PASS, Equity Bank partner on loan issuance

DAILY NEWS Reporter

PRIVATE Agricultural Sector Support (PASS) Trust and Equity Bank Tanzania Limited have signed a collaboration deal in loan issuance, bringing to 12 the number of banks that the trust works with.

Under the new deal, PASS will establish a Credit Guarantee Fund (CGF), enabling Equity Bank to extend loans from its own funds to qualified borrowers, with the views of boosting lending to small and medium enterprises in agro-processing.

The CGF, equivalent to or more than expected leverage of guaranteed investments, may be invested into the bank’s products or through low risk liquid instruments with varying tenures to enable PASS anticipate and meet claims against its guarantees.

The fund, besides creating the investment income for PASS Trust, will also serve as a pool of cash from which PASS Trust settle claims against its various guarantee products.

“PASS and Equity Bank Tanzania Limited agree to fully cooperate in the execution of this financing scheme to ensure objectives of the programme are successfully accomplished,” reads the agreement that the two parties signed in Dar es Salaam yesterday.

The pact provides for Equity Bank to designate one of its senior staff to handle the PASS portfolio in the bank, with the views of enhancing loan processing administrative efficiency.

“We are delighted by the signing of this deal... it will amplify our efforts to reach as many small and medium sized entrepreneurs in the agriculture sector as possible,” PASS Managing Director Nicomed Bohay said in his post-signing speech.

Mr Bohay said the trust remains committed to supplementing the government’s industrialisation drive by encouraging and supporting prosperous agro-processing sector, technically and financially.

PASS Trust works with peasants and livestock keepers for whom it writes business plans, before linking them to commercial banks for loans, which it also guarantees.

The trust, operating as a service provider between agriculture and financial sectors has so far guaranteed over 400bn/- loans to the sector, with loan recovery rate of 95 per cent. Before Equity Bank, the trust was already working with 11 commercial banks under almost similar arrangement.

The other banks are Tanzania Agricultural Development Bank, CRDB Bank, Amana Bank, Akiba Commercial Bank, Exim Bank, TIB Bank, Bank M, National Microfinance Bank, Bank ABC, BOA Bank and Mkombozi Bank.

PASS had previously envisaged to reach 345,000 entrepreneurs in the agricultural sector this year, with projected guaranteed loans of 114bn/-.