Financial Engineering
Assessing various Sources of Finance for Agribusiness Enterprises
A case of Africa Agribusiness Academy Members and Financial
Institutions in Tanzania
October, 2012
Table of Contents Table of Contents....................................................................................................................................................... 2
List of Abbreviations................................................................................................................................................ 3
Abstract.......................................................................................................................................................................... 4
SECTION I...................................................................................................................................................................... 5
Introduction............................................................................................................................................................. 5
SECTION II.................................................................................................................................................................... 6
Overview of Financial Institutions in Tanzania.......................................................................................6
SECTION III................................................................................................................................................................... 7
Accessing Finance................................................................................................................................................. 7
Response from AAA- Members....................................................................................................................... 7
SECTION IV................................................................................................................................................................... 9
Sources of Finance................................................................................................................................................ 9
Internal sources of finance........................................................................................................................... 9
External sources of finance........................................................................................................................11
Available Financing for SMEs in Kenya and Uganda...........................................................................14
Financial Products from selected Financial Institutions..................................................................15
SECTION V.................................................................................................................................................................. 28
Conclusion............................................................................................................................................................. 28
2 | P a g e
List of Abbreviations
TIB Tanzania Investment Bank
NMB National microfinance Bank
ACB Akiba Commercial Bank
DCB DCB Commercial Bank PLC
Banc ABC Banc ABC Tanzania Limited
EXIM EXIM Bank
CRDB CRDB Bank PLC
FIs Financial Institutions
MFs Micro-Finance Institutions
AAA Africa Agribusiness Academy
SMEs Small and Medium Enterprises
pa Per Annum
3 | P a g e
Executive Summary
This paper examined the financial engineering mechanism as a means to help understand
the various sources of financing for SME’s operating in the agribusiness/ agro-food sector.
Specifically the paper focused on financial institutions/commercial banks in Tanzania as
one of the sector offering a range of financial products for the agribusiness sector.
It provides a simple explanation of the range of financing products and services available to
agribusinesses. It is intended to better educate business owners on what types of finance
may be appropriate for their businesses, the expectations of lending institutions, and how
to improve the likelihood of gain better access to appropriate financing opportunities with
the loan terms and conditions best suited to their circumstances.
The survey collected data from 7 commercial banks (NMB, CRDB, TIB, Banc ABC, EXIM,
ACB, and DCB); various financial products with their terms and conditions have been
identified. AAA members have also contributed their experiences and challenges they face
when accessing funds for their businesses.
The study found that, many financial institutions do not have products or services designed
specifically for agribusinesses, although many of them are still viable lenders or investors
for this sector. Some lenders treat agribusinesses the same as businesses from any sector,
and consider them eligible for all products and services they offer while others see the
sector as a risk, thus trying to attach tight terms and conditions to minimize risk.
Overlap between various sources was observed indicating multiple sources of capital are
adopted by AAA members including loan from commercial banks, micro-finance
institutions and private sources such as personal savings, friends and relatives.
4 | P a g e
SECTION I
Introduction
Africa’s agribusiness sector is flourishing. Apart from producing food for local
consumption, the sector is supplying the food market with variety of products, creating a
large number of jobs and considerable income generation. Despite its potential, the sector
is impeded with inefficient facilities and equipment, poor quality control, difficulties in
accessing and determining the proper finance, advice and specialists training.
Finance, as one of the driving force is critical to increasing efficiency, improving product
quality, and raising the productivity and income of agribusiness actors. Without access to
finance, small and medium entrepreneurs will continue to make little investment, have
low-return production systems, and be unable to use their farm resources optimally.
Similarly, financial constraints may prevent agro-food processors from expanding their
capacities, thus limiting the amount of produce they can sell in the market.
Among the challenge facing agribusiness entrepreneurs in accessing loans is the
determinations of the best combination of financial products with favorable conditions that
will make them benefit from the investments while at the same time repay their liabilities.
Many small and medium entrepreneurs have failed to pay back their loans simply because
of the tight financial terms and conditions. There is a need to identify and evaluate different
sources of finance that will be used by entrepreneurs in selecting profitable agribusiness
loan products.
The study concentrated in determining various financing options from Financial
Institutions (banks). Information on active finance schemes developed by the bankers and
fund managers to support agribusiness sector have been collected.
