Boosting Tanzania’s Agricultural Sector: African Development Bank Grants $2 Million Credit Guarantee and $528,600 Grant for Fertilizer Access

Tanzania’s smallholder farmers are poised for a massive boost in productivity thanks to a $2 million partial credit guarantee and a $528,600 grant provided by the African Development Bank (AfDB). The funding is designed to facilitate greater access to fertilizer for over half a million Tanzanian farmers, in a bid to bolster the nation’s agricultural sector.

In collaboration with the African Fertiliser and Agro-Industry Partnership (AFAP), the AfDB-managed Africa Fertilizer Financing Mechanism (AFFM) will assist suppliers and importers in purchasing fertilizer for Tanzanian hub agro-dealers. This significant investment is part of the AFFM Partial Credit Guarantee Provisioning Project approved on 24 May 2023.

The primary aim of the project is to enhance access to quality inputs through a functional, efficient, and sustainable fertilizer supply chain. The initiative also seeks to improve access to finance for large fertilizer distributors, thereby ensuring the timely availability of appropriate fertilizers for smallholder farmers.

Implementation of the project, which will span from July 2023 to July 2026, includes support for hub agro-dealers to access the credit guarantee facility, an effort to increase fertilizer availability, and dedicated project management and coordination.

AFAP will expand its current project activities to include five additional regions – Ruvuma, Manyara, Rukwa, Kagera, and Mwanza, besides the 14 regions where the 2019 credit guarantee project was implemented.

This move by AfDB aligns with its Feed Africa Strategy, aiming to increase agricultural productivity and food security in Tanzania. The project will engage five suppliers and 35 hub agro-dealers as direct beneficiaries, 1,000 retailers as indirect beneficiaries, and ultimately, 550,000 smallholder farmers as the ultimate beneficiaries.

Tanzania’s agricultural sector, which constitutes 29% of the country’s GDP and employs 65% of the populace, is expected to benefit immensely from this initiative. Despite the government’s efforts through the Agricultural Inputs Trust Fund and the Agricultural Development Bank, the need for well-structured financial products and services in the agricultural sector remains high. The AfDB’s project aims to bridge this financing gap and help Tanzania achieve the Abuja Declaration target of 50 kg/ha of nutrient consumption.

The collaborative initiative is set to revolutionize Tanzania’s agricultural landscape by increasing fertilizer accessibility, thereby driving crop yields, enhancing food security, and potentially boosting farmer incomes. With technical assistance and capacity building for hub agro-dealers and suppliers, the project’s effects will likely be long-lasting, fostering sustainable growth in Tanzania’s agricultural sector.