Pilot to boost access to finance for forest and farm producer organizations in Tanzania
Arusha – A new pilot initiative to expand direct access to finance for forest and farm producer organizations in the United Republic of Tanzania through innovative financial mechanisms was launched this week in Arusha.
Implemented by the Forest and Farm Facility (FFF) under the Food and Agriculture Organization of the United Nations (FAO), the USD 1 million pilot project will strengthen financial inclusion for organizations that represent smallholders, rural women’s groups, local communities and Indigenous Peoples’ institutions.
“By bringing together small-scale farmers and forest users, producer organizations help to collectively improve market access, strengthen livelihoods and manage natural resources sustainably – but they need the right financial partners,” said Ewald Rametsteiner, Deputy Director of the Forestry Division at FAO and Officer-in-Charge for FFF. “This pilot project is about helping financial institutions see their potential and catalyzing innovative financing.”
Strengthening the role of blended finance
Efforts to boost sustainable rural development in Africa are growing, such as the African Forest Landscape Restoration (AFR100) Initiative, which aims to restore 100 million hectares of degraded land in Africa by 2030 by linking restoration, entrepreneurship and financing.
However, many small enterprises in food production, forest stewardship and climate resilience struggle to get loans or funding because they may lack formal paperwork or financial records, and most financial products are not designed to match the long time it takes for land restoration projects to generate returns.
Supported by FAO’s Flexible Voluntary Contribution, the FFF’s pilot project aims to put into action a new operational model that goes beyond relying solely on grants or microfinance and channels funds directly to producer organization members through national and local financial institutions.
The pilot will test new tools with banks and cooperatives, and deploy blended finance instruments – such as concessional loans, guarantees, revolving funds, and insurance–tailored to the needs of small-scale producers in forestry, agroforestry, honey, coffee, nurseries, and other forest- and farm-based value chains.
The pilot in Tanzania will be followed by similar initiatives in Bolivia and Ghana.
Launch during the Tanzania Matchmaking Event
The launch of the project took place back-to-back with the Tanzania Matchmaking Event, held in Arusha from 25 February. Organized by FAO under the “Supporting AFR100 by engaging with small-scale forest and farm producers” programme and the FFF, the event brought together producer organizations, restoration-linked enterprises, domestic financial institutions, and impact investors to connect viable forest and farm projects with potential financiers.
It also aimed to address the challenges faced by the “missing middle” – enterprises often too large for microfinance yet too small or informal to qualify for commercial lending.
The Swedish International Development Cooperation Agency, the UK’s Foreign, Commonwealth and Development Office and the German Federal Ministry for Economic Cooperation and Development are core funders of the FFF, which contributed most of the funding for both the matchmaking event and the pilot launch.
The FFF is a partnership between FAO, IIED and IUCN, and AgriCord.