8 February 2013

Tanzania to Provide Youths With Loans for Agricultural Enterprises

Dar es Salaam — The Tanzanian parliament on Monday (February 4th) passed a resolution to form a new government programme that will provide loans to youths under 35 who are interested in starting agricultural businesses.

Nzega parliamentarian Hamisi Kigwangalla, who introduced the legislation in parliament, said the Youth Fund will be an important means to curb the problem of youth unemployment in the country.

Under the new legislation, 200 billion shillings ($24 million) will be earmarked annually from the national budget starting in the next fiscal year, which begins in July.

Results from the 2012 population and housing census showed that there are 44,929,002 people in Tanzania, with 63% of the population below the age of 30. Kigwangalla said most of those youths are faced with few job opportunities and this programme will help open up their career prospects and help the country meet existing agricultural demands.

"Banks have stringent requirement for accessing loans, especially youths who have no collaterals," he told Sabahi. "Youths, whether individually or in groups, will have access to loans from now on".

Officials who spoke to Sabahi said the new funding programme will be used as a complement to existing efforts that help finance and empower youths to create their own employment opportunities.

Attempting to unlock Tanzania's agricultural potential

Honest Ngowi, an economist and lecturer at Mzumbe University, told Sabahi that the Youth Fund will be an excellent way to stimulate food production in Tanzania.

"Financing agriculture has been a major problem for this country," he said, adding that private banks have traditionally been reluctant to finance agricultural projects because they are more volatile and can take up five years to make a profit. "This fund will unlock [Tanzania's] potential in agriculture," Ngowi told Sabahi.

He said previous efforts by the government to solve the unemployment problem failed to focus on agriculture, which employs about 80% of working Tanzanians.

However, he said, the success of the programme will depend on the criteria the government will use to select the youths who will receive money, and whether the government will provide initial training to adequately prepare them to take the financial responsibilities associated with running a business.

Complete transparency throughout the process will be particularly important, Ngowi said.

Similarly, John Mnyika, a 32-year-old lawmaker from the main opposition party Chama cha Demokrasia na Maendeleo, welcomed the initiative but was sceptical the government would fund it consistently.

Mnyika cited a similar youth programme that the government initiated in 1994 that received only 1.7 billion shillings in funding in the last 10 years. "I wonder what will be the difference from this newly formed fund," he told Sabahi.

Dar es Salaam resident Joyce Mwingira, 27, also supports the government in allocating money to fund youth's entrepreneurial spirit, but said for the programme to be successful it should be managed by young people who can inject new ideas to tackle the unemployment problem.

"We need youths' money to be managed by youths who are going through the same pains," she said.

More details in the coming months

Director of Youth Development in the Ministry of Information Culture and Sports Elisante Ole Gabriel told Sabahi it is too early to criticise how the government will be manage the fund.

"The fund has been just formed this week, so it is too early to comment about it," Gabriel told Sabahi. "We need to sit and plan the implementation mechanism. But in short our common goal is to empower youths whether the money comes from the bank, the mosque or the church."

He said the government would now have to figure out ways to combine the existing youth fund and the newly formed one in order to ensure the smooth operation of all programmes aimed at tackling youth unemployment.

Gabriel said in the coming months the government will provide more details about how and where to apply for funding, and that money will be available starting July 1st.

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