[Tanzania] National Microfinance Bank invests in agriculture with $28 million package
The National Microfinance Bank, NMB, has announced it is setting aside $28million in the next five years to boost agriculture led activities as it seeks to boost the country’s 2025 dream of attaining mid-level economic status through agriculture.
According to the bank’s managing director Ineke Bussemaker the emphasis on agriculture funding stems from the vision of the bank's shareholders -- the Tanzanian government and Rabobank of the Netherlands – which is to promote agribusiness. The bank is also mulling doubling the amount in coming years depending on farmer's initiatives and their demand for loans.
"Our bank has decided to play a vital role in the agricultural value chain and pioneered warehouse receipt financing for the country's Amcos [agricultural marketing cooperative societies]," she said. According to her, food and agribusiness continues to be a significant part of NMB's business, providing input to hundreds of Amcos' financing emerging and commercial farmers and supporting processors and traders of agricultural commodities (value chain) with their trade finance foreign exchange and investment needs.
To support the initiative, she said that the bank has hired loan officers throughout the country who will be closer to the farmers and enable easier access of loan facilities. She explained that the bank aims to reach farmers in different ways including the use of mobile phones to train them on how to access loans as well as other forms of communication including crops development challenges among others.
"We are also advising farmers to open accounts with us because as long as we identify them as our clients, it becomes easier to loan them," she said.
Currently, NMB has at least 2.1 million customers, which means that about 40percent of all Tanzanians who have a bank account actually hold an account at NMB. The bank also finances a rapidly growing SME segment with over 60,000 customers.
Mr Pascal explained that their loans comprise of short term loans of 1 to 2 years whose interest rate is between 7 and 8percent for small scale farmers who mostly do small scale farming. Medium-term loan of two to five years at an interest rate of nine to10 percent for purchasing tractors, grinding machines and post-harvest technology.
The third scheme is the long term loan of to 15 years of an interest rate of 11 to 12 per cent construction of markets, irrigation farming and expansion of commercial farming. The bank has in recent past made huge investment in agriculture led models as it seeks to tap into growing interest from farmers.
Its agricultural portfolio of products ranges from upstream to downstream which represents financing from individual farmers, small, medium, large and cooperatives including agriculture input suppliers, agro processors, traders and exporters which allows agribusiness sectors to grow and create wealth for both men and women in Tanzania.
To enhance knowledge and deeper understanding of the agriculture sector; the bank has set up a research unit within the agribusiness department. Agriculture sector knowledge, market trends and price updates for selected Agri-commodities are provided through the research unit to staff and clients.
Key to success in NMB agriculture financing has been the continuous investment in knowledge, new product innovations, and partnerships with key stakeholders, creating a tailor made pool of products that are relevant to market needs and agribusiness value chains.
