The Smallholder Credit Guarantee Scheme (SCGS) is an individual guarantee administered by the Tanzania Agricultural Development Bank (TADB) for agriculture loans extended to smallholder farmers by the Eligible Banks (EB).  The guarantee to EB is aimed at covering 50% of the principal loan defaulted by the borrowers, after the EB has followed the procedure laid down in this regard.

SCGS does not provide any guarantee cover for the defaults in the payment of interest on the guaranteed loans. The guarantee strives to mitigate the credit risk of underlying loans extended to agricultural sector.


The mission of the SCGS is to encourage commercial banks to improve lending to smallholder farmers who are excluded from the formal banking services.


The SCGS seeks to encourage adoption of modern farming methods/techniques by the smallholder farmers through access to financial services, in order to create employment, promote food security and transform their operations from subsistence to commercial farming.


The SCGS will be administered by the Tanzania Agricultural Development Bank (TADB), under an agency agreement between itself, the Government of the United Republic of Tanzania (through the Ministry of Finance & Planning) and MIVARF.


The SCGS is applicable only to the licensed commercial banks operating in Tanzania. The eligible banks (EBs) will be selected on a competitive basis . The Eligible Banks would also be required to sign a guarantee contract agreement with the Administrator, which shall govern the implementation of guarantee mechanism between the both the parties. Primarily the applicant bank must be:

  • Licensed under Banking and Financial Institutions Act;
  • Complying with all the regulations and prudential norms stipulated by of BoT; and
  • Focusing on increasing agricultural loans to smallholder farmers.

TADB aimed at mitigating the risk perception from the lender’s point of view, as the guarantor undertakes the engagement to share the loss with the bank. Basically the lender is aware that, if the borrower does not fulfil the obligation, there will be the guarantor that, under given conditions, will surrogate the borrower and will pay on their behalf. Of course, the weight of a guarantee depends on the guarantor’s standing that should be at least equal to the borrower’s one.

Guarantee is a very old form of contract; however, it has risen in the interest of the financial intermediaries especially in the last twenty years in which the regulatory framework of the Central Banks has enhanced the role of the credit risk mitigation products.


The guarantees:

  • provide borrowers with access to finance, encouraging their creation or expansion; by so doing, they promote entrepreneurship and job creation
  • provide a proper assessment of the borrower’s intangible and qualitative elements (experience, training, skills, business and technical value of the project, ability to fulfil the business plan etc.) in the risk assessment of loan applications.
  • enrich the risk assessment with field information about the sector, its technological and market development, competition etc.
  • bring together the language of the enterprise with financial jargon, so that there is a better understanding between borrowers and financial institutions.

Download the Application Forms Now


Eligible Banks can directly upload the information regarding the applications to the SCGS Portal