Loan type, screening, repayment mode and performance of agricultural input loans in Tanzania: the case of CF union limited and exim banks

The research study is loan type, screening, repayment mode and performance of agricultural inputs loans in supporting agricultural sector development in Tanzania Lack of credit has been singled out as a critical constraint to agricultural sector development and al the moment there is government strategy to extend credit for the purchase of agricultural input. The initial experience was that of low recovery rate. In response to that experience of losing money, the fund has been working with other partner such as commercial bank as a better place to evaluate loan applicants and monitoring. The overall objective of the study was to identify loan type, screening, repayment mode and performance of agricultural inputs loans channelled through commercial banks to farmers. Specifically the study examined various agricultural credit input channelled through banks, screening criteria used in granting loans to farmers, modality of repayment preferred by bank and to determine whether the bank recover all advanced credit on time. To achieve the objective above, data from sampled farmers and agriculture input trust fund staffs were gathered and information from two banks Exim and CF-Union limited was also obtained. The questionnaire and in depth face to face interview was employed in capturing primary data from respondent, while secondary data was collected from various sources including lending banks, ministry of agriculture and various relevant agricultural material. Analysis was done using computer program known as statistical package social sciences and was based on descriptive statistics summarized the questionnaire results. The study finding indicate that banks issue four types of agro input loans including improved seeds varieties, fertilizer, equipment and chemicals. Banks uses qualitative risk assessment model (5's), business plan and Agitf test to select potential borrower. In repayment of disbursed credit the bank require farmers to make deposit of loan installments quarterly as per loan agreement. Lending banks are facing repayment problem from factor emanating from both borrowers bank while delay in repayment was a common complaint by banks. The study came up with some specific recommendation to banks, farmers and government fund scheme (Agriculture input trust fiend) toward improving performance of agricultural loans in supporting agricultural sector development.