Press release n. IFAD 07/01

Rome, 31 January 2001. The International Fund for Agricultural Development (IFAD) will extend a loan of 16.3 million dollars on highly concessional terms to finance the IFAD-initiated Rural Financial Services Programme in Tanzania. The total cost of the programme is 23.8 million dollars. The loan agreement was signed today at IFAD headquarters by the President of IFAD, Mr. Fawzi Al-Sultan, and by the Ambassador of Tanzania to Italy, His Excellency Costa Ricky Mahalu.

The programme, co-financed by the Swiss Government with a grant of 2.2 million dollars, will receive an OPEC Fund loan of 2.2 million dollars. The Government of Tanzania will contribute 2.7 million dollars, while the beneficiaries’ contribution is estimated at 400 000 dollars.

The Rural Financial Services programme will cover three zones, southern, central and western Tanzania, where IFAD’s previous micro-credit and savings operations have created the necessary conditions and enabling environment through awareness-building, operational facilities and financial viability for further development and replication. The targeted regions have a predominance of rural poor along with the existence of viable farm and off-farm income-generating activities. The programme would help the country to address the rural poverty situation through building a financial system with roots at the village level, based on the principle of private banks, with emphasis placed on savings mobilization, extension of financial services, and good governance. Major efforts would also be carried out through Non-government organizations and community based organizations.

Specifically, the programme will target rural solidarity groups including women and the landless, and the rural grass-roots micro-finance institutions that serves them (i.e. village banks). There are now 395 rural credit and savings cooperatives and 68 credit and savings associations involved in various forms of micro-finance activities in the programme area. The programme will seek to provide wider and easier access of micro-finance services to poor farmers, women, the landless and other vulnerable segments of the rural population, in order for them to undertake income-generating activities.

To date, IFAD has financed nine projects, for a total assistance amounting to 119.29 million dollars on highly concessional terms, including four grants totaling 620 000 dollars.

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IFAD is a specialised agency of the United Nations with the specific mandate of combating hunger and poverty in the most disadvantaged regions of the world. Since 1978 IFAD has financed 578 projects in 114 countries, allocating almost US$ 7 billion in the form of loans and grants. Through these projects, about 250 million rural people have had a chance to move out of poverty.

IFAD makes the greater part of its resources available to low-income countries on very favourable terms, with up to 40 years for repayment and including a grace period of up to ten years and a service charge of 0.75% per year.