Tanzania Secures $154 Million Loan from Japan for Agricultural Growth and Rural Development

Published on 14th January 2024

Tanzania has secured a Sh354.45 billion loan from Japan, marking a significant step in enhancing its agricultural sector and supporting rural development. The loan will fund the Agricultural and Rural Development Two-Step Loan Project, a five-year initiative aimed at addressing key challenges within the sector, such as access to finance, productivity enhancement, and climate-smart agricultural practices.

The project is a collaboration between the government of Tanzania and the Japan International Cooperation Agency (JICA), with the Tanzania Agricultural Development Bank (TADB) tasked with its implementation. Dr. Mwigulu Nchemba, Tanzania’s Minister for Finance, emphasized the importance of this partnership in boosting the agricultural sector’s growth. He highlighted that the financial support will help farmers gain access to affordable, long-term financing, enabling them to adopt modern farming techniques, improve productivity, and increase efficiency in crop production.

“This project will enable farmers and agricultural businesses to invest in modern technologies, quality inputs, and advanced farming practices,” Dr. Nchemba stated. “By diversifying crops and implementing climate-smart practices, we are setting the foundation for improved food security and sustainable rural development.”

Dr. Nchemba further emphasized that this loan aligns with Tanzania’s National Five-Year Development Plan, focusing on competitiveness and industrialization to promote human development. He also pointed out the long-standing relationship between Tanzania and Japan, with Japanese support playing a key role in sectors like agriculture, water, education, health, and infrastructure over the past 60 years.

Frank Nyabundege, Managing Director of TADB, expressed confidence that this loan would significantly impact Tanzania’s agriculture, which remains a major contributor to the economy. Despite its importance, agriculture continues to face challenges such as limited access to affordable finance and inadequate infrastructure. With this loan, TADB will be able to offer medium- and long-term sub-loans to farmers, cooperatives, and agribusinesses to enhance agricultural productivity, strengthen value chains, and support the commercialization of the sector.

The project will focus on five key agricultural value chains: maize, rice, wheat, sunflower, and horticulture. Special attention will be given to supporting youth and women, two critical groups for the future of agriculture in Tanzania. Nyabundege stressed that the project is not just about providing funds, but also about building the capacity of TADB and its partners to deliver effective financial solutions that can sustain long-term growth in the sector.

JICA’s Executive Senior Vice President, Ms. Katsura Miyazaki, reiterated JICA’s commitment to Tanzania’s agricultural transformation, stating that the agency would continue to support the country’s efforts to build a more resilient and sustainable agricultural sector. She noted that JICA is also preparing a new project, the Tanzania Food Systems Resilience Program (TFSRP), in collaboration with the World Bank, to further strengthen food security and resilience across the country.

This new initiative reflects the deepening cooperation between Tanzania and Japan, highlighting the shared commitment to fostering sustainable agricultural practices, improving rural livelihoods, and promoting economic development. With this financial backing, Tanzania is poised to make substantial progress in addressing agricultural challenges, driving growth, and creating a more prosperous future for its rural communities.