AFDB asks Tanzania Ministry to “Look After”  Loan to  Boost Agricultural Productivity

Tanzania has been  beneficiary of loans  from the AFDB amounting to USD 284 million (about Tsh.625 bn/-)  between November  and December 2016, out of which USD 94 million (about Tsh. 207 bn/-) will be used for agricultural development.

Dr Tonia Kandiero

Dr Tonia Kandiero

 

By TZ Business News Staff.

 

The African Development Bank (AFDB) has asked Tanzania to “look after” funds loaned to the country for agricultural development,  so that the funds are able to boost productivity in the sector.

Tanzania has been  beneficiary of loans  from the AFDB amounting to USD 284 million (about Tah.625 bn/-)  between November  and December 2016, out of which USD 94 million (about Tsh. 207 bn/-) will be used for agricultural development.

In a statement during a recent loan agreement signing  event at the Ministry of Finance and Planning in Dar es Salaam, the then Tanzania AfDB Country Representative, Dr Tonia Kandiero said “we trust that the Treasury… will look after this investment that will boost productivity in the agricultural sector.”

She made the remarks after signing two agreements with ministry officials. The two concessional loan agreements  for a combined 164 million US dollars (352.6bn/-) between Tanzania and AFDB were meant General Budget Support (GBS) for the year 2016/17—particulary meant for electricity– and for capital  to boost the Tanzania Agricultural Development Bank (TADB) which was created to provide loans to the agricultural sector employing over 75% of Tanzanians.

Dr. Kandiero said the loans were in line with AFDBs terms of reference for its existence which she identified as feeding Africa, lighting-up Africa, Integrating Africa, improving the African quality  of life and industrializing Africa.

She promised to scale-up loans to Tanzania “substancially”  in 2017 especially toward the energy sector.  “We will continue to reverage reforms in the energy sector. This is a sector that the AFDB will continue to support,” she said.

The Agricultural and General Budget Support agreements were signed in Dar es Salaam December 17, 2016.  The Tanzania government was represented by the Permanent Secretary in the Ministry of Finance and Planning, Mr Doto James, while the AFDB was represented by the  then Country Representative, Dr Tonia Kandiero. She is currently in South Africa where she has been transferred to become Director General of the Southern Africa Regional Development and Business Delivery Office. The office is aimed at accelerating the bank’s business and development impacts across Africa.

Permanent Secretary in the Tanzania Ministry of Finance and Planning, Mr Doto James

Permanent Secretary in the Tanzania Ministry of Finance and Planning, Mr Doto James

From the first agreement, AfDB committed 70 million US dollars (over 150bn/-) to be disbursed to the Tanzania Electric Supply Company Limited (TANESCO) to increase efficiency in the state- owned power firm.  The second 94 million US dollars (over 200bn/-) agreement is intended to increase capital to TADB so that it can be able to provide soft loans to farmers — to increase the value chain from production, value for money and availability of reliable markets for crops produced by farmers.

A couple of weeks earlier, AfDB and Tanzania’s CRDB Bank signed a USD 120 million loan agreement to finance infrastructure and SMEs. The loan agreement was signed on Nairobi November 30, 2016. The loan will support infrastructure development, particularly the power and transport sectors, which is a major constraint for Tanzania’s economic diversification and growth according to a post on AFDB’s website.

The Tanzania SME sector is also key to creating more jobs and this project will support a wide range of SMEs across agriculture, construction, manufacturing, education and services in order to promote inclusive growth in the country, the posted statement says. CRDB is one of  Tanzania’s larg commercial banks. It was listed on the Dar es Salaam Stock Exchange in 2002. It has a wide geographical coverage of the Tanzanian market where it operates over 120 branches across the country and an additional 3 branches in Burundi.

CRDB supports various sectors including power, manufacturing, agriculture and SMEs.  In 2008, the AfDB provided a risk-sharing facility to promote SMEs in the agriculture sector, through which more than 270 SMEs benefited. Since 2008, CRDB has expanded its SME loan portfolio and partnered with more than 1,739 agents, or non-banking intermediaries to widen its reach.

This is “Agency Banking” for which CRDB obtained a license from the Bank of Tanzania and the model has enabled the bank to provide services in far-flung areas where establishing branches may be uneconomical hence efficiently allowing the financially excluded to access banking services.

The new Line of Credit will help finance SMEs and infrastructure projects in Tanzania. It will provide valuable support towards infrastructure development which is a major constraint to Tanzania’s economic growth. It will also help scale up lending to SMEs and women enterprises in both urban and rural areas to create more jobs and promote inclusive growth for Tanzania’s economy by leveraging CRDB’s network of branches and banking agents, AFDB says.