The structure for the remainder of the paper is as follows; Section II provides an overview
of Financial Institutions in Tanzania. Section III provides information on accessing finance
and responses from AAA members. Section IV provides various sources of funds available,
their advantages and disadvantages and the detailed list of financial products from banks.
Lastly, section V provides the conclusion.
5 | P a g e
SECTION II
Overview of Financial Institutions in Tanzania
New commercial banks, insurance companies, stock exchange and related financial units
have been established. The entry of new banks and non-bank financial institutions has
enhanced the competition and improved the quality and type of financial products and
services provided. Currently, there are more 30 registered commercial banks and 15 non-
bank financial institutions. Each of these institutions plays an important role in financial
resource mobilization.
Most commercial banks favor short-term to long-term lending. Lending rates for long-term
are also too high to be an incentive to productive sectors of the economy. They seem to be
so risk averse that, leading to crowding-out effect of many SME’s investments.
Various types of funding are provided by Tanzania FI’s. They range from term loans to
working capital. Key product offered include housing loans, business loans to finance a
wide range of activities including working capital, equipment purchase and investments,
agricultural supplies and many more.
Business Loans are specifically designed for entrepreneurs to provide working capital or to
finance inventory and/or equipment purchases, investments, agricultural supplies or any
other business related purpose. Banks have also initiated training for senior personnel on
general agriculture issues. Future plans include strengthening the training programme in
order to position loan managers to evaluate agribusiness projects when processing loan
applications.
6 | P a g e
SECTION III
Accessing Finance
Access to finance allows SMEs to undertake productive investment to expand their
business and to acquire the latest technologies, thus ensuring their competitiveness.
However, in many business surveys, most SME entrepreneurs have identified lack of access
to credit and loan funds as the most important obstacle for the development of their
businesses.
Most of the financial institutions require security to offer financial assistance that include
land title and other fixed assets. Other lenders have tendency of asking for insurance cover,
something which most borrowers lack and thus find it difficult to get loans.
In order to make the right decisions for financing the business, SME’s should first do some
research on the type of financing needed for the business and sources of lending available
and their requirements. Seeking a loan whether through a financial institution or from any
other source, there are some requirements that need to be gathered first. Armed with this
knowledge, SME’s will be prepared to secure financing for the business.
Response from AAA- MembersAs a part of the study, several AAA members have contributed their knowledge and
experience on accessing various sources of finance especially with the Financial
Institutions.
Members mentioned a combination of different sources of finance for their businesses.
They include;
Personal savings
Borrowing from friends and relatives
Project revenue
Small personal loans from Micro finances wit interest rates ranging from 10% to
30%
Commercial Term Loans from commercial banks
7 | P a g e
Despite other factors, commercial loans which are provided by commercial banks have
been mentioned to be the major source of fund for members. Loan’s terms and conditions
also seemed to affect most agro-food processors
Interest rates are very high (form 19% to 30%)
Loan Fee/ bank charges
- Fees are high form 1.5% to 5% of the amount of the loan
- Processing fees excludes project inspection costs
- Insurance is also charged even for the loan with collaterals
Time bound
Immediate repayment of loan. Example, you access loan this month, the next
month you start paying back.
Collateral- Collateral is mandatory and the loan is up to 70% of that collateral.
Other constraints that face members when acquiring additional external finance
particularly from Financial Institutions include;
Lack of customer care among credit officers. They treat customers like beggars and
forget that customers are their partners. Some loan officers are very helpful and
friendly whereas others are difficult to work with.
They retain collaterals for the whole loan period while large amount is already paid
back.
They expect bribe for fast processing of the loan.
Credit officer lack the technical skills of the project proposal presented to them i.e.
technical knowhow, returns cycle, SWOT analysis etc.
Most Financial Institutions do not have loan product designed for agribusiness/
food processors.
Among the mentioned sources of finance, grants are the best source of fund that members
would prefer. However, loans with favorable conditions and less harassment by credit
officers is another best alternative. At the moment there is no choice rather than going to
the same financial institution, searching for reasonable equity, angel investors and compete
for grant money.
8 | P a g e
SECTION IV
Sources of FinanceFinance is available to a business from a variety of sources both internal and external. It is
crucial for businesses to choose the most appropriate source of finance for its several
needs as different sources have its own benefits and costs.
Internal sources of financeThese are funds readily available within the firm. They include Personal savings, Retained
profits, Working capital and Sale of fixed assets.
Personal savings/ equity capital
This is the amount of money the owner, partner or shareholder of a business has at his
disposal to do whatever he wants.
