"I used to harvest enough rice to feed my family and sell the surplus at the market. But recently, my yields have dropped, and getting a loan to invest in sustainable farming has been nearly impossible."
Revocatus
Rice farmer, Mbeya
Across Tanzania, smallholder rice farmers, responsible for producing 90% of the country’s rice, are up against a series of overlapping challenges: erratic weather patterns, dwindling yields, and limited access to finance. The government’s National Rice Development Strategy aims to boost rice production, but environmental degradation and low productivity threaten to derail these goals. Many farmers are eager to adopt sustainable practices, but without the necessary capital, knowledge, or support from value chain actors, making the shift remains a distant dream.
There is a glimmer of hope in the Southern Highlands of Tanzania, though. In the rice fields of Mbeya, farmers like Revocatus are no longer tackling climate change on their own. Change is taking root, step by step. Thanks to a climate-smart financing project, farmers are gaining access to the tools, training and incentives they need to transform rice cultivation. The result? More sustainable farming practices that protect the land and strengthen farmers’ resilience.
In 2023, Rikolto launched an ambitious demonstration project in the Southern Highlands, funded by the Flemish International Climate Action Program (FICAP). Partnering with CRDB Bank, Ecosystem Equity, TARI Ifakara, and local farmer organisations, they co-designed an innovative climate-smart lending model.
The project leverages the climate-smart lending framework endorsed by the Global Innovation Lab for Climate Finance and got CRDB - the largest Agri-lender in Tanzania with 50% of the market - to adapt its loan criteria, adding sustainability terms and increasing loan ceilings by 25% to better address farmers’ real investment needs and challenges.
“We are pleased to be part of this partnership for several reasons. One key factor is the access to a cost-free credit guarantee, which provides a strong incentive by reducing the bank’s risk when offering larger loans. Additionally, by integrating resilient farmers, who become reliable clients, into a digital monitoring system, we can further reduce risk and lower loan monitoring costs. In practical terms, this means potentially cutting capital costs by 42%, which makes a significant difference”
“We are pleased to be part of this partnership for several reasons. One key factor is the access to a cost-free credit guarantee, which provides a strong incentive by reducing the bank’s risk when offering larger loans. Additionally, by integrating resilient farmers, who become reliable clients, into a digital monitoring system, we can further reduce risk and lower loan monitoring costs. In practical terms, this means potentially cutting capital costs by 42%, which makes a significant difference” shared Mr. Kyando, Customer Relation Manager at CRDB Bank Mbeya.
The guarantee facility was a game-changer in bringing CRDB on board. By offering a cost-free credit guarantee, the bank’s financial risk was significantly reduced, enabling larger loans to be extended to small scale farmers. But the true strength of this collaboration goes beyond financials: it’s about creating a shared vision of resilience. In fact, farmers embracing sustainable practices are better equipped to withstand climate shocks, while the bank reduces risk by drawing from a pool of more reliable clients. This vision of mutual responsibility, where both sides benefit, can ensure the long-term success of the partnership for years to come.
Bringing this partnership to life wasn’t an overnight success. Rikolto played a pivotal role in bringing banks, farmers, and stakeholders to the same table, setting the groundwork with a Memorandum of Understanding. The next step was to develop the model itself. Ecosystem Equity led the technical design in close consultation with CRDB and Rikolto. In parallel, Rikolto and TARI trained 300 community-based trainers, 50 public extension officers, and 5 bank loan officers on sustainable rice practices, ensuring that skills were embedded at every level.
During the first pilot phase, 53 farmers participated, 64% of whom have already repaid their loans—an encouraging figure, considering the significant drop in market prices for both paddy (down 15%) and rice (down 25%). Typically, low prices lead farmers to hold onto their rice, waiting for better market conditions. In fact, the ups and downs of supply and demand can be challenging to navigate—a reality both farmers and bank officers understand well. Meanwhile, the training in sustainability practices paid off: improved soil management boosted productivity by 12%, while better water practices adopted by 99% of the farmers cut greenhouse gas emissions by 51%.
Before, I used to apply fertilisers without really understanding the soil’s needs, just guessing at what might work. I didn’t know how much or when to apply it, so I wasn’t getting the best results. Since the training, I apply fertilisers based on soil nutrient analysis, making sure I use the right type, at the right time, and in the right amounts. This has helped me optimize both my production and input efficiency.
Like Revocatus, more than 4,700 of 5,589 MAMCOS-trained farmers have started embracing sustainable practices, scoring over 60 on SRP’s 90-point sustainability threshold. This is a promising sign that they are on the “path toward sustainability”. Indeed, a key element of the model is the SRP standard-based monitoring system, which encourages gradual improvement rather than imposing rigid compliance. Farmers track their progress season by season, aiming for the 90-point sustainability threshold — a practical, long-term commitment.
The project officially kicked off in 2023, and loans were disbursed for the first season of 2024. One thing has become clear: the market remains a tough nut to crack. While 4,670 tons of rice were sold to the National Food Reserve Agency (NFRA) and two off-takers, more buyers are needed to secure better prices and consequently engage more farmers. The agreements reached so far came out of B2B meetings, set up through collaboration with the Rice Council of Tanzania. This council, representing private-sector rice stakeholders, is and will be a crucial partner in expanding the network of potential buyers.
Moreover, embracing sustainable farming isn’t the easy—or the quick—path forward. For instance, transitioning to climate-smart practices often demands more labour for transplanting, making some farmers think twice before giving up old practices. While increased productivity per acre, access to finance and training are good incentives, farmers need practical solutions to overcome the challenges of switching to a more sustainable model. To make it happen, 50 young people were trained in seedling transplanting, and new equipment was introduced in 2024 to lighten the workload. Investing in youth is in the interest of Local Government Authorities (LGAs) and fits within programs like the Building Better Tomorrow (BBT) youth inclusion initiative—a perfect synergy in the making.
Synergies, a shared vision, and multi-stakeholder dialogue are essential to finding common ground and forging partnerships. The solutions provided must deliver clear, long-term benefits—like boosting resilience—while addressing concerns and urgent challenges faced by the stakeholders. For banks, this model means cutting costs and tapping into a new pool of low-risk clients, while farmers benefit from higher yields and improved access to finance to kickstart their production season.
As for 2024/2025 season, 251 farmers have received new loans, marking the beginning of the scaling-up phase. While farmers embark on the new cropping season, the project partnership will integrate a digital platform to streamline farmer profiling and fast-track loan applications. The next steps also include expanding to additional districts and bringing in more value chain partners—buyers, input suppliers, development organizations (such as AGRA, Norges Vel, and FAO), and eventually new financial institutions like Equity Bank. The end game: to increase the project’s scale, generate evidence, and gain validation from policymakers at district and national levels, embedding this model into Tanzania’s broader agricultural financing ecosystem.
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