Support Agricultural Lending and Loan Product Development for a Tanzanian Commercial Bank

USAID-Funded Farmer-to-Farmer Access to Finance Program

Support Agricultural Lending and Loan Product Development for a Tanzanian Commercial Bank

Description of the Program:

Improving Economies for Stronger Communities (IESC) serves as the lead implementer for the Farmer-to-Farmer Access to Finance Program (F2F A2F) to address deficits in the financial ecosystem hindering investment and growth in agriculture for individual farmers, as well as micro, small, and medium-sized enterprises through the delivery of volunteer technical assistance. IESC has designed a thematic F2F program to generate sustainable, broad-based economic growth and create jobs in the agricultural sector with a special focus on assistance to women and youth. Focusing on Kenya, Tanzania, and Liberia, the F2F A2F Program will work with local partner organizations and volunteer hosts to field pro bono experts from the U.S. agriculture, corporate, and banking sectors to address systemic capacity constraints for farmers and lenders in each targeted country and unlock finance for improved agricultural production leading to utilization of agricultural technologies and increased sales and incomes.

Problem Statement:

Smallholder farmers represent two tremendous opportunities for financial institutions (FIs) in Tanzania: a market opportunity to grow their client base, and an impact opportunity to advance a social mission. However, increased risk in agricultural finance and the lack of specialized financial expertise of the agriculture sector are commonly quoted as the main constraints inhibiting FIs from offering agricultural finance products. Financial Institutes view farmers as poor book-keepers with limited financial skills and a lack of collateral facility. Consequently, they do not advance credit to farmers. Due to the risks involved, financial institutions’ lending decisions emphasize collateral, credit history, extensive loan processing documentation, and high interest rates. This creates major barriers for agribusinesses. However, FIs have recently become aware of the potential of the agriculture sector in Africa and have identified the link between future profitably and the growth of agricultural lending. Most financial institutions do not have internal expertise on agriculture, so they are unsure how to structure loan products that meet the needs of farmers and mitigate risk.

The Farmer-to-Farmer Access to Finance Program has partnered with a commercial bank that has been operating for over 20 years with 17 branches in the country. The bank recently established stronger leadership and hired new experienced staff in agri-finance. They are aiming to venture back into agri-lending after experiencing high non-performing loans (NPL). The bank's NPL is now 17%. The bank needs support training their staff in the technical skills needed to understand agriculture, agribusiness, and business plan analysis for agribusiness investments. This will help the loan officers make better decisions before approving loans and lower the chance of NPLs. Furthermore, the bank needs support to design and develop a user-friendly agri-lending product that meets the needs of agricultural MSMEs, helps the FI to tap into the agriculture sector, and increases its client-base and revenue.

This commercial bank needs knowledge on how to develop products that take into consideration the needs of the target audience, market trends, competitor analysis and securities regulations . The host also needs support to develop an agri-lending product for MSMEs. F2F A2F is recruiting a U.S. citizen or permanent resident experienced volunteer expert in agri-finance and agriculture product development.

Objectives:

1. Train bank staff in agriculture lending
2. Develop a loan product structure.

Deliverables:

1. Training materials
2. A loan product
3. Final trip report with four to six measurable and achievable recommendations for the host organization
4. Power Point Presentation summarizing the accomplishments of the assignment for the host organization and the USAID Mission
5. Training attendance sheets that include participants' names, ages, genders and fully completed and signed by all attendees.

Additional Travel Information:

Dar es Salaam is the largest city and financial hub of Tanzania. With a population of over five million people, Dar es Salaam is the largest city in East Africa and the 6th largest in Africa. Located on the Swahili coast, Dar es Salaam is an important economic center and one of the fastest-growing cities in the world. Its climate is hot and humid with an annual rainfall of 43 inches (1,100 mm). Swahili, also known as Kiswahili, is the official language of Tanzania and is prevalently spoken throughout Dar es Salaam. English is a secondary language used in hotels, restaurants, and areas mainly frequented by tourists.

Other key information

• Volunteer experts are expected to bring their own laptop for use on assignment
• Flights, ground transportation and hotels will be booked and paid for directly by IESC
• Volunteer experts will be provided with a smartphone with a local sim card for use during the assignment
• F2F A2F assignments are very engaging and a full-time commitment while in-country. Any tourism or other personal activities in-country must be conducted after the assignment is completed.
• Travel and lodging conditions may vary depending on the location of the assignment. Volunteer assignments may require extended travel via taxi to remote locations or stays in rural areas with fewer amenities. IESC can provide more information about travel and lodging during the volunteer onboarding process.

Volunteer Outreach:

USAID and IESC encourage all F2F A2F volunteers to participate in public outreach. An important objective of the program is to increase awareness of Americans’ good work in developing countries. Volunteers should select at least one outreach activity from the list below, to be completed within one month of return to the US:

• Write an entry for the IESC website.
• Post a photo, video, or text related to the F2F A2F assignment on LinkedIn, Facebook, Twitter, personal website or other social media site, and send a link to IESC staff.
• Send a press release to a local newspaper in the volunteer’s hometown. (IESC can provide a template)
• Write something for an alumni or professional association newsletter, or other publication. (IESC can help as needed).
• Give a presentation about the F2F A2F assignment to colleagues, students, religious group, rotary club, etc.
• Send an email about F2F A2F to friends, family, or colleagues.

Requested Expertise of Volunteer Expert:

• At least a bachelor’s degree, MBA, or equivalent in Finance, banking, Agriculture, Economics, Marketing, and any other related course
• 7-10 years of banking/Agri-finance services industry experience.
• Experience in product development, strategic planning, and implementation preferred.
• 5+ years of experience or equivalent expertise in product management or a relevant domain area.
• Advanced knowledge of the product development life cycle, design, and data analytics.
• Experience in developing Agri-lending products will be an added advantage.
• Experience working in Tanzania and/or the region is a plus.
• Strong leadership and communication skills and capacity to plan strategically and flexibly.
• Sufficiently physically fit, with appropriate medical clearance.
• Writing Skills: reporting requires good computer skills including, but not limited to, working, and generating reports with MS Word. Experience with PowerPoint presentations is desirable.
• Good writing and analytical skills, interpersonal communication, and presentation skills (adult education skills).
• All F2F A2F volunteers must be US citizens or permanent residents.

Please reach out to IESC's Volunteer Engagement Associate, Rachel Hyman, with any questions- rhyman@iesc.org