The Citizen (Dar es Salaam)
Bethuel Kinyori
14 August 2008
The Government has been challenged to help create the environment for farmers and industrialists to access long-term loans to develop their projects. The call was made in Dar es Salaam last week by the head of a local social and economic research think tank (ESRF) in an exclusive interview with this paper.
According to ESRF executive director Dr Bohela Lunogelo (pictured), currently there are very few sources of long-term capital in the country.
He said the existence of only one financial institution that provides long-term financial to farmers and industrialists, is not healthy for national development.
"The Government has during the past two years been injecting capital in the Tanzania Investment Bank, but the grant issued has not been adequate to serve all farmers and industrialists," he said
Development experts meeting in Dar es Salaam voiced the same view, saying long-term financing should be enhanced as a measure to achieve sustainable economic growth. They said repayment for the loans should range between 10 and 50 years.
Dr Lunogelo pointed out that due to prevailing inflationary trends, it is expensive to borrow from commercial banks where the average lending rates are above 20 per cent.
He called on Tanzanians to save part of their incomes as a way of addressing the problem of investment capital. He however, noted that the lasting solution is for the Government to revive or establish investment banks.
Dr Lunogelo added that the State should also inject more capital in community banks because they are better positioned to help people access capital.
He cited the Mufindi Community Bank and Mwanga Community Bank which have proved to be very successful and effective in this area.
The banks, he explained, are a good channel for lending to savings and credit cooperative societies which serve many ordinary people at the grass roots.
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