Why Central Zone dominates agriculture, forestry, fishing loans

According to the latest Consolidated Zonal Economic Performance Report for the quarter ending September 2024, the total value of bank loans in the Central Zone, covering Dodoma, Morogoro, Singida and Tabora regions reached Sh5.57 trillion, representing 17.1 percent of Tanzania’s total bank loans, which stood at Sh32.66 trillion.

This makes the Central Zone the second-largest recipient of bank credit in the country, trailing only Dar es Salaam, which accounts for 53.6 percent of the total share.

With a 59.4 percent year-on-year growth rate—the highest in the country—loans in the Central Zone have surged by 35 percent compared to June 2024, reflecting increased demand for credit, primarily driven by agriculture.

Notably, the sharp rise in agricultural lending highlights the region’s heavy dependence on farming and agribusiness.

The Central Zone is a major producer of cash crops such as tobacco, sunflower, grapes and cotton, as well as staple food crops like maize, millet and sorghum.

Beyond crop farming, livestock, forestry and beekeeping have also contributed to the growing demand for bank loans, as financial institutions expand credit facilities tailored to agribusiness.

However, economists and financial analysts have attributed this rapid increase in agricultural loans to various economic policies, improved access to credit and a growing recognition of agriculture as a viable sector for investment.

Speaking to The Citizen, on Thursday, an economist and lecturer at the University of Dar es Salaam (UDSM) and the director of Sava Tech Financial Solutions, Dr Tobias Swai, said the surge in loans reflects financial institutions’ increasing confidence in agriculture as a growth sector.

“With improved access to credit, farmers can invest in better inputs, modern equipment and processing facilities, leading to higher yields and greater market competitiveness,” he said.

However, he cautioned that lending to agriculture carries inherent risks due to unpredictable weather conditions and market fluctuations.

He recommended stronger collaboration between banks and insurance companies to protect farmers against potential losses.

For his part, an economist and lecturer at the University of Dodoma (UDOM), Dr Mwinuka Lutengano, attributed the increase in agricultural lending to reduced interest rates, which have made credit more accessible.

“With lower borrowing costs, more farmers and agribusiness owners are willing to take loans to expand their operations. This, in turn, boosts productivity and creates employment opportunities,” he explained.

He noted that rising financial support for agriculture in the Central Zone is expected to have long-term positive effects, not just for farmers but for the entire economy.

“Increased investment in farming will boost food security, enhance export earnings and contribute to Tanzania’s overall economic stability,” he said.

The Executive Director of the Research on Poverty Alleviation (Repoa), Dr Donald Mmari, said the rise in agricultural loans presents an opportunity to modernise farming practices and increase rural incomes.

“Financing agriculture is not just about production; it also drives value addition, infrastructure development and rural transformation. With the right policies, this can be a game-changer for Tanzania’s economy,” he said.

Mzumbe University’s economist, Dr Daudi Ndaki, believes that increased agricultural lending signals a shift in perception, where agriculture is now seen as a profitable venture rather than just a subsistence activity.

“When banks invest heavily in agriculture, it means they see potential for high returns. This will attract more investors into the sector and help in the commercialisation of farming,” he noted.