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NCBA Bank Tanzania and the Tanzania Agricultural Development Bank (TADB) have signed a partnership backed by a TZS10 billion financing facility aimed at expanding access to credit for businesses across the agricultural value chain.
The arrangement is expected to increase financing capacity for eligible corporate, small and medium-sized enterprises (SMEs) and retail customers involved in agricultural activities, including production, mechanisation, processing, storage and distribution.
Under the agreement, TADB has provided NCBA with the TZS10 billion term facility, alongside a credit guarantee arrangement intended to share part of the lending risk as the commercial bank extends financing to eligible agricultural businesses.
The partnership comes as access to affordable finance remains important for businesses seeking to invest in equipment, expand production, improve storage and processing capacity and reach wider markets.
Speaking during the signing ceremony in Dar es Salaam, NCBA Bank Tanzania Managing Director Alex Mziray said the partnership would enable the bank to broaden its support for businesses operating across the agricultural value chain.
“Through this partnership, we are strengthening our ability to support businesses operating across Tanzania’s agricultural value chain with financing that can enable them to invest, expand and become more productive,” he said.
Mr Mziray said agricultural businesses had different financing needs depending on where they operate in the value chain.
For SMEs, he said, access to credit could support the acquisition of machinery, expansion of production capacity and improvement of storage facilities, while processors could use financing to expand their operations.
Larger agribusinesses could also access financing to support investments and expansion across different segments of the value chain.
TADB Managing Director Frank Nyabundege said collaboration with commercial banks could widen the channels through which agricultural businesses access financing.
“By working with financial institutions such as NCBA, we are able to broaden the channels through which agricultural businesses can access finance,” he said.
He said combining TADB’s agricultural development mandate and risk-sharing mechanisms with NCBA’s banking infrastructure and customer reach could support viable businesses across the sector.
The credit guarantee component is intended to provide additional risk-sharing support as NCBA increases lending to eligible agricultural enterprises.
The partnership also forms part of NCBA’s efforts to support customers under its Ndoto Zako, Hatua Zetu campaign, according to Mr Mziray.
“Behind every agricultural enterprise is an ambition. It could be a farmer looking to mechanise, an SME wanting to increase production or a processor looking to access a new market,” he said.
Mr Nyabundege said the success of the arrangement would ultimately depend on whether increased access to financing translated into productive investment and expansion of agricultural businesses.
“The impact we want to see is businesses accessing financing, investing productively, expanding their operations and strengthening their contribution to the agricultural value chain,” he said.
The agreement brings together a development finance institution and a commercial bank in a financing model that targets businesses at different stages of agricultural production and distribution.
The institutions said the arrangement is intended to help connect financing with productive activities across the value chain, from farm-level investment and mechanisation to processing, storage and distribution.