An official in the Tanzanian tobacco industry has revealed that the farmers have made another step forward on the way to establish their own bank by having collected six billion Tanzanian shillings (about $3. 75 million) in capital.
Moshi Kakoso, chairperson of Tanzania Tobacco Farmers Association and MP for Mpanda-Rural, called for more smallholder farmers to be cooperative in the founding of the bank, Xinhua learnt on Friday.
Tobacco farmers, through their cooperatives and primary societies, will be the source to their agricultural inputs using bank credits. The procured inputs will then be distributed to society members on loan basis. The members will sell their harvests in cured tobacco through their societies which would maintain accounts with the loaning bank.
Kakoso noted that the society has chosen Tabora to be the headquarters of the bank because a quarter of tobacco farmers are based in the region. Tobacco farmers can access loans from a few commercial banks in Tanzania but at very high interest rates, making it even more difficult for smallholder farmers.
The aim of setting up the bank is, among other reasons, to enable the smallholder farmers secure loans easily, said Kakoso, adding that the association has decided that it will sell tobacco in U.S. dollars to cut loss due to foreign exchange fluctuations.