The Agricultural Finance Markets Scoping (AgFiMS) is a diagnostic tool which was developed and implemented by FSDT in 2012 in partnership with the Gatsby Charitable Foundation. AgFiMS provides information about the demand for and supply of financial services in the agricultural sector. Its aim is to provide information that will boost the supply and access to agricultural finance in Africa through market-leading innovation and policy change.
The AgFiMS Tanzania 2011 Supply Side Report, prepared by AYANI, focuses on the supply of financial services to the agriculture sector in Tanzania. Using both qualitative and quantitative research methods to collect data from primary and secondary sources, key partners and sponsors involved in the project, include the Ministry of Agriculture, Food Security and Cooperatives, the Ministry of Finance, the Bank of Tanzania, and the Financial Sector Deepening Trust Tanzania. Agriculture is critical to Tanzania’s economy, accounting for about half of GDP, employing 80% of the workforce, and representing three quarters of exports.
The supply of finance to agriculture in Tanzania, indicates that the outstanding loan values held by end agriculture users in December 2010 was Tsh 656 billion. This amount was distributed among banks (Tsh 517 billion), MFIs (Tsh 26 billion), SACCOS (Tsh 64 billion), and the informal sector (Tsh 39 billion). SACCOS were identified as having the greatest potential to expand the supply of finance to agriculture due to their widespread presence in rural areas. Value chains are important in understanding risks and improving efficiencies in the agricultural sector.
The assessment identifies a number of factors affecting the supply of agricultural finance and provides recommendations to address these challenges. These include product development, regulatory improvements, and funding and support for SACCOS and informal groups. There is need for better access to markets, improved infrastructure, and the use of technology to enhance the delivery of financial services to rural communities.