Community banks vital to agriculture, says official
Community banks are an effective tool in developing agriculture as envisaged by the ‘Kilimo Kwanza’ vision, a banker said yesterday.
Speaking at the annual conference of the Community Banks Association in Dar es Salaam, the general manager of Moshi-based Uchumi Community Bank, Mr Fuhanael Kihurwa, said financial resources were crucial to facilitating farmers’ purchase of inputs and machines to improve their agriculture.
He observed that due to lack of financing, Tanzania?s agricultural sector, which is dominated by small-scale farmers, continued to be underdeveloped.
“Low resource inputs applied to agriculture explains the country’s poor performance in agriculture. Availability and use of various agricultural inputs is very low, and so is mechanization and use of irrigation methods,” Mr Kihurwa said.
He noted that if well capitalised and adequately utilised, community and cooperative banks, which were closer to farmers, could make the implementation of ?Kilimo Kwanza’ (Agriculture First) vision and strategy possible.
Contrary to a misconception in the mainstream banking sector, investing in agriculture is good business, he added.
“Agriculture can potentially contribute a leading role in GDP growth rate and controlling inflation. Dealing with small farmers is least capital intensive and the resulting incremental capital to output ratio is conceptually the highest. It is attractive public investment,” he said.
To better help farmers who are scattered throughout the Tanzanian hinterland, Mr Kihurwa suggested that it is important to organise them in formal groupings to reduce transaction costs. This can be achieved by strengthening production, marketing and service cooperatives, as well as savings and credit cooperatives (saccos).
Most community and cooperative banks had inadequate capital to meet the needs of all clients, and he therefore urged the Government and other stakeholders to invest in such banks to help them perform better.
Source – The Citizen