The Central Zone in Tanzania dominates agricultural, forestry, and fishing loans, securing 45% of loans in these sectors, vastly exceeding the national average. With a total loan value of Sh5.57 trillion, the region is witnessing significant growth attributed to increased credit access and recognition of agriculture as a viable investment. Experts underscore the potential long-term economic benefits of this trend.
The Central Zone in Tanzania has distinguished itself as a leading area for agricultural, hunting, forestry, and fishing loans, securing 45 percent of all related loans—significantly surpassing the national average of 16.9 percent. According to the latest Consolidated Zonal Economic Performance Report, the value of bank loans in the Central Zone, encompassing Dodoma, Morogoro, Singida, and Tabora, reached Sh5.57 trillion, representing 17.1 percent of the nation’s total bank loans, which amount to Sh32.66 trillion.
The Central Zone holds the position of the second-largest recipient of bank credit nationwide, following Dar es Salaam, which commands 53.6 percent of the total. Demonstrating a remarkable year-on-year growth rate of 59.4 percent, loans in the Central Zone have increased by 35 percent compared to June 2024, indicating a heightened demand for credit, primarily fueled by agricultural activities. This surge underscores the region’s strong reliance on farming and agribusiness.
In addition to its production of cash crops such as tobacco, sunflower, grapes, and cotton, the Central Zone also contributes staple food crops like maize, millet, and sorghum. Agriculture, alongside livestock, forestry, and beekeeping, has fostered an increased need for bank loans, prompting financial institutions to develop credit facilities aimed at supporting agribusiness.
Economists attribute this rapid expansion of agricultural loans to several factors, including favorable economic policies, improved access to credit, and a growing acknowledgment of agriculture as a viable investment sector. Dr. Tobias Swai, an economist at the University of Dar es Salaam, emphasized the role of financial institutions’ confidence in farming as a growth sector. He articulated that “with improved access to credit, farmers can invest in better inputs, modern equipment, and processing facilities, leading to higher yields and greater market competitiveness.”
Dr. Swai also highlighted the risks associated with agricultural lending, which include unpredictable weather conditions and market fluctuations. He proposed enhanced collaboration between banks and insurance companies to safeguard farmers from potential losses. Dr. Mwinuka Lutengano from the University of Dodoma noted that reduced interest rates have made credit more accessible, which encourages farmers and agribusiness owners to expand operations, thereby enhancing productivity and generating employment opportunities.
Dr. Lutengano projected that the increasing financial support for agriculture in the Central Zone will yield long-term benefits for both farmers and the broader economy, enhancing food security and export revenues, thus contributing to Tanzania’s economic stability. Dr. Donald Mmari, Executive Director of the Research on Poverty Alleviation (Repoa), remarked that rising agricultural loans offer a chance to modernize farming practices and elevate rural incomes. He stated, “Financing agriculture is not just about production; it also drives value addition, infrastructure development, and rural transformation. With the right policies, this can be a game-changer for Tanzania’s economy.”
Economist Dr. Daudi Ndaki from Mzumbe University asserted that the increase in agricultural lending indicates a transformative perception of agriculture as a profitable venture. He noted, “When banks invest heavily in agriculture, it means they see potential for high returns. This will attract more investors into the sector and help in the commercialisation of farming.”
The Central Zone’s dominance in receiving agricultural loans showcases a significant growth dynamic within the region’s agribusiness sector. This trend is fueled by accessible credit, favorable economic conditions, and a shift in perception towards agriculture as a profitable venture. With continued investment and the right policy frameworks, these developments could lead to heightened productivity and broader economic stability in Tanzania.
Original Source: www.thecitizen.co.tz
