What it takes for farmers to get funds

Arusha. Financial institutions could be losing the opportunity of financing agricultural activities because the sector requires more than mere checklists, a banker said here yesterday.

The managing director of the Tanzania Agricultural Development Bank (TADB), Mr Japhet Justine, said agricultural projects financing require artistic conversations model for appraisals rather than subjecting them to checklists.

“Being a ‘Development Financial Institution’ (DFI), TADB takes an innovative approach to enabling timely and efficiency in financing the agricultural project proposals we receive. While having a good project proposal is essential, an artistic conversation with a prospective borrower is also vital in the process,” he said.

He was speaking during a panel discussion at the European Investment in Agricultural Dialogue.

He said while the coffee value chain in Kagera Region was deemed un-bankable by commercial banks, TADB was able to finance it after conducting conversations, researches into the value chain and its application of blended financing.

“We are proud to have supported the coffee cooperative unions and Agricultural Marketing and Cooperative Societies (Amcos) in Kagera who were in deep debt, and whose farmers were paid about Sh400 per kilogramme of coffee prior to our financing,” he said. The farmers now receive over Sh1,000 per kilogramme.

“If this project was to be subjected to a ‘commercial bank’ checklist procedure, it wouldn’t be bankable,” he emphasised.

TADB has been able to - among other things - address equity support where commercial and community banks are enabled, debt component and guarantee/collateral component and of recent heading towards trade financing guarantee.

During the dialogue, the UNDP Programme specialist, Mr Amon Manyama, said UNDP and TADB were currently on an MoU whereby they were working together in 12 projects in the country.

“Agriculture indeed requires a different approach to its financing as well as its funding. While financial institutions have to look into blended financing approaches, government funding must as well look into the new opportunities…,” he said.

Agriculture engages over 60 percent of Tanzania’s working age population.

“This means that, if its potentials are well tapped, we can achieve the ‘Agenda 2030.’ My advice is for the government to tap the new funding opportunities and products like the Blue Bond and Green Bond,” Mr. Manyama commented.

The two institutions, UNDP and TADB, sat at a panel discussion on Innovative Sources of Funding for Agricultural Development Capital Market, Private Equity, and Blending.