Advantages
No collateral needed to lend money to the business.
There are no documents required.
The money need not necessarily be paid back to the owner on time.
Can be interest free or carry a lower rate of interest since the owner provides the
loan.
Disadvantages
Personal savings is not an option where very large amounts of funds are required.
Since it is an informal agreement, if the owner demands the money back in a short
notice it might cause cashflow problems for the business.
Retained profit
This is the cash that is generated by the business when it trades profitably. The retained
profit is saved by the business as a back-up in times of financial needs and maybe used
later for a company’s development or expansion. Retained profits are a very valuable no-
cost source of finance for any business, large or small.
Advantages
There are no interest payments to be made on the usage of retained profits
9 | P a g e
Disadvantages
There may be opportunity costs involved.
Retained profits are not available for starting up businesses or for those businesses
that have been making losses for a long period.
Working capital
Working capital refers to the sum of money that a business uses for its daily activities.
Proper working capital management can be a source of finance for a business.
Advantages
Since it is an internal source of finance there are no costs involved in acquiring it.
Disadvantages
Opportunity costs are involved.
Is not suitable for long term investments.
Working capital cannot raise large amounts of funds.
Total risk is undertaken by the company
Sale of fixed assets
Sometimes where the fixed asset is a surplus and is abandoned, it can be sold to raise
finance in demanding times for the business. Some examples of fixed assets are land and
building, machinery, vehicles, fixtures and fittings and equipments.
Advantages
No interest payments are required.
Large amounts of finance can be raised depending on the fixed asset sold.
It is an ideal source of finance if it is for an asset replacement.
Disadvantages
If the asset is sold then the business would lose opportunities to generate income
from it.
If the business wants to buy a similar asset later on it may cost more than it was sold
for.
If the asset is sold and the money is spent without return then the business is broke.
10 | P a g e
The asset may be able to generate more income than the purpose it was sold for.
External sources of financeThese are sources of fund which can be obtained from outside the business. They can either
be Bank overdraft, Loans, Grants or venture capital
Grant
Grants are funding given to businesses for programs or services that benefit the community
or public at large. Grants can be given by the government or private firms. For example a
grant may be given to open a new factory where unemployment is high.
Advantages
Grants do not have to be paid back.
There are no costs involved in obtaining a grant.
Disadvantages
Grants are given on certain restrictions and laws imposed by the government.
Not all businesses are eligible for grants.
Grants are given freely and therefore are very competitive because lots of firms try
for the same source of fund.
Venture capital
It is the capital that is contributed at the initial stages of an uncertain business. The
investor expects to have some influence over the business.
Advantages
Venture capitalists invest large sums of money in the business.
They may also bring a lot of experience and expertise along with the money
Since they become owners by investing in the business they have equal interests in
the business’s success.
Disadvantages
11 | P a g e
The profits will be shared with the investor.
Acquiring venture capitals is a lengthy and complex process where a business plan
and financial projections must be submitted to the potential venture capitalist
As an owner of the business the venture capitalist may want to influence the
strategic decisions and take control of the business.
Business Angels
These are wealthy, entrepreneurial individuals who provide capital and also share personal
business management experience with the entrepreneur in return for a proportion of the
company equity. They take a high personal risk in the expectation of owning part of a
growing and successful business.
Advantages
Business Angels are free to make investment decisions quickly
There is no need for collateral - ie personal assets
no repayments or interest
A business angel with the right skills can strengthen a business by, for example,
offering marketing and sales experience
Disadvantages
It takes longer time to find a suitable Business Angel investor
Giving up a share of your business
Borrowing from friends and family
This is also a common source of fund coming from friends and family members who are
supportive of the business idea. This can be quicker and cheaper to arrange (certainly
compared with a standard bank loan) and the interest and repayment terms may be more
flexible than a bank loan. However, borrowing in this way can add stress to an
entrepreneur, particularly if the business gets into difficulties.
Loans
12 | P a g e
Small and mid-size firms finance their operations by applying for fixed-term bank loans,
overdraft agreements or lines of credit facilitated by Financial Institutions.
Bank overdraft
Bank overdraft is a short term credit facility provided by banks for its current account
holders. This facility allows businesses to withdraw more money than their bank account
balances hold. Interest has to be paid on the amount overdrawn. Bank overdraft is the ideal
source of finance for short-term cashflow problems. As a result, an overdraft is a flexible
source of finance, in the sense that it is only used when needed.
