Fresh hope for agriculture as Samia launches Cooperative Bank

Dar es Salaam. The Tanzania Cooperative Bank (TCB) was officially launched on Monday, marking a significant milestone in improving access to financing for the agricultural value chain. The bank, with an initial capital of Sh58 billion, promises to cater to the financing needs of entrepreneurs, farmers, youth, women and other Tanzanians.

The launch ceremony was graced by President Samia Suluhu Hassan, who said that the government’s commitment to addressing the financial needs of farmers and supporting the agricultural sector.

She directed the Ministry of Agriculture, the Ministry of Finance and the Bank of Tanzania to collaborate in creating policies that enhance financing for agriculture.

“This initiative will involve key stakeholders such as the Tanzania Agricultural Development Bank (TADB) and commercial banks,” President Hassan said, underlining the need for effective allocation of funds to boost agricultural production and value addition.

While Tanzania has met the ten percent investment requirement outlined in the Malabo Declaration of 2023, President Hassan acknowledged that the growth of the agricultural sector remains sluggish compared to other sectors. She emphasized the need to increase capital investment in agriculture, which, she noted, would not only benefit the sector but the national economy as a whole.

“The newly launched Cooperative Bank will provide financial resources to strengthen the agricultural sector. It is designed to operate under sound banking principles, remain self-sustaining and focus on reaching rural Tanzanians.”

The bank is set to play a pivotal role in supporting rural economies, with a particular focus on cooperatives. While cooperatives have grown at a modest rate of 4.1 percent, President Hassan called for proactive measures to enhance their contribution to the country’s GDP, focusing on governance, transparency and stability. With 51 percent ownership by cooperative members, the bank aims to improve food security and the overall economy.

TCB’s services will be designed to help farmers manage risks such as crop losses. Starting with a capital of Sh58 billion, the bank plans to expand its services into rural areas, encouraging greater collaboration between financial institutions and supporting agricultural growth across Tanzania.

Cooperative Bank of Tanzania (CBT) chief executive Godfrey Ng’urah highlighted the bank’s fresh approach to agricultural finance. Though not the first cooperative bank in Tanzania, the CBT is being reintroduced after 40 years with a new vision. Ng’urah explained that the bank would provide easy access to capital for agriculture through affordable and simple terms.

He also acknowledged the support of CRDB Bank, which contributed Sh10 billion to the bank without any repayment obligations, allowing it to start operations debt-free.

“The Cooperative Bank currently operates four branches in Moshi, Tabora, Mtwara and Dodoma, with 58 agents. Plans are underway to open three additional branches in Dar es Salaam, Kagera and Mwanza,” Ng’urah said. He also noted that the bank targets women, youth entrepreneurs and farmers, aiming to enroll 10 million members by 2030.

Tanzania Cooperative Development Commission chairperson Abdulmajid Nsekela, emphasised the vision for cooperatives to become self-sustaining businesses with effective management.

He pointed to efforts to address losses and corruption within cooperatives, focusing on digitization and transparency to improve their operations.

“It is vital that this bank and its operations are aligned with existing cooperative systems to assess the potential for sustainable investment,” he said, expressing confidence in the bank’s success, particularly given that it started without loans.

Agriculture minister Hussein Bashe announced a special funding initiative at the Cooperative Bank, supported by the Agriculture Trust Fund. The funds, managed via the Agricultural Inputs Trust Fund (AGITF), will provide farmers with low-interest loans and reduce financial risks.

Mr Bashe emphasised that the bank’s focus on short-term lending would complement TADB’s long-term agricultural infrastructure lending.

“The government’s Sh5 billion equity stake in the bank signals our deep commitment to reform and agricultural development,” he said.