Africa-Press – Tanzania. CRDB Bank has hugely slashed the lending rates to farmers to a single digit to stimulate the economy–-shattered by the coronavirus pandemic.
In this grand initiative, the lender lowered the interest rate on agriculture loans from 20 per cent to 9 per cent to boost lending to the key economic sector that employs over 75 per cent of the country’s workforce.
In the same vein, the bank has slashed the lending rate for salaried employees to 13 per cent from 16 per cent.
CRDB Bank Chief Executive Officer and Managing Director Abdulmajid Nsekela said the significant reduction in interest rates on loans to farmers and workers was the result of the bank’s pledge and implementation of President Samia Suluhu Hassan directives issued last November that centered on boosting the economy.
“Last year, we sat with our regulator in the country, the Bank of Tanzania (BoT), and started the process of reviewing interest rates for various loans offered by us…
I am proud to see today (yesterday) we have come up with a solution that solves the long-standing cry of our customers,” said Mr Nsekela at a press conference on Monday.
The CEO challenged the society to seize the opportunity of a reduced interest rate that would ease repayment methodology while increasing the ability to apply for a large number of funds.
Last November, Mr Nsekela as the Chairman of Tanzania Bankers Association (TBA) during the 20th Conference of Financial Sector (COFI) told President Samia that the banking sector is part of the society and wanted the market to have affordable interest rates to push the economy forward.
“After some loan simulation the banks now are ready to lower interest rates…in coming days you will see some start lowering the rates,” Mr Nsekela, promised the President who was the chief guest of the COFI.
The promise followed the president’s plea to the banking sector to throw a second eye on high loan interest rates which backpedalled the economic growth.
On Monday, Mr Nsekela said the agricultural loan interest reduction to 9 per cent is the largest in the market, noting that the bank had offered the discount to help strengthen the agricultural sector which contributes 26 per cent of GDP and provided 75 per cent of jobs for Tanzanians.
“Our goal is to accelerate the revolution in the agricultural sector in the country by enabling smallholder farmers to timely modernise agriculture through affordable loans for inputs and agricultural implements,” said Mr Nsekela.
CRDB is the country’s leading commercial lender in the agricultural sector by providing 40 per cent of all agricultural loans in the country.
The reduction in interest rates on agricultural loans reflects the CRDB’s commitment to supporting the government’s efforts to bring development to Tanzanians in practice.
Over the past three years, the bank has provided loans of more than 1.6tri/- to stakeholders in the agricultural value chain.
For employee loans, CRDB said they are committed to further improving the welfare of workers in the country through low interest loans.
“Employees are an important group for our bank that is why we have been improving on interest rates for this group every year to help them achieve their goals which will increase efficiency in their workplaces,” said Mr Nsekela adding:
“This is the third time in the last five years for CRDB to reduce interest rates on employees’ loans. We expect that employees will seize this opportunity to improve their lives and that is exactly the goal of CRDB Bank.”
The government and BoT, in recent months, have been calling on financial institutions to reduce lending interest rates to boost the economy.
To achieve this the BoT has taken various policy measures including reducing the amount that banks are required to deposit with the central bank, as well as establishing a special fund of 1.0tri/-, which will be used to lend to banks and financial institutions at low interest rates to enable them to cut borrowing costs as well.
According to Mr Nsekela, these new government measures are helping to stimulate economic growth, by enabling many banks to have sufficient liquidity to lend to borrowers at low interest rates as has been done by CRDB.
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