Dar es Salaam. Banks’ confidences in the agriculture sector has continued to improve following a sharp increase in lending, which is good news to farmers and agro-processors.

Credit grew by 45.8 per cent during the year ended in March this year, compared with 34.1 per cent in February.

The Bank of Tanzania (BoT) monthly economic review for April shows that the growth was higher than in other sectors of the economy.

The review shows that the sector’s credit growth was negative throughout last year before jumping to positive growth in January, this year.

This has also pushed up agriculture’s share of credit to the private sector to 8.5 per cent in March from 8.1 per cent in February and 6.5 per cent in March 2018.

Speaking with The Citizen yesterday, Tanzania Agricultural Development Bank (TADB) managing director Japhet Justine said the growth could partly be attributed to the purchase of cashew nuts using domestic funds.

“In most years, purchases of cashew nuts were done using external funds, and that is why they did not reflect on banks’ books,” he said.

He added that TADB paid a total of Sh600 billion to at least 400,000 cashew nut farmers.

He also said TADB financed the purchase of other commercial crops, including coffee, through guarantee schemes.

“Most banks were shying away from financing the agriculture value chain, but our involvement has increased other banks’ appetite in financing the sector,” Mr Justine noted.

He said the growth of agriculture lending was also due to increased loans to the livestock sub-sector, with the bank planning to lend a total of Sh30 billion.

“We want to unlock financial investment in agriculture to catalyse the value chain,” he said, adding that he expected further growth of agriculture financing during the third and fourth quarter of this year.

Mining and quarrying, manufacturing, personal and transport loans also registered growth, but were lower than credit extended to agriculture.

However, building and construction, trade as well as hotel and restaurants contracted by 2.1 per cent, 2.4 per cent and 7.2 per cent, respectively.