Business

$57.2 million worth loans await horticultural farmers

Tanzania's banks often hesitate to lend the industry

February 7, 2018

A nursery attendant of the Tanzania Horticultural Association attends to Hass avocado (Persea Americana) seedlings on the outskirts of Njombe township. Farmers of the crop can access bank loans through the Private Agricultural Sector Support (PASS) Trust with effect from this year.

By Joe Lihundi, Tranquility News Reporter, Arusha

A credit access fund plans to inject TSh128 billion ($57.2 million) into commercial agriculture in Tanzania this year in a bid to spur investments in the horticulture sub-sector.

The Private Agricultural Sector Support (PASS) Trust in 2017 assisted in pumping TSh114 billion ($50.9million) loans into the agricultural sector, with 65 per cent of them going to producers of food crops, mostly maize and rice.

The Pass Managing Director, Mr Nicomed Bohay, said in its efforts to invigorate the horticultural sub-sector, the credit access facility will this year reach out as many small and medium-scale farmers as possible.

He wondered that only 3 per cent of the 2017 credit went to the industry with the highest growth rate in the agricultural sector, which is currently considered to be a sleeping giant in the country.

Horticulture, which has of late been attracting youth and women, grows at 11 per cent a year, compared to barely 4 per cent growth rate registered by the mother sector.

Thanks to the Tanzania Horticultural Association (TAHA) for devising and working on strategies which have seen several challenges inhibiting growth of the industry dubbed green gold resolved.

One of the upcoming producers of Hass avocado in Njombe Region, Tanzania, Erasto Ngole and his wife stand infront of a house and a vehicle they obtained after investing in a 10-acre farm of the lucrative crop surrounding the household. PHOTOS | JOE LIHUNDI

Horticulture in the country approximately produces over 6 million tonnes of cut flowers, vegetables, fruits, horticultural seeds and spices exported through Jomo Kenyatta International Airport in Nairobi, Kenya, and Julius Kambarage Nyerere and Kilimanjaro international airports in Tanzania.

The sub-sector fetched the Tanzania coffers $700 million in revenue in 2016, equivalent to 43 per cent of the country’s agricultural exports, making it the fastest growing industry after tourism and service sectors.

“Taha is our natural choice,” said Mr Bohay shortly after penning a Memorandum of Understanding with Taha in Arusha last weekend.

He attributed achievements of the industry to good knowledge and skills the horticulture’s outfit has over the years been imparting on farmers.

Mr Bohay said the agreement will not have an expiry date and that the major role of Pass will be conducting feasibility studies for bankable business plans for the farmers.

Taha chief executive officer Jacqueline Mkindi said, in turn, that the role of the association will be to identify bankable horticultural farmers and traders, including input suppliers, in all 15 regions the association operates.

Through its agronomists scattered around the regions, the voicing platform for producers, traders, exporters and processors of horticultural products will then build the capacity of the identified farmers and traders.

“We’ll also link them up with markets through logistics support services of our subsidiary, Taha Fresh,” said Ms Mkindi, admitting that local horticultural farmers are in dire need of the Pass services.

Tanzania Horticultural Association Chief Executive Officer Jacqueline Mkindi and the Private Agricultural Sector Support (PASS) Trust Managing Director Nicomed Bohay (right) exchange documents of a memorandum of understanding which will see horticultural farmers and traders in Tanzania secure bank loans through the trust.

Pass boasts providing 560,000 bankable projects with guarantees for TSh400 billion ($179 million) worth loans secured since the inception of the charity organization 17 years ago.

With a goal of stimulating investments and promoting growth of commercial agriculture and agribusiness in Tanzania, Pass offers a range of business development financial services.

They include feasibility studies, business plans, capacity building in specific technical areas and creation of farmers’ groups for contract farming, input supply credit, produce-price negotiations and advisory services.

Pass also assists eligible individuals, associations and companies in accessing loan facilities for their viable investments through appraisals of write-ups in line with specific terms and conditions of and linkages to banks.

It also offers partial credit guarantee cover given to the collaborating bank to top up inadequate collateral depending on the impact of the investment on agricultural value chains.

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