Relief as govt pays Sh20.8 billion to maize farmers before festivities

Dar es Salaam. The Tanzanian government has distributed Sh20.8 billion to maize farmers across three key agricultural regions, addressing part of the Sh52.4 billion debt owed to them as of December 2024.

The payments were effected to farmers on Friday, December 13, 2024, as the government disclosed its goal to clear all outstanding balances by January 10, 2025.

Agriculture Minister Hussein Bashe disclosed the move in a public statement issued on Friday, December 13, 2024, emphasising that the government is committed to making all payments promptly.

Bashe stated that as of December 11, 2024, the government, through the National Food Reserve Agency (NFRA), had purchased maize and other grains worth Sh334.22 billion.

He said Sh52.4 billion was the debt owed to farmers in Songwe, Rukwa, and Ruvuma regions, hinting that the amount will be settled in phases, starting with the current disbursement.

“As of December 13, Songwe has received Sh6.8 billion, while Sh7 billion has been allocated for Rukwa and Ruvuma regions respectively,” he said.

Furthermore, he said these payments follow a First In, First Out (FIFO) method, ensuring that earlier deliveries are compensated first.

“We are working to ensure that all debts to farmers are fully cleared before January 10, 2025,” Bashe said, highlighting the government’s focus on improving its payment system to avoid delays in future procurement seasons.

According to him, the government plans to purchase an estimated 1.2 million tonnes of maize during the 2025/26 season, which begins in June-July, next year.

In his statement, Minister Bashe also underscored that Tanzania’s food reserves will exceed 700,000 tonnes, a milestone for the country.

This is particularly significant as the government continues fulfilling contracts with international clients such as the World Food Programme (WFP) and the government of Zambia.

"This is a historic moment for our country as we have never purchased such a large quantity of grain in our history," noted Mr Bashe.

However, despite the large-scale purchases, Mr Bashe acknowledged that the procurement process has faced challenges, particularly with payment delays.

These issues were attributed to the payment systems including interconnection problems with commercial banks that assist in financing maize purchases.

"We are aware of these problems and are working to improve the systems for improved efficiency in the upcoming season," said the minister.

The payments come after months of frustration for maize farmers across the country.

Many have not received the full amount for maize sold to the NFRA between July and November 2024, with Sh63 billion still outstanding as of November this year.

Farmers in regions like Ruvuma, who delivered large quantities of maize earlier in the year, have faced severe financial strain as they wait for compensation.

"I haven’t been paid for the maize I sold in September. This delay has left me struggling to prepare for the next farming season," said one farmer from Songea, Ruvuma Region.

NFRA Executive Director, Dr Andrew Komba, admitted to the payment delays, attributing the issue to liquidity constraints faced by their financing partners.

“We are working with several lenders, but their financial challenges have delayed payments. We pay farmers as soon as we receive the necessary funds,” explained Dr Komba.

Despite the ongoing delays, Dr Komba assured that payments would be timelier in Phase II of procurement, which begins in February 2025.

"By the time Phase II starts, we will have received sufficient funds from our clients, including Zambia, the Democratic Republic of the Congo (DRC), and the WFP, to ensure smooth and timely payments to farmers," he said.

However, sources within the banking sector suggest that NFRA could have been more proactive in requesting funding, which may have contributed to the delays.

"As far as I know, there have been no pending applications from NFRA. We process the requests as soon as they are submitted," said one banker familiar with the matter.

Looking ahead, the NFRA is committed to fulfilling its major export contracts.

For the 2024/25 season, the agency has agreed to supply 1.25 million tonnes of maize to Zambia, the DRC, and the WFP, valued at approximately $450 million (Sh1.17 trillion).

As of now, Zambia has made payments for 195,000 tonnes, with 40,000 tonnes already delivered.

However, the DRC has not yet made any payments for its 500,000-tonne order, while the WFP has received 5,000 tonnes of its 35,000-tonne order.

Despite the challenges, Dr Komba remains optimistic, stating that 74 percent of the procurement process for these contracts has been completed successfully.

He also noted that the agency is addressing logistical issues, such as a shortage of storage facilities and delays in sorting maize damaged by rains.

In response, the NFRA has built temporary shelters, increased its digital weighing stations, and plans to introduce modern cleaning technology in the next procurement season.

By November 2024, the NFRA had procured 429,000 tonnes of maize, 30,000 tonnes of rice, and zero tonnes of millet, due to insufficient local production in targeted areas.

As the government works to resolve the outstanding issues, Tanzanian maize farmers are hopeful that the upcoming payments and reforms will restore confidence in the sector.