Arusha. Domestic banks are increasingly positioning themselves as intermediaries between global capital providers and local enterprises as Tanzania embraces fund-of-funds and on-lending models to bridge persistent financing gaps across key sectors of the economy.
The financing structures, which pool resources from development finance institutions and international investors before channelling them through local banks, are gaining prominence as a means of extending affordable, long-term funding to businesses that would otherwise struggle to access capital.
The growing importance of these models featured prominently during a panel discussion on Fund-of-Funds and On-Lending Platforms at the Tanzania Investment Summit 2026 in Arusha on Tuesday, June 2, 2026, where executives from commercial banks, development finance institutions, and trade finance organisations outlined how the approach is widening access to credit while reducing investment risks.
Throughout the discussion, participants noted that although capital is increasingly available through international and regional partners, the greater challenge lies in how efficiently it is structured and channelled through domestic financial systems.
Trade and Development Bank (TDB) Group Manager for Coverage and Lending Operations, Mr John Madaba, said on-lending arrangements continue to serve as an important bridge between development finance institutions and the real economy.
He said TDB works through both funded and unfunded lines of credit to support local banks financing sectors such as agriculture, logistics, and manufacturing.
“These lines of credit typically give banks flexibility to deploy capital across different sectors within a defined period,” he said.
Mr Madaba added that such facilities are often complemented by trade guarantees and letters of credit that help reduce transaction risks.
Through partnerships with Tanzanian banks, he noted, TDB has extended about $600 million in credit lines, supporting key sectors of the economy and strengthening trade flows across the region.
The discussion also highlighted the growing use of risk-sharing instruments to support on-lending structures and help banks manage exposure.
CRDB Bank Head of Credit Sanction, Mr Andrew Mbunda, said on-lending remains central to financing large-scale projects, particularly where private investors provide equity but still require structured debt financing.
He said credit guarantee instruments and government-backed risk-sharing facilities have become essential in enabling banks to scale up lending without overburdening their capital base.
“We facilitate on-lending structures for key projects, but we also rely on risk mitigation tools such as guarantees to manage balance sheet pressure,” he said.
From a market-structuring perspective, NMB Bank Head of Global Markets, Ms Gladness Deogratius, said Tanzania’s growing participation in sustainable finance and bond markets is helping attract offshore capital.
She said the shift towards use-of-proceeds frameworks has significantly improved investor confidence by increasing transparency in how funds are deployed.
“In the past, we saw limited offshore participation. Today, with sustainable financing frameworks, investor appetite has increased because the impact of funds can be clearly tracked,” she said.
Ms Deogratius added that banks are also playing a dual role as advisers and underwriters, helping issuers structure transactions that meet international investor standards while aligning with domestic development priorities.
Tanzania Agricultural Development Bank (TADB) Director of Planning, Advisory and Corporate Affairs, Mr Mkani Waziri, said development finance institutions remain central to transforming agriculture from subsistence to commercial production through blended financing models.
He said TADB combines government equity with concessional resources from development partners while also working through commercial banks to extend its reach to smallholder farmers.
“We are transforming agriculture from subsistence farming to commercial farming to ensure it contributes more significantly to economic growth,” he said.
Mr Waziri added that guarantee schemes and climate-smart agriculture financing are being used to reduce risks and widen access to finance, particularly for women and smallholder farmers.
Meanwhile, Tanzania Commercial Bank (TCB) Chief Manager for Trade Finance, Ms Jessica Mizambwa, said the bank is undergoing a strategic shift towards productive-sector financing, particularly for small and medium-sized enterprises (SMEs) and trade-related activities.
She said TCB is increasingly targeting agriculture, infrastructure, and manufacturing as part of efforts to reorient its balance sheet away from traditional retail banking.
“Our focus is to support SMEs and corporates in productive sectors such as agriculture, energy, and infrastructure,” she said.
Ms Mizambwa added that the bank is seeking access to low-cost, long-term funding from development finance institutions to expand its lending capacity to the real economy.
