added.
The minister requested the bank’s management to provide similar chances to other groups including the 33-member group of youth who were united through social media to form their company called KCL Company Limited.
Mkulazi Holdings Company board chairman, Prof Godius Kahyarara who is also the NSSF Director General, Professor Godius Kahyarara and his PPF counterpart, William Erio asked more youth to join the groups so that they can access loans.
They said they would continue to support youth according to Azania Bank’s management policy any necessary cooperation in making the project successful.