Mbeya. Vice President Philip Mpango has urged banks to disburse more agricultural-related loans to help transform the sector and give rise to commercial enterprises as lack of adequate funding has been constraining the sector’s value-chain.
He said this when he visited NMB Bank’s pavilion at the ongoing Nane Nane Fair, a national event to celebrate and recognise farmers’ contribution to the country’s gross domestic product (GDP).
Dr Mpango commended the banks for reducing lending charges to 9 percent but noted that they could further cut the credit interest rate to enable more people to afford loans.
“The role of credit is to encourage the increasing agricultural productivity, by enabling farmers to determine the level of technological change and increase technical efficiency in agricultural related activities,” he said.
He added: “Therefore, more loans should be extended to farmers, fishers, and breeders so as to increase investment and productivity. Moreover, higher interest rates affect profitability and decrease borrowing, spending, and investing, since agriculture is a capital-intensive industry.”
For his part, NMB’s Highlands Zone manager Stratton Chilongola said the bank lending has remarkably impacted the agriculture value-chain in Tanzania, which in turn has enabled farmers, fishers, and livestock keepers to meaningfully contribute to national output (GDP) growth and overall development of the country.
According to him, agriculture is a key national economic activity that requires financing support which his bank has for the last five years, provided agricultural related loans worth over Sh1.56 trillion.
The zonal manager further said his bank’s agro-financing portfolio, includes Sh300 billion that has been extended to finance cultivation of several crops this year, was disbursed mainly to the development of coffee, tobacco, avocadoes, paddy, soya, maize, and sesame seeds.
“For this year, we have set aside Sh20 billion for construction of crop warehouses in villages across the country to help address the challenge of post-harvest losses.
“To date, we have extended loans worth Sh6 billion for this purpose,” Mr Chilongola noted.
“Most importantly we are here to showcase our value-adding financial solutions such as the MshikoFasta overdraft service whereby farmers through NMB Mkononi can borrow up to Sh500,000 without collateral,” he told Dr Mpango when he toured the bank’s pavilion.
He further explained that through the NMB Foundation, the bank has provided financial and business literacy to 1,550 Agricultural Marketing Co-operative Societies (Amcos) countrywide.
“Therefore, his bank is using the Nane Nane fair to educate and enlighten farmers on money matters, particularly focusing on how they can better manage their finances and utilize the credit opportunities it offers.