IFAD signs agreement for US$90.6 million loan to Tanzania

Rural financial services and markets to get a boost

A US$90.6 million loan from the International Fund for Agricultural Development (IFAD) to the United Republic of Tanzania will enhance access to rural financial services and markets and promote private-sector development in the country, the United Nations rural poverty agency has announced.

The loan agreement for the Marketing Infrastructure, Value Addition and Rural Finance Support Programme was signed on 25 February in Rome by Mustafa Mkulo, Minister for Finance and Economic Affairs of the United Republic of Tanzania and Kanayo F. Nwanze, President of IFAD. The loan will be extended to the country on highly concessional terms.

In the United Republic of Tanzania, agriculture is recognized as a significant driver for growth. However, its potential is yet to be exploited fully to bring about a significant reduction in rural poverty. Smallholder producers have limited access to financial services, markets and opportunities for value addition.

To address rural finance and marketing issues, the programme will scale up some of the successful activities implemented under two pilot programmes – the Agricultural Marketing Systems Development Programme and the Rural Financial Services Programme, completed in 2009 and 2010 respectively.

The new programme, cofinanced by the African Development Bank (AfDB), the Alliance for a Green Revolution in Africa (AGRA), the Government of the United Republic of Tanzania and the beneficiaries will support the implementation of the agricultural sector development strategy. The strategy envisages a modernized, commercial, highly productive and profitable agricultural sector by 2025.

The programme is expected to enhance the capacity of participating commercial banks for sustained lending to agriculture, and strengthen rural microfinance institutions with improved governance and management systems. The marketing groups obtaining higher revenues from improved access to markets and increased synergies in agricultural marketing and rural finance activities will help improve the livelihoods of poor rural people.

Over 500,000 vulnerable rural households, including smallholder farmers, herders and fishers, small-scale rural entrepreneurs, traders and artisans, grass-roots microfinance institutions, processing and marketing groups, very poor rural women and rural young people, will benefit directly from the programme.

With this new programme, IFAD will have financed 15 programmes and projects in the United Republic of Tanzania for a total investment of US$3,591.8 million benefiting nearly 4 million households.