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Madaba/Mafinga, Tanzania — Small agricultural loans, disbursed through mobile phones and targeting specific farming activities at different phases of production, have more than doubled food productivity among thousands of smallholder farmers in southern and central parts of Tanzania over the past three years, improving their livelihoods.

IPS travelled the region this month and spoke to many farmers who attested to how the new form of controlled village-specific lending resulted in their successful harvest.

Peter Lulandala, a smallholder farmer from central Tanzania’s Iringa Province, is one of those farmers.

Lulandala is servicing a TZS one million ($312) loan he borrowed from a local community bank. The problem was that once the money had been paid out to him in a single instalment he was unable to keep aside the funds for the various farming phases.

“We could borrow money, which was usually given in a single batch mostly during the planting season. For most of us, it was extremely difficult to keep part of the money in our houses or on personal bank accounts just to wait for the weeding or harvesting season.

Farmers are guaranteed by two signatures of fellow group members. What makes the SACCOS lending different is that once the loan is approved, the farmer can only access it in phases.

“We disburse it in three phases so that the farmers can only access what they need during the planting season, then the second disbursement can only be released at the right time for weeding and top-dressing, and finally the last payment is for harvesting and post-harvest handling,” Masengo told IPS.

Lulandala said the new lending structure has worked for him.

“But since this particular cash is kept by the bank and with an agreement on how it will be disbursed, I will always look for an alternative way to feed my children as the money waits for the intended purpose,” said the farmer who hails from Itengulinyi village, 15 kilometres off the main highway that connects Makambako and Iringa towns.