Advantages
No security is needed for a bank overdraft.
Ideal for short-term cashflow deficits.
Easy and quick to arrange.
Interest is only paid when overdrawn and on the exact amount needed
Disadvantages
There is a limit to the amount that can be overdrawn.
Interest has to be paid on an overdraft that is calculated on a daily basis and
sometimes the bank charges an overdraft facility fee too.
Overdrafts are meant to cover only short-term financing and are not a permanent or
long-term source of finance.
Bank loan
Loans are amounts of money borrowed from banks or other financial institutions for large
and long-term business projects such as the development or expansion of the
business. Bank loans are good for financing investment in fixed assets and are generally at
a lower rate of interest that a bank overdraft.
Advantages
Large amounts can be borrowed.
Suitable for long-term investments.
Interest rates are lower than for bank overdrafts and are set in advance.
Disadvantages
13 | P a g e
Collateral and other business documents are needed.
The amount borrowed has to be repaid at the agreed date.
Interest is charged.
Available Financing for SMEs in Kenya and Uganda
Formal financing from financial institutions are significant to keep the business operational
of SMEs in Kenya and Uganda. Most SMEs are run by capital from private sources. However,
majority of SMEs currently take courage to approach commercial banks and micro financial
institutions to source for external finance.
Various sources of capita including loans from Commercial banks, MFs, and private sources
such as personal savings, friends and relative are very important and frequently used by
SMEs in Kenya. In Uganda, apart from personal savings, friends and relatives, other popular
ways in which SMEs finance their businesses includes banking sector financing, lease
financing, venture capital, credit purchase and equity financing.
Financial Products from selected Financial Institutions
Information provided by financial institutions regarding their products and services
represents an example of products, terms, and conditions. Financial institutions will
14 | P a g e
determine loan conditions for each loan and customer, based on their own risk analysis,
policies and procedures. The interest rate for any financial products depends on the market
rate, however in most cases the interest rate on lending depends on number of factors for
instance loan loss potential, risk involved and administration expenses. All these influence
the cost of capital.
Bank Name: Tanzania Investment Bank (TIB)
1. Address: P.O. Box 9373 Dar es Salaam 2. Website: www.tib.co.tz
3. E-mail: [email protected] 4. Tel: +255 22 2411101-9
5. Fax: +255 22 2411095
Please Note: Telephone and fax numbers may change.
6. Branches: Building No. 3, Mlimani City Office Park, Sam Nujoma Road, Dar esSalaam.
Consolidated Holding Corporation Building- Samora Avenue/ Zanaki Street, Dar es Salaam
7. Type of Finance Available: Agricultural Project Financing Window
Products Range Interest Rate Maturity Fee CollateralAgricultural Loans TZS. 50M-
1000M5%-8% pa 6 months-
15 years2% Outstanding portfolio,
Fixed deposits, Legal mortgage
8. Collateral: Primary collaterals to be pledged to the bank must rank first in priority. The
primary security must be owned by the project. Third party property can only
be accepted as supplemental security.
9. Documents/ Information Required:
Application letter indicating
15 | P a g e
i. type and amount of credit required
ii. purpose
iii. Source of repayment and time
Legality of the Borrower
i. Memorandum and Articles of association
ii. Certificate of registration/incorporation
iii. Valid business license
iv. Recent annual returns filed with the Registrar of Companies (for companies)
Business operations
i. Audited annual accounts for at least one year
ii. Latest interim financial statements (management accounts).
iii. A feasibility study (business plan)
iv. Partial Budget covering list of activities to be done, cost of production, quantity
of produce, price of output, revenues, profits etc.
v. Financial projections covering the period for which the facility is requested.
vi. Existing and previous banking relationships and borrowing history (other
debts/ bank statements).
vii. History and details of Company ownership, qualifications and experiences of the
management team (CVs).
viii. List of major buyers and suppliers with their applicable terms.
Security Description
i. First priority legal mortgage on farm/business property being financed.
ii. Photocopy of title deeds.
iii. Insurance on fixed & floating assets.
10. Eligibility Criteria:
16 | P a g e
The Agriculture Window funds are intended for financing agricultural and livestock
production, processing and marketing.
A borrower must be legally in existence in Tanzania and registered with the
appropriate recognized authority (i.e. as a limited liability company or SACCOS or
community bank, etc.)
