The Central Zone accounts for 45% of Tanzania’s agricultural loans, significantly higher than the national average. In Q3 2024, loans reached Sh5.57 trillion, underlining the region’s reliance on agribusiness. Key factors for growth include lower interest rates, improved access to credit, and a shift in agricultural perception. Experts foresee long-term economic benefits for the region, impacting food security and rural transformation.
The Central Zone of Tanzania stands out as a leading provider of bank loans for agriculture, hunting, forestry, and fishing, accounting for a remarkable 45% of all loans in these sectors. This is significantly higher than the national average of 16.9%. According to the latest Consolidated Zonal Economic Performance Report for the quarter ending September 2024, the total value of loans in this zone reached Sh5.57 trillion, constituting 17.1% of the country’s total bank loans of Sh32.66 trillion.
In terms of bank credit distribution, the Central Zone ranks as the second-largest borrower, following Dar es Salaam, which possesses a 53.6% share. The region has experienced a 59.4% year-on-year growth rate in loans, which is the highest in the nation. Compared to June 2024, loans surged by 35%, indicating increased credit demand primarily fueled by the agriculture sector. This growth underscores the region’s reliance on farming and agribusiness.
The Central Zone is renowned for producing various cash crops, including tobacco, sunflower, grapes, and cotton, alongside staple foods like maize, millet, and sorghum. Livestock, forestry, and beekeeping are also significant drivers of loan demand as financial institutions develop tailored credit solutions for the agribusiness sector.
Economists attribute the rise in agricultural loans to favorable economic policies, enhanced credit access, and recognition of agriculture as a promising investment area. Dr. Tobias Swai, an economist from the University of Dar es Salaam, stated that banks are increasingly confident in agriculture as a growth sector. Access to credit allows farmers to invest in quality inputs and modern tools, thus enhancing productivity.
Despite the optimism, Dr. Swai noted the inherent risks of agricultural lending due to factors like unpredictable weather and market volatility. He suggested closer collaborations between banks and insurance providers to safeguard farmers against potential losses. Dr. Mwinuka Lutengano from the University of Dodoma linked the increase in agricultural lending to lower interest rates that facilitate easier access to credit for farmers and agribusinesses, enhancing productivity and job creation.
Dr. Lutengano emphasized that the growing financial support for agriculture is likely to yield lasting benefits, contributing to food security, increased export earnings, and overall economic stability in Tanzania. Dr. Donald Mmari, Executive Director of Repoa, remarked that agricultural financing not only supports production but also fosters value addition and infrastructure development, which can transform rural economies.
Mzumbe University’s economist, Dr. Daudi Ndaki, observed that the increasing agricultural lending reflects a changing perception of agriculture as a lucrative investment rather than merely a subsistence endeavor. Banks’ significant investment in the sector is an indicator of expected high returns, likely attracting additional investors and aiding the commercialization of farming operations.
The Central Zone leads in agricultural loans with a 45% share, far exceeding the national average of 16.9%. Factors contributing to this trend include increased confidence from banks, lower interest rates, and a shift towards viewing agriculture as a viable investment. This growth is expected to transform the agricultural landscape, fostering economic stability and improving rural incomes through enhanced productivity and value addition.
Original Source: www.thecitizen.co.tz
