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2SAGCOT Centre Ltd. 2
Overview of the Tanzania Investment Landscape
Introduction to SAGCOT
Overview of Ihemi cluster and key value chain opportunities
3
Overview of the Tanzania Investment Landscape
Opportunities in Agribusiness
Agricultural processing
Tanzania is the third largest country by area inthe region and there is ample arable land.Significant opportunity exists in:
Post-harvest marketing
Infrastructure (warehousing, cold storage, transport)
Tanzania has become an attractive investment destination, due to it’s political stability and steady economic growth. Agribusiness holds much investment potential.
Tanzania as an investment destination1
• Politically stable
• Steady economic growth in recent years(average 8% GDP rise)
• Less competitive investment markets thanUganda and Kenya
Investor profile to be well positioned for theTanzanian market
• Flexible investment criteria
• Local presence
• Technical assistance facilities for pipelinebuilding.
1. GIIN/ Open Capital https://thegiin.org/assets/documents/pub/East%20Africa%20Landscape%20Study/07Tanzania_GIIN_eastafrica_DIGITAL.pdf
Inputs production
4SAGCOT Centre Ltd. 4
Overview of the Tanzania Investment Landscape
Introduction to SAGCOT
Overview of Ihemi cluster and key value chain opportunities
5
The SAGCOT initiative is a public-private collaboration in Tanzania that aims to mobilize USD 3.5 Billion of investments in agriculture by 2030
Background
The Southern Agricultural Growth Corridor of Tanzania(SAGCOT) initiative is a joint innovation by the Governmentof Tanzania, the private sector and international donors toaccelerate public-private partnership aimed at spurringagricultural growth in Tanzania’s southern highlands
Main goals:Through coordinated multi-stakeholder effort the partnership hopes to:• Transform Agriculture in the Southern Corridor• Promote sustainable resource management• Leverage public and private investments to spur growth• Promote smallholder engagement models that enable
inclusivityKey concentration areas:(1) Value chain approach to allow for scale(2) Strategic partnerships to create synergies(3) Innovative financing (4) Address enabling environment constraints(5) Leverage infrastructure investments(6) Realise Green Growth
Introduction to SAGCOT
Intended Impact by 2030
• Mobilize USD 3.5 Billion of investments in agriculture by Develop 350,000 Ha of land
• Create USD 1.2B in revenues
• Achieving food security, and green growth
6
23 Southern Agricultural Growth Corridor of T anzania
Figure 3.1 Agricultural potential and backbone infrastructure
SAGCOT’s backbone infrastructure provides a
reasonable but incomplete platform upon which
to develop commercial agriculture in the southern
corridor. The majority of infrastructure was built after
Tanzanian independence as an alternative to the South
African and M ozambican transport links to Zambia,
and includes:
• the Port of Dar es Salaam, which currently handles
approximately eight million tonnes per year,
• the Tanzania-Zambia Railway Authority (TAZARA)
network of 1,870km of rail, commissioned in 1976
to link Dar es Salaam Port to Kapiri M poshi and
then to the Zambian Railways (and the DRC and
Southern African rail networks),
• The Tanzania-Zambia (TANZAM ) Highway, a
paved trunk road system of 1,762km linking Dar es
Salaam Port to Kapiri M poshi,
• the TANESCO electricity grid servicing major towns
along the corridor within Tanzania, and
• total renewable water resources amounting to
93km3 per year, of which 84km3 per year is
produced internally.
If this backbone infrastructure is going to provide
the services that are needed for agricultural
growth, several important improvements are
needed. Firstly, Dar es Salaam Port ’s capacity
needs to be expanded and customs procedures
accelerated. Secondly, the road system requires
rehabil itation and maintenance. Thirdly, even
though rail transport is less expensive than
road haulage, it is currently slow, unsecure
and unreliable. Interchange facil it ies must be
improved and railway wagon and locomotive
stock upgraded to make it more competitive.
Fourthly, the power grid will need upgrading
in places and national shortages in generating
capacity wil l need to be met.
Investments in some of these improvements
are already taking place (see Figure 3.4
Anchor investment map). The government and
development partners, with cooperation from the
private sector, must be committed to see proposed
infrastructure investments completed, including
cooperation from state-owned enterprises.
Source: JICA, SAGCOT technical team estimates
Introduction to SAGCOT
Superior infrastructure and connectivity to local & global markets
Ideal agroclimate for range of crops & livestock
• Major river systems
• Ample rainfall and sunshine hours
• Rich alluvial valleys for rice, sugar
• Rolling plains for maize, sisal, oilseeds, ranching
• Cool highlands for tea, coffee, horticulture
• Lush tropics for tree crops – cocoa, palm, timber
• International highways connect all major agri-zones in corridor to main consumer markets in Dar, Arusha, Nairobi & Lusaka
• International port & airport at Dar with direct connections to Middle East, Asia & Europe; 2nd international airport has been commissioned in Mbeya
• Main national grