Abstract
After independence in 1961 the institution of agricultural finance in Tanzania were improved based on the idea of Arusha Declaration which stressed on Ujamaa Socialism and reorganized into a new system which aimed to overcome colonial economic strategies which existed. The branches of financial institutions were established mainly in cash crop regions so that more farmers can be lent loans than in the previous period because the government has the perspective which agricultural development is necessary for industrialization. But in spite of the above improvement the agricultural loan has been concentrated to the commercial agriculture and therefore possibility of agricultural development as whole in Tanzania has been blocked. On the other hand, there has been rapid growth of population in Tanzania, where food-production per person has decreased and govermment must import the food.
That means the policy of stresseing on commercial crops for industrial development and getting foreign exchange cause a bad circulation: Ignoring subsistence crops cause the food shortages, on the other hand this stagnation of subsistence food crop production affect the condition of the peasants because they have little possibility of receiving agricultural loans. Agricultural loan for peasants is stagnant in the statusquo and they can't extend production. Agriculture in Tanzania must look for the possibility of development under difficult conditions. In that case, the role of agricultural loan institution is important, in future, the policy of loan has to change in order to improve regional differentiation and we hope this system to a better one and stress on subsistence crop production. In addition more long term loans have to be provided than short term loan, by this achievement Tanzania can establish long term economic strategy including industrialization.
