Tanzania, Japan sign Sh354.45bn loan for agriculture development

Dar es Salaam. The government has received a Sh354.45 billion concession loan from Japan to finance the implementation of the agriculture and rural development two-step loan project.

The aforementioned project is a five-year project aiming to address the challenges by facilitating financial intermediary functions related to agricultural and rural development finance.

This commitment will be implemented by the Japan International Cooperation Agency (Jica), while the project will be executed by the Tanzania Agricultural Development Bank (TADB).

The minister for Finance, Dr Mwigulu Nchemba, said at the signing ceremony that the implementation of the project will drive the growth of the agricultural sector by enhancing farmers’ productivity through access to affordable capital.

“This will be achieved by providing medium- and long-term sub-loans to farmers, production groups, and agriculture-related enterprises, enabling them to invest in modern farming practices, quality inputs, and advanced technologies.

“The supported project aligns with our current National Five-Year Development Plan with the theme of realising competitiveness and industrialisation for human development, which aims to increase efficiency and productivity using the available resources. Further, it is also aligned with the agricultural sector,” he said. “The increased financial support will also facilitate crop diversification and the adoption of climate-smart agricultural practices, contributing to food security, rural development, and overall economic stability,” he said.

He said the funds received from Japan are a continuation of support that is growing, as reflected by the increase in the number of bilateral development projects supported by the Government of Japan through Official Development Assistance.

Dr Nchemba further explained that the government has benefitted from Japanese support for over 60 years, particularly in the sectors of agriculture, water, health, energy, transportation, and education through capacity building. It has also continued to benefit from Japanese support, which is channelled through other international organisations to support our social and economic projects.

This long-standing partnership has played a significant role in driving sustainable socio-economic development and improving the livelihoods of Tanzanians. The commitment of the Japanese government to fostering mutual growth and strengthening ties is invaluable, and the government looks forward to continued collaboration in achieving shared development goals. TADB’s managing director, Mr Frank Nyabundege, said agriculture remains the backbone of the country’s economy, contributing significantly to employment, Gross Domestic Product (GDP), and foreign exchange earnings. However, the sector continues to face challenges, including limited access to affordable financing, inadequate infrastructure, and low productivity levels.

It is for these reasons that TADB was established to serve as a catalytic financial institution that promotes agricultural transformation through innovative financing solutions. He noted that TADB will be able to extend medium- and long-term sub-loans to groups of farmers, cooperatives, agribusinesses, and other beneficiaries across the country. The ultimate goal is to improve agricultural productivity, enhance value chains, and foster the commercialisation and industrialisation of the agricultural sector.

“This project will cover five value chains, which are maize, rice, wheat, sunflower, and horticulture, with a focus on youth and women,” he said.

According to him, this project is not just about providing funds; it also involves the aspects of building capacity and ensuring that TADB and its partners have the necessary tools and expertise to deliver sustainable financial solutions to the agricultural sector, thus enhancing the capacity of TADB to deliver on its mandate effectively. Jica’s Executive Senior Vice President, Ms Katsura Miyazaki, said that through the promotion of agricultural technology, Jica will contribute to climate-smart agriculture, which is aligned with the prioritised policy of TADB.

“Jica has been strongly promoting the Five-Year Development Plan (FYDP III) as well as Agricultural Sector Development Programme Phase II, or (ASDP2), and will continue cooperating with Tanzania to align with the Tanzania Development Vision 2025,” she said.

According to her, Jica is prepared to proceed with another financial project for agricultural development, called the Tanzania Food Systems Resilience Program (TFSRP), which is a co-financing project with the World Bank.