Tanzania Launches Bank to Boost Agriculture

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Tanzania has officially launched the Tanzania Cooperative Bank (TCB), a financial institution aimed at addressing the country’s long-standing gaps in agricultural financing.

TCB, with an initial capital of TZS 58 billion, will increase financial access for farmers, agricultural entrepreneurs, and rural communities, groups that have historically been underserved by commercial banks.

Speaking at the launch in Dar es Salaam, President Samia Suluhu Hassan reaffirmed the government’s dedication to supporting the agricultural sector, acknowledging that despite Tanzania meeting the ten percent public investment target under the 2023 Malabo Declaration, growth in agriculture continues to lag behind other sectors.

She emphasized the importance of tailored financial solutions to boost productivity and sustainability in agriculture.

The Tanzania Cooperative Bank is designed to operate under sound banking principles with a rural focus, aiming to enroll at least 10 million members by 2030.

According to the bank’s CEO, Godfrey Ng’urah, TCB is introducing a new model of agriculture-focused banking that includes targeted loan products and accessible financial services.

Currently, the bank runs four branches and 58 agents and plans to expand operations in Dar es Salaam, Kagera, and Mwanza.

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Additionally, TCB will introduce a new funding initiative supported by the Agriculture Trust Fund, which will provide low-interest agricultural loans. Agriculture Minister Hussein Bashe noted that the government’s TZS 5 billion equity stake reflects a serious commitment to financing reform.

The bank will also benefit from a debt-free start, thanks to a TZS 10 billion contribution from CRDB Bank, which will not require repayment, enabling immediate lending to farmers, youth, and women entrepreneurs.

This development comes at a time when agriculture finance in Tanzania remains critically underdeveloped, despite the sector contributing approximately 30% to GDP, 30% of export earnings, and employing nearly 75% of the population.

Currently, only 3% to 12% of commercial bank lending is directed toward agriculture, hindered by various structural challenges.

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Key obstacles include the low lending appetite of commercial banks, who view agriculture as high-risk due to climate variability, market disruptions, and lack of collateral, especially among smallholder farmers who cultivate 90% of Tanzania’s arable land.

Women and youth face additional barriers due to customary land ownership restrictions and lack of formal documentation.

Other financing challenges include high interest rates, short loan tenures, and limited access to long-term capital needed for large-scale agricultural investments.

Climate shocks such as erratic rainfall and global disruptions like the Russia-Ukraine war, which has affected fertilizer prices, further increase risks for both lenders and borrowers.

Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.