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Financing Agriculture not risky

LENDING to agriculture is no longer a risky undertaking, the Private Agricultural Sector Support (PASS), which has recovered over 95 per cent of its guaranteed credits to the sector, affirmed in Dar es Salaam yesterday.
PASS

The TADB Executive Director Mr. Thomasi Samkyi (Left) and PASS Director General Mr. Nicomed Bohay (Right) Picture by: Issa Michuzi Blog

“The common perception that agriculture sector is not credit worthy is a myth,” PASS Managing Director Nicomed Bohay said, dismissing as unfounded the lame excuses of denying funding to agriculture on the pretext that the sector is highly risky.

He said the trust that operates as service provider between agriculture and financial sectors has so far guaranteed 314bn/- loans to agriculture, with 95 per cent of the amount recovered.

Mr Bohay, speaking at the signing of the guarantee facility agreement between PASS and Tanzania Agricultural Development Bank (TADB), invited more Tanzanians to explore business opportunities in agriculture to qualify for the affordable funding under the arrangement.

“All the commercial banks, which we work with haven’t been able to exhaust the financial resources available,” said Mr Bohay, hinting that the PASS managed Credit Guarantee Fund remains underutilised by 75 per cent.

TADB and PASS have under the agreement embarked on the promotion of lending to agriculture through risk mitigation, focusing on smallholder peasants, medium and large scale farmers as well as other stakeholders in the agricultural value chains.

TADB Managing Director, Thomas Samkyi said his bank was determined to work with low fee charging guarantee partners like PASS, saying high costs of agriculture production requires cheap funding, “If the guarantees costs are high, the overall financing cost increases, making it difficult to repay the loans.”

Mr Samkyi said the bank’s focus to youth agriculture enterprises require guarantees as majority of the youth lack the required collateral at their first engagement in agriculture activities.

Eligible beneficiaries of the Credit Guarantees, the bank boss said, will be farmers and other entrepreneurs in the agriculture value chains–agricultural producers, agro-processors, storage facility constructors, irrigation technology providers and other agriculture infrastructure developers.

Mr Samkyi said the bank whose key objective is to catalyse investments in the agricultural sector envisages to issue loans of at least 60bn/- to over 100,000 small peasants, 10 youth enterprises and one big farmer this year at an interest rate of between seven and 12 per cent.

“TADB invites farmers and other players to access the credit facilities for agricultural development projects in the priority value chains under this guarantee arrangement,” said Mr Samkyi, reaffirming his bank’s tenacity to work with other strategic partners to promote interventions aimed at transforming the agricultural sector.

TADB becomes the 10th bank to partner with PASS, which is already working with CRDB Bank, Amana Bank, Akiba Commercial Bank, Exim Bank, TIB Bank, FBME Bank, National Microfinance Bank, ACB Bank and BOA Bank.

Tanzania and Danish governments founded PASS under DANIDA funding in 2000. It operated as a project under the Agricultural Sector Programme Support until 2007 when it was registered as a trust, not for profit organisation, to help commercialisation of subsistence farming.

The trust invested 56bn/- in agriculture last year alone, in support of crop production, input supply, irrigation, tractor purchases, agro-processing, crop trading and transportation.

 

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Posted by on April 5, 2016 in Business News

 

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Commodity exchange takes off in May‏

Commodity exchange takes off in May‏
THE Tanzania Mercantile Exchange (TCX) is expecting to start trading in May this year after all the preparations including the regulations for guiding the market operations which are in the final stages.

The Capital Market and Securities Authority (CMSA), Public Relations Manager, Mr Charles Shirima said in Dar es Salaam yesterday that some companies have shown interests of trading at the country’s commodity exchange but have not been issued with licences.

“The preparations for the Tanzania Mercantile Exchange (TCX) have reached advanced
stage ready for the takeoff in May this year. Companies wishing to trade as commodities
dealers at the exchange are invited to register at the CMSA,” he said.

The TCX is expected to start by trading in coffee, cashew nuts, sesame, rice, sunflower
and probably maize currently traded under warehouse receipt system.

A commodity exchange is a central place where sellers and buyers meet to transact in
an orderly and organised fashion, with clearly specified and transparent rules.

The government backs commodity exchange as an answer to market challenges.

The training of the first commodities dealers, about 60, is ongoing and will end this
July and licensing them will follow thereafter.

The Parliament passed the bill for the establishment of the TCX after amendiing the CMSA law of 1994 to become Capital Markets and Commodities Exchange Act.

The exchange would provide a marketplace where buyers and sellers meet to trade
and be assured of quality, delivery and payment.

Experts in agro-business have it that the exchange will liberate farmers from poverty
through exposure to reliable domestic and export markets.

Liberalisation has its benefits mainly attributed to price determination as a result of market
forces of demand and supply.

Once farmers know what the market price is, they can enjoy fairer negotiations with
purchasers and can make more informed judgments on what to invest in the future and how to market it.

 

 
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Posted by on January 21, 2016 in Business News, Tanzania News

 

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