A borrower must have a good business track record and must have been in the
agriculture industry for at least one year.
The entity has to exhibit good corporate governance and demonstrated
management competence.
The minimum total equity contribution is 30% of the total project cost, of which
10% must be in cash to be deposited with TIB. In the absence of cash, the minimum
equity required is 40% of the project cost.
There must be detailed information on the availability of markets for the products
to be produced by the project.
The project must have ability to generate revenue for interest payment during the
specified grace period.
The borrowing entity must be having good borrowing records and demonstrated
sound financial management.
The farm land where agricultural activities to be financed will take place must be in
the ownership of the borrowing entity.
11. Other terms and conditions
The borrower must be a limited Liability company
The borrower should have good track record (Startups that meet other critical
eligibility shall be considered)
Possibility for a grace period depends on the type of loan.
Bank Name: DCB Commercial Bank PLC
17 | P a g e
1. Address: P.O. Box 19798 Dar es Salaam 2. Website: www.dcb.co.tz
3. E-mail: [email protected] 4. Tel: +255-22-2172201
5. Fax: +255-22-2172199
Please Note: Telephone and fax numbers may change.
6. Branches: DCB House, Magomeni Mwembechai, Temeke branch, Ukonga branch,
Chanika branch, Tabata branch and Arnautoglu Branch, Dare se Salaam
7. Type of Finance Available: All products are available to SMEs and Agribusinesses that
satisfy the criteria. Loans for small, micro and medium
businesses, mortgage loans, individual loans, salaried loans
and housing microfinance
Products Range Interest Rate Maturity Fee CollateralBusiness loans (SME's and MSE's)
TZS.1m and above
22% pa 2 wks- 5 yrs
2% upfront + 1% insurance
Immovable property
Group loans TZS.200,000 -2m
2.5% per month
2 wks- 5 yrs
2% upfront + 1% insurance
Immovable property
8. Collateral: Depends on the amount of the loan. Immovable property, if movable should
be insured. Insurance of the object of financing is mandatory for the entire
repayment period.
Immovable Securities e.g. Land or buildings Movable Securities e.g. Vehicles, chattels like household items, or stocks of goods Guarantors e.g. personal, company or employer guarantee All loans of above 10 million must be secured by a registered Mortgage.
9. Documents/ Information Required: Legal business registration document
10. Eligibility Criteria: The bank finances all profitable projects based on prudent bank
criteria (viability of the proposal)
18 | P a g e
Sole Proprietorship Business Individual Business Men/Women Companies
11. Other terms and conditions: For newly established companies, financial projections
are required.
12. Summary comments: Business should be functioning actively. More favorable terms
for the next loan application. The borrowers who have timely
and fully repaid the previous loan can take a certain type of a
loan to a certain amount without much consideration on
collateral.
Bank Name: Banc ABC Tanzania Ltd
19 | P a g e
1. Address: P.O. Box 31 Dar es Salaam (Head Office) 2. Website: www.bancabc.co.tz
3. E-mail: - 4. Tel: +255 22 111990, 2119517
5. Fax: +255 22 2112402
6. Branches: - Upanga, Kariakoo, Quality Centre- Dar es Salaam and Arusha
7. Type of Finance Available: All products are available to SMEs and Agribusinesses that
satisfy the criteria.
Products Range Interest Rate Maturity Fee CollateralTerm loans TZS. 1m-500m 26% pa 24 Months 2% Mortgage, vehicles,
Overdraft TZS.1m-500m 26% pa 24 Months 2% Mortgage, vehicles,
8. Collateral: The collateralized immovable and/or movable property is subject to insurance by an insurance company
9. Documents/ Information Required: Legal business registration document
10. Eligibility Criteria: loans are provided to legal entities engaged in production, trade or
services that are privately owned with a profitable operating
history.
11. Other terms and conditions: Legal entity with positive operating results in the last three years.
12. Summary comments: More favorable terms for the next loan application. The
borrowers who have timely and fully repaid the previous
loan can take a certain type of a loan to a certain amount
without much consideration on collateral.
-Loan processing takes 3 weeks
Bank Name: CRDB Bank Plc
20 | P a g e
1. Address: P.O. Box 268 Dar es Salaam 2. Website: www.crdbbank.com
3. E-mail: [email protected] 4. Tel: 022-2116714/2133067
5. Fax:
Please Note: Telephone and fax numbers may change without notice.
6. Branches: All over the country
7. Type of Finance Available: Business and agribusiness financing. All products are
available to SMEs and Agribusinesses that satisfy the
criteria.
Products Range Interest Rate Maturity Fee CollateralBidii Working Loans
TZS.1m-300m 20-24% pa 3-12 Months Up to2% Mortgage, vehicles, immovable property
Bidii Investment Loans
TZS.1m-500m 20-24% pa 3-5 years Up to2% Mortgage, vehicles, immovable property
8. Collateral: Depends on the amount, the purpose of the loan and the client’s
creditworthiness.
9. Documents/ Information Required:
Viable business proposal
Business license
Tax Payer Identification Number (TIN)
Tax Clearance Certificate
Other documents will depend on the level of business. Contact Branch
Directors/Managers or SME Relationship Managers at any CRDB Bank branch.
21 | P a g e
10. Eligibility Criteria: All food and agricultural processors, inputs and materials
suppliers, and traders/distributors of food and agricultural products are eligible for
financing.
Applicant age must be at least 18 years.
The business must have been in operation for at least 3 years.
The business must have operated an account with CRDB Bank for a period of not
less than 3 months.
11. Other terms and conditions: Loan analysis looks on; Viability of the business proposal- 80%
Applicant should have a CRDB Bank account- 15%
Collateral/ Security-5%
12. Summary comments: More favorable terms for the next loan application. The
borrowers who have timely and fully repaid the previous loan
can take a certain type of a loan to a certain amount without
much consideration on collateral.
Bank Name: National Microfinance Bank (NMB)
22 | P a g e
1. Address: P.O. Box 9213, Dar es salaam, Tanzania 2. Website: www.nmbtz.com
3. E-mail: [email protected] 4. Tel: +255(0)22 2161000
5. Fax: --
Please Note: Telephone and fax numbers may change without notice.
6. Branches: 140 Branches, all over the country
7. Type of Finance Available: Range of loan products and other banking services. All
products are available to SMEs and Agribusinesses that
satisfy the criteria.
Products Range Interest Rate
Maturity Fee Collateral
Business loans (SME's)
TZS.1 milion-1 Billion
18% pa 12-60 months
1.5% Immovable property
NMB Juhudi Loan Scheme
TZS.5Milion-500Million
18% pa 12-60 months
1.5% Immovable property
Overdraft Facility TZS 50m and above
18% pa Up to 12 months
1.5% Immovable property
Kilimo Loans TZS. 500000-7.5m
16% pa 12months 1.5% Farm size
8. Collateral: Depends on the amount and the purpose of the loan
Immovable property, if movable should be insured. ( House, vehicle, Equipments)
9. Documents/ Information Required:
Loan application letter
Cash flow projections for the period of the credit
Audited financial statements for the last three years and up-to date management
accounts for financing above TZS 15Mln
Business License (certified copy)
23 | P a g e
Tax Identification Number and Tax Clearance Certificate (certified copy)
List and certified copies of security/ collateral documents (with ownership
documents).
Bank statement for at least recent six months with satisfactory account turnover.
Valuation reports done by a professional valuer for financing above TZS 30 million
attached with official search for the title deed.
Business plan for medium and large businesses and simple investment plan for
small loans up to TZS 30 million
Bills of quantities, technical specifications and drawings if the loan is for financing
the constructions.
Suppliers’ invoice if the loan is for the purchase of vehicles, equipment, machinery
or any assets of this nature
Collateral document
10. Eligibility Criteria: All food and agricultural processors, inputs and materials
suppliers, and traders/distributors of food and agricultural
products are eligible for financing.
11. Other terms and conditions: Applicant must be at least 18 years of age with at least business experience.
12. Summary comments: Loan terms are relaxed for the next loan application provided
that the customer has fully paid the previous loan within the
stated time.
Bank Name: Akiba Commercial Bank PLC
24 | P a g e
1. Address: P.O. Box 669 Dar es Salaam 2. Website: www.acbtz.com
3. E-mail: [email protected] 4. Tel: +255 22 2118340/3
5. Fax: +255 22 2114173
6. Branches: Ubungo, Buguruni, Tegeta, Kinondoni, Mbagala, Tandale,Temeke, Ukonga, Ilala, Kariakoo- Dae es Salaam. Moshi and Arusha
7. Type of Finance Available: All products are available to SMEs and Agribusinesses that satisfy the criteria.
Products Range Interest Rate Maturity Fee CollateralBiashara small TZS.
