15 April 2014

Tanzania: NMB All Out to Boost Agricultural Output

THE National Microfinance Bank (NMB) says enhancing knowledge and deeper understanding on efficient farming skills has proved to be the best way of improving productivity in the agricultural sector.

Statistics show that between 16 to 17 per cent of farmers in the country, where over 70 per cent of the population is employed in agriculture were the only ones making use of fertilizers and better seeds.

This undermines productivity. It is from this background the NMB Bank believes on the importance of training farmers on better farming methods before issuing loans for investment in the sector.

NMB Bank has now embarked on conducting seminars to farmers in different parts of the country. About 500,000 farmers from 500 groups of around 100 people each have benefitted from the seminars conducted by NMB Bank.

The bank disburses an average of 100bn/- annually for agriculture financing in different parts of the country.

The NMB Bank Head of Agribusiness, Mr Robert Paschal, said in an interview with the 'Daily News' that lack of knowledge and profound understanding of farming activities has remained a serious problem holding back nation's efforts to promote agricultural development.

"NMB agriculture financing has been a success due to continuous investment in knowledge, new product innovations and partnerships with key stakeholders which ultimately brings tailor made pool of products that are relevant to market needs and agribusiness value chains," he said.

He said the agriculture sector knowledge, market trends and price updates for selected agri-commodities are provided through the research unit to staff and clients.

Through agribusiness department, the bank has devised unique lending approach since 2008 and gathered adequate experience that makes NMB more competitive and knowledgeable in agriculture value chains financing in the market than its competitors.

The current portfolio of products range from upstream to downstream, financing from individual farmers, small, medium, large and cooperatives including agriculture input suppliers, agro processors, traders and exporters which allows agribusiness sectors to grow and create wealth for citizens.

The products offered in the scheme by the NMB Bank through agribusiness department include warehouse receipt finance product, out-growers loan schemes, NMB Kilimo Account (a saving account for farmers, short term loans and working capital.

To ensure the seminars are successful, NMB has been working closely with other stakeholders like agriculture research institutes and dealers in farm inputs so that they may understand the right time to provide farmers with the farming tools.

The Warehouse Receipt financing is a working capital facility for the purchase of non-perishable commodities like coffee, cotton, maize, cashew nut, sunflower, sesame, cocoa and other crops which are stored in approved warehouses.

The stored crop in the controlled and licenced warehouses by Tanzania Warehouse Receipt Licensing Board (TWLB) is the collateral for the loan which is assigned to the bank through warehouse receipts.

NMB can now provide funds to enable you to continue preparing for the next crop whilst your commodities are being sold.

These are loans given to registered farmer groups, individual farmers, commodity traders and businessmen dealing with non-perishable commodities like coffee, maize and cashew nut.

Some of the beneficiaries of the warehouse receipt financing are the registered farmer groups or primary cooperative societies or agricultural marketing cooperative societies (AMCOS), large farmers, local and International Trading Companies.

Its funding is extended against commodity stocked in bank's controlled and authorized warehouse after submission of warehouse receipt. The bank holds the crops stored in the warehouse until buyers pay for the crops they purchased.

The warehouse receipt system has several benefits including flexibility to farmers or primary producers to sell their produce when the market offers in good price, providing ample time and flexibility for primary producers to purchase raw materials.

Others are provision of good storage and reduction of post-harvest losses, easy access to credit for small and medium sized traders and producers, promoting quality of crops and facilitating price discoveries for farmers through participation in price setting and avoid being price takers.

The agro dealer input loan scheme is designed to facilitate or extending working capital to agriculture inputs stockist to purchase agriculture inputs and sell to farmers. The facility is given to traders to enable them withdrawal in their NMB business account balances up to a certain approved limit as overdraft.

The objective is to ensure farmers get inputs nearby, without shortages in supply and on the right time. Some of the benefits of NMB Agro-dealer Input financing are to provide extra working capital for a short period to agro dealers, available anytime, when applied for, flexible and easy to operate.

The NMB Bank out growers loans have been designed to facilitate farmers dealing with crops under contracting farming arrangements to manage getting working capital to meet costs of farming, inputs purchase, crop maintenance and meet other related costs for crop development.

The scheme works under arrangements of three parties including the bank as the financier, the buyer or processors (Off-taker) and the farmer. So far out grower loans have been extended to sugar cane farmers, barley, tea and tobacco farmers.

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