IFAD Supports Farmers? Credit Scheme In Tanzania


Smallholder farmers all over Africa have every reason to smile due to interventions from the International Fund for Agriculture Development (IFAD) that aims at addressing pressing issues affecting them (farmers).

Production and profit are rising despite challenges posed by climate change and low access to credit facilities among other difficulties.

The timely intervention of IFAD in encouraging and supporting farmers in rural Tanzania to start up co-operative credit unions has greatly helped the farmers to solve the age old problem of accessing low interest loans to help them procure equipments.

Over seven-hundred and six farmers in the village of Mbokomu in the rural district of Moshi in the region of Kilimanjaro have become self sustaining and are in active production of dairy products due to the loans they have been able to access from the local Saving And Credit Co-operative Society (SACCOS) started in 2003.

SACCOS started as an initiative of the locals with support from the government of Tanzania under a Rural Financial Service Programme (RFSP) in collaboration with IFAD to work out a scheme to help farmers who had been hard hit by climate change and the absence of credit to start small and medium scale productions.

A visit to Mbokomu proved that this project which has been operating for a decade now, has really achieved its purpose as smiling beneficiary farmers were quick to share their successes with visiting journalist from different African countries to Moshi district.

Over 393 million Tanzanian shillings have been disbursed as loans to smallholder farmer at an interest rate of 20% per annum. About 85% of the recipients are women who have proved capable of running their businesses. The interest rate was set by the farmers themselves.

The farmers receive an average of 1.3 million Tanzanian shillings in credit. The recovery rate has been very successful because the farmers understand the system to be a revolving fund meant to benefit other farmers who might be in queue waiting for credit. This partly accounts for the sustainability of the scheme for close to a decade.

The purely farmers credit co-operative is administered by a board of directors with well qualified staff trained by IFAD through capacity building workshops and periodically given refresher training to update their skills on modern banking practices.

Farmers who access loans from SACCOS on soft terms go into dairy production that has ready market thanks to a processing plant started by the Lutheran Church of Tanzania in Mbokomu. Milk and other dairy products are sold to neighbouring Kilimanjaro, Arusha and other parts of the country.

After selling their produce to the factory, the farmers are able to re-pay the loans and also earn dividends on their savings as shareholders in SACCOS.

The Rural Financial Service Programme has since phased out but IFAD is still available and continues to provide guidance for the continuance stay of the scheme to keep the smallholder farmers going.

Chairman of the board, Mrs. Eliasaria Kissanga, explained that farmers are trained on how to save their proceeds from the sale of their dairy products and on how to judiciously use the loans advanced to them.

SACCOS since its establishment has brought banking services to the door-steps of the rural dwellers and has also inculcated in them the habit of savings. The practice of saving monies in bedrooms and other mind boggling places has become a thing of the past.

Kissanga expressed gratitude to IFAD for standing by SACCOS all these years and admitted that the capacity training on financial management given to them by IFAD has greatly helped in keeping the co-operative going.

A 79 year old farmer, James Lekashingo, a beneficiary of the scheme revealed how he has been able to put his children through education after becoming a member of SACCOS and accessing loans under soft terms.

His first time with banking services was during his encounter with this local co-operative. Like many other rural African farmers, accessing credit is always a distant dream.

After starting his animal husbandry with a cow, he now boasts of three well bred cows that are producing milk at full capacity. With the help of his wife, they also rear pigs on commercial basis.

To solve his transportation problems, Lekashingo has acquired a motorbike which has proved helpful in the running of his fast growing small scale animal husbandry.

He now also spots a set of fine lower front artificial teeth that enables him to wear smiles whenever he is interacting with colleagues. He confesses that this would not have been possible without the help of SACCOS and IFAD.

This near octogenarian farmer who has found success at such a late age suggested that more women should be involved in the scheme. This is largely because in most rural Tanzania, women are now the brains behind animal husbandry and the bread winners of many families following the collapse of coffee farming that put most men out of jobs.

He also suggested that further education should be given to the farmers to create awareness as a means of ensuring the sustainability of SACCOS.

Mss Debora J. Mchau and Apaelise F. Kassinga, both farmers who have also benefited from the credit scheme are now bread winners providing for the up keep of their homes.

Like all savings and loans schemes, SACCOSS faces some challenges that include default in loan re-payment albeit loan recovery has been comparatively commendable.

The scheme also has a low capital base that makes it difficult to advance huge amounts as loans to ambitious farmers desirous of going into large scale crop and animal husbandry.

The low capital base of SACCOS has largely been the result of poverty which is endemic in rural Africa. Farmers who are into crop production are hard hit by the effects of climate change thereby impinging on income generation.

Almost all the rivers, streams and dams in Mbokomu that used to fuel irrigation have run dry. Banana farming which was the mainstay of fruit production has become a thing of the past.

A tree planting exercise was started in the area with funding and other help from the government of Japan. The result of this is yet to be achieved. It is hoped that this would help salvage the precarious situation faced by farmers.


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