09/02/2008

News / Two New U.S. Programs Helping Tanzanians Live Better Lives

Two New U.S. Programs Helping Tanzanians Live Better Lives

Will help farmers, entrepreneurs and energy sector
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Presidents Jakaya Kikwete and George Bush in Tanzania (© AP Images)
Presidents Jakaya Kikwete and George W. Bush in front of Air Force One in Dar es Salaam, Tanzania, February 19, 2008
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Presidents Jakaya Kikwete and George Bush in Tanzania (© AP Images)
Presidents Jakaya Kikwete and George W. Bush in front of Air Force One in Dar es Salaam, Tanzania, February 19, 2008

By Charles W. Corey
Staff Writer

Washington -- The people of Tanzania will be able to live better lives because of two new U.S. programs announced August 28 during the Washington visit of Tanzanian President Jakaya Kikwete and his delegation -- just one day before Kikwete met with President Bush at the White House.

One program, sponsored by the U.S. Agency for International Development (USAID), involves a $20 million joint credit guarantee being negotiated with CRDB Bank PLC and the African Development Bank. The credit guarantee would increase access to credit for Tanzania’s small farmers and agribusinesses and promote greater agricultural output, employment and economic growth throughout the country.

A second program, announced by the U.S. Trade and Development Agency (USTDA), awards more than $620,000 to establish operational protocols for implementing and enforcing regulations for electricity, petroleum and natural gas based on the best international practices.

Both programs underscore the important relationship between the United States and Tanzania, Acting USAID Deputy Administrator Jim Kunder told an audience gathered at USAID headquarters in Washington.

USTDA Deputy Director Leocadia Zak told the audience that energy is very important to the economic development of Tanzania. “Without energy, there would not be the possibility for industry …cold storage for the agricultural products … there would not be power for telecommunications and there would not be the ability to bring cold storage for medicines and other medical devices.”

Zak said the grant should help promote the establishment of more public-private partnerships.

“The agricultural sector in Tanzania is a major driver of economic growth,” Kunder said, employing approximately 80 percent of the country’s population. Almost a third of Tanzania’s gross domestic product is from the agricultural sector.
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Tanzanian farmer Lugonda Magaiwa in his field (USAID)
Lugonda Magaiwa harvests a new variety of chickpea seed he obtained through a USAID program at his farm in Shinyanga, Tanzania.
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Tanzanian farmer Lugonda Magaiwa in his field (USAID)
Lugonda Magaiwa harvests a new variety of chickpea seed he obtained through a USAID program at his farm in Shinyanga, Tanzania.

Unfortunately, farmers and agribusinesses, according to Kunder, “often face difficulty in accessing credit because the sector is perceived by financial institutions as risky for investment.”

Credit guarantees can help farmers and agribusinesses access financing that would allow them to expand their operations, with benefits going to the entire country, Kunder told the audience.

Credit guarantees are an important tool for economic development, he said, “because they leverage existing private-sector resources, resulting in expanded financial services to new borrowers.”

What is key, Kunder said, is that with credit guarantees, banks and farmers can develop relationships and protocols so eventually farmers and entrepreneurs will be able to seek credit from banks in Tanzania without having to rely on guarantee programs.

Kunder praised the “enormous” level of entrepreneurship in Africa and Tanzania’s private-sector economy. He called the joint guarantee program a “cornerstone” of the African Entrepreneurship Facility -- a groundbreaking public-private initiative launched by USAID Administrator Henrietta Fore to help expand the private sector in Africa.

In his remarks, President Kikwete, who is also chairman of the African Union, called credit the critical link in moving the nation and its farmers from subsistence to a production surplus and out of poverty.

He readily acknowledged the difficulty of the task because “banks don’t like to lend to small farmers.”

Kikwete recalled that when he was minister of finance, he saw this reluctance firsthand when the bankers told him: “Forget it. It’s too risky, too unpredictable."

Since then, he said, he has sought ways to help. “This announcement has made my day. … I am sure when Tanzanians get the message that this facility has been created, they will be thankful that someone has heard their cries and is ready to take action.”

President Kikwete was in Washington on a three-day visit at the invitation of President Bush, who visited Tanzania, Benin, Rwanda, Ghana and Liberia during a February 15-21 trip.

Source: http://www.america.gov/st/foraid-english/2008/August/20080829130031WCyeroC0.4381634.html?CP.rss=true

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