Rural finance is the best thing that ever happened to people in Tanzania. The government in collaboration with international stakeholders among others is working towards enhancing lives of people in the reserve areas. Most people living in rural areas do not have professional skills hence unemployed. Most of these people rely on manual work and traditional economic activities to make a living a living. While most of the country’s population is in the cities, rural areas significantly contribute to economy of Tanzania. Cities rely on agricultural produce from rural farms to run the fancy restaurants. Without proper structures in the agricultural industry and support from the government, the economy will cripple.
For stability in any economy, food supply has to be constant. Also, most people earn from agriculture either directly or indirectly. It’s not only farmers who benefit from it, manure manufacturers and retailers as well as owners of farm equipment rely on agricultural activity in a country. The transport sector also reaps a lot from the agricultural sector. Pointing to agriculture as an engine of this country’s economy might be an understatement because practically, all sectors rely on its performance. Realization of this fact led to Financial Sector Deepening Trust (FSDT) with focus on [url=http://www.fsdt.or.tz]rural finance.[/url]
[b]Focus of rural finance[/b]
The government embarked on this economic development agenda early in the 80s with focus on uplifting living standards and economically empowering people living in rural areas. There is a lot involved when it comes to public utilities and development goals for a group of people. The challenges are enormous but the national administration is committed to the cause and has so far boosted the country’s economy to become one of the most admirable in the region. It is not only about national revenue but individual income levels and standards of living. The government is encouraging both public and private sector banks to focus on financing people in rural areas. It is the first step of empowering people towards a common economic goal.
Components of rural finance are executed in the following categories
Restrictions and interest rates on finance have significantly reduced since the government adopted FSDT technique. People in rural areas across the country can easily access capital from banks and other financial institutions without hurdles of tight repayment periods and high interest rates. The definition of rural area is coupled with low-income neighborhoods; qualification for finance is based on location and education level of families. This is the basis of bank financing in the rural areas.
Exim bank initiated the financing process. The process began with crop and small scale financing of farmers in active production and stores facilitating the production process. As mentioned, the bank-financing endeavor covers people in low-income neighborhoods. The results are evident as most families are able to depend on farming for daily needs and rural areas are gradually opening up because of constant circulation of money. Money circulation is an important aspect of any economy.
[b]Member based organizations [/b]
Non-governmental organizations have joined efforts to support the Tanzanian government in empowering people in rural areas. It is not only about finance but also knowledge and moral support. Ignorance is one of the major causes of poverty; some people have access to resources with regards to funds but have no idea how to invest or take it into practice. Member organizations come in handy at this point to empower people in rural areas with crop growing ideas and animal production. The goal of these organizations is expanding the agricultural sector to a gigantic economic engine.
NGO’s also bring farmers together and creates a platform for sharing of farming ideas with respect to expanding and creating more channels of income. Some micro entrepreneurs programs host close to 18,000 farmers in rural areas. In such a case, it is more than sharing ideas, farmers also make monthly contributions. Farmers can sustain their agricultural needs without need of finance from the government. Members have access to loans based on their monthly contribution and repayment history.
The government recently introduced contract farming where a farmer or agricultural firm is only allowed to supply specific materials to the government for a specified period. It gives a chance to every farmer and firm to make money out of their farms and prepare for the next season. Apart from contract farming, the government has also introduced cooperative societies to help in creating a community of farmers and developing the agricultural sector. The agricultural communities are about motivating farmers and answering any questions from individuals encountering challenges in the farms.
The government can also get response from framers and complaints with regards to prices of manure and farm equipment among other necessary tools for agriculture. Farmers are often exploited by private firms when it comes to purchase of manure and produce after harvesting. The goal of rural finance is prioritizing needs of a farmer; intermediaries should not earn more than farmers in any agricultural field.
Rural finance under FSDT aims to boost income levels and living standards in all rural areas. Agriculture is the main economic activity in such regions; therefore, economic empowering squarely depends on production and performance levels in the sector. A large population is currently benefiting from rural finance.
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