5 August 2014

Tanzania: NMB Bank Touts Increased Financing to Farming Projects

AS the climax of Farmers' Day (Nanenane) approaches, the National Microfinance Bank (NMB), has urged farmers to access variety of financing products and services designed to boost the sector.

Boosting agriculture productivity is among priorities that the NMB Bank has always sought to enhance and boost the sector's contribution to economic growth and lift millions of Tanzanians out of abject poverty. According to 2007 National Accounts Data, agriculture remains the mainstay of Tanzania's economy.

In value-added terms, agriculture generates 29 per cent of gross domestic product (GDP), industry 24 per cent and services 47 per cent. With only two years since it started financing the agricultural sector, its progress has been remarkable. The bank has managed to develop the right products and services to reach farmers of different categories.

The NMB Agribusiness Manager, Mr Isaack Masusu, said in an interview that the bank has selected few key commodities in some areas in order to be closer and serve farmers better.

For example, the bank has been focusing in enhancing knowledge and deepening understanding on efficient farming skills and this has proved to be the best way of improving productivity in the sector.

The Nanenane celebrations going on across the country is a unique opportunity for farmers to access NMB agriculture products and services to boost output, individual incomes and economic growth.

"With the largest branch network, NMB will be available and present in the seven agriculture zones designed to serve better farmers," he said. For example NMB is financing sugarcane farmers in Turiani and Kilombero, but also tea growers in Lushoto as well as barley farmers in Arusha and West Kilimanjaro.

The same is the case with tobacco growing in Tabora, maize cultivation in Rukwa and coffee farming in the southern highlands. Similarly, the available statistics show that between 16 to 17 per cent of farmers in the country, were the only ones making use of fertilizers and improved seeds.

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.

"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.

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

Others are provision of good storage and reduction of postharvest 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 extend working capital to agriculture inputs stockist to purchase agriculture inputs and sell to farmers. The facility is given to traders to enable them withdraw 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. Thus "nanenane" remains a unique opportunity for farmers to visit and access NMB range of products and services offered and designed to make agriculture sector contribution go up. NMB Plc is one of the largest commercial banks in Tanzania, providing banking services to individuals, small to medium sized corporate clients, as well as large businesses.

It was established under the National Microfinance Bank Limited Incorporation Act of 1997, following the break-up of the old National Bank of Commerce, by an Act of parliament .Three new entities were created at the time, namely: NBC Holding Limited, National Bank of Commerce (1997) Limited and National Microfinance Bank Limited. Initially NMB could only provide payment services as well as offer savings account, with limited lending capabilities, before becoming a fully-fledged universal retail bank. In 2005, the Government of the United Republic of Tanzania privatized the bank when it sold part of its shareholding (49%) to a consortium led by the Coöperatieve Centrale Raiffeisen- Boerenleenbank B.A. ('Rabobank Group') Subsequently, there was further divestiture in 2008 when the Tanzanian Government offloaded another 21 per cent of its shareholding to the Tanzanian public through an initial Public Offering(IPO).The listing of the bank's stock on the Dar es Salaam Stock Exchange has led to a diversified ownership structure.


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