By Business Insider Reporter
Tanzania’s agricultural sector – long regarded as the backbone of its economy – is set for a major boost following the African Development Bank Group’s (AfDB) receipt of US$14 million under the Global Agriculture and Food Security Program (GAFSP).
The funding, announced on October 22, 2025, will support agricultural small and medium enterprises (SMEs) in Tanzania, Ethiopia, Uganda, Malawi, and Zambia, helping them gain greater access to credit, insurance, and investment capital.
The initiative is part of GAFSP’s new Business Investment Financing Track, a private-sector financing window launched in 2024 to unlock billions in agricultural financing for developing economies. This first allocation will establish a US$200 million Agro-Inputs Risk Sharing Facility, hosted by the AfDB, aimed at de-risking agricultural lending and encouraging commercial banks to finance agribusinesses that typically face credit constraints.
Catalysing finance for Tanzania’s agribusinesses
Tanzania’s agriculture sector employs about 65 percent of the country’s workforce and contributes nearly 30 percent of GDP, yet access to finance for smallholder farmers and agro-enterprises has remained a long-standing challenge.
Banks often perceive agriculture as high-risk due to weather variability, price instability, and limited collateral among small producers.
Through the new Agro-Inputs Risk Sharing Facility, local banks will receive guarantees and insurance coverage that cushion them against potential defaults – allowing them to extend more credit to agro-input suppliers, cooperatives, and SMEs engaged in input distribution, processing, and value addition.
For Tanzania, this means improved access to affordable financing for businesses dealing in certified seeds, organic fertilizers, mechanisation, and climate-resilient technologies – critical components for achieving food security and industrial growth.
“By targeting agro-input dealers and smallholder farmers, this facility intends to strengthen the entire value chain, from input supply to market access, building food systems able to withstand market shocks, including and especially environmental pressures,” said Philip Boahen, AfDB’s Coordinator for the GAFSP.
US$14m to unlock US$200 million in private capital
The GAFSP allocation includes US$10 million in de-risking capital and an additional US$4 million in technical assistance grants, both designed to catalyse up to US$200 million in private-sector lending. The facility will be implemented in partnership with the African Trade & Investment Development Insurance (ATIDI) – a pan-African institution that provides political risk and credit insurance for investors across the continent.
In Tanzania, ATIDI’s role will be pivotal in providing risk guarantees to financial institutions that support agribusinesses, especially those supplying vital inputs to smallholder farmers.
By mitigating risk, the facility will help unlock dormant capital within local banks and create a more vibrant ecosystem for agricultural financing.
“This first allocation demonstrates the appetite for funders to work together in this new model to solve an age-old challenge of finance for smallholder farmers: risk,” said Natasha Hayward, GAFSP Program Manager. “By blending donor funds with multilateral development and commercial finance, every dollar will leverage many more in private investment.”
Transforming rural economies
The initiative is expected to benefit more than 1.5 million smallholder farmers and over 500 agro-dealers and cooperatives across the five participating countries, with Tanzania emerging as one of the largest beneficiaries given its agricultural potential and established agro-industrial corridors.
By improving access to finance, the facility will enable Tanzanian farmers to adopt climate-smart practices – such as precision irrigation, drought-resistant seed varieties, and mechanised farming – that boost productivity while safeguarding the environment. The impact will be particularly significant for regions like Southern Highlands, Morogoro, and Kagera, where smallholder farmers form the backbone of maize, coffee, and horticultural value chains but continue to face financing bottlenecks.
