The role of smallholder agricultural credit in Tanzania: a case study of Isoliwata Village

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University of Dar es Salaam
This study was set out first to examine whether or not inputs provided on credit were instrumental in increasing agricultural production. Secondly, it sought to identify the problems of agricultural credit programmes at both the institutional and the former level. The study was conducted through a case study and data were gathered through review of research reports and studies on rural credit in Tanzania as well as s survey method and interviews in particular. The study reveals that modern inputs resulted in increased yields when used properly and in suitable conditions. However, there should be other necessary conditions for a successful credit scheme such as guaranteed market, prices which guarantee substantial returns, good transport system, effective extension services and timely availability of inputs which were by then the major constraints on part of the farmers. As regards institutions the Banks that had been providing credits were facing scarcity of the resources. There had been limited resource mobilization from within. Consequently, the great part of Tanzania Rural Development Bank’s loan portfolio was made up of foreign resources in the form of loans or grants from foreign governments, organization, and international bodies. There was very little financing for food crops and it was mostly limited to maize. It was further found that growers were greatly depending on credits. And the system by then had been to give them credit every year. However, credit was simply one form of capital. Credit could replace by other sources of capital as development progressed. The following conclusions were reached as regards solutions to the credit problems: Increased control of the foreign funds if at all Tanzania is to continue using external resources as she might be compelled by objective conditions; increased internal mobilization of credit funds; good planning and organization of the credit programmes and a clearly defined credit policy which identified priority sectors to which credit funds are directed. These will help to ensure that credit programmes are in agreement with and promote the national goals; Ujamaa na Kujitegemea. Although there are indications of correction of undesirable trends that have been existing in the credit system in Tanzania. Much remains to be accomplished before real socialist rural credit provision is realized.
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Agricultural credit, Tanzania
Lugusha, E, A (1979) The role of smallholder agricultural credit in Tanzania: a case study of Isoliwata Village, Masters dissertation, University of Dar es Salaam. Available at (