500,000-20m
22% pa 6-24 months
1% loan preparation1% Insurance +Tsh10,000 Processing fee
House, vehicle, chattels
Biashara Pevu/ large
TZS.20m-50m
20% pa 6-24 months
1% InsuranceTsh 10,000 loan Processing
House, vehicle, chattels
8. Collateral: Depending on the amount of the loan
Mostly Immovable property, if movable should be insured
9. Documents/ Information Required: Legal business registration document/ TIN
number, Sales agreement, Residential License and Title deed
10. Eligibility Criteria: The applicant should have an experience in business with positive
operating results.
11. Other terms and conditions: For newly established companies the loan needs to be
secured by highly marketable collateral
12. Summary comments: The loan will be processed within 5 days after the submission of the loan application.
Bank Name: EXIM Bank
25 | P a g e
1. Address: P.O. Box 1431 Dar es Salaam 2. Website: www.eximbank-tz.com
3. E-mail: [email protected] 4. Tel: 2293401
5. Fax:--
Please Note: Telephone and fax numbers may change without notice.
6. Branches: Coastal zone (Samora Avenue, Exim Tower, Clock Tower, Temeke, Namanga,
Ubungo, Mlimani City, Nyerere Road, Kariakoo, Buguruni,Tanga, Zanziba and
Mtwara), Southren zone( Iringa and Mbeya), Central zone(Morogoro), Lake
zone(Mwanza), Northern zone( Arusha, Babati, Karatu, Moshi)
7. Type of Finance Available: All products are available to SMEs and Agribusinesses that
satisfy the criteria. (Agribusiness loans, Term loans, Trade
finance, working capital finance.)
Products Range Interest Rate
Maturity Fee Collateral
Agribusiness loans
Depends on the viability of the plan and the security pledged
23% pa Up to 3yrs 2% Comprehensive Insurance,Title deed
Term loans( Long term)
Depends on plan and the security pledged
23% pa Up to 3 yrs 2% Comprehensive Insurance,Title deed
Short term finance
Depends on the viability of the plan and the security pledged
23% pa Up to 12 months
2% Comprehensive Insurance,Title deed
8. Collateral: Depending on the amount and the purpose of the loan. Combination of
security instruments is applied in compliance with the Bank’s credit
26 | P a g e
policies and procedures. Proposed collateral should have a proof of
ownership
9. Documents/ Information Required:
Proof of ownership of assets to be used as collateral (Title deed)
6 months audited Financial Statement
Comprehensive Insurance
Business Plan
10. Eligibility Criteria:
The loan applicant should have a current bank account
The bank finances all profitable projects based on prudent bank
criteria.
11. Other terms and conditions: The extent of the security to be provided by the loan
applicant depends on the evaluation of the applicant’s
good standing, amount of the loan and the maturity.
12. Summary comments: Having the required collateral doesn’t guarantee the applicant
to get loan. The customer should satisfy all the bank
requirements.
SECTION V
Conclusion
Agribusiness sector can increase agricultural productivity and production, thus
contributing to economic growth and increased well-being of the people. Its potential to
27 | P a g e
increase and stabilize food supply is especially important in light of the ongoing food crisis
in Africa. Expanding the agro-food industries require actors to have access to financial
services. Effectively tailoring financial services and products to support agribusiness
sector in different settings and among different client groups will be essential to success.
Various sources of financing are available. Not every business can use all of the available
financing choices. Choosing the right financing source is based on these vital points
including business condition and the interest rate or the other cost of the finance. Some
financial products are more flexible than others depending on the business situation.
While lack of adequate collateral can be a key constraint to accessing financing, business
management and cash flow are actually the most important issues with regards to loan
repayment, because you repay the loan from the cash flow of well managed business. It’s
the management that runs the business and determines the success of the business. It is
critical to getting financing that you can demonstrate exactly how you will repay the loan
with interest and fees.
Banks are reluctant to extend loans to SMEs for substantial amounts due to the risk
involved. It is suggested that SME’s should be trained to understand different sources of
funds available, their advantages and disadvantages and the procedures involved in
accessing loans. There is also a need to sensitize SME’s to undertake a saving culture so as
to spare funds for future investment other than relying on loans with high interest rates.
Regular dialogue with members will help to form a shared vision and build a consensus
about the best way forward.
28 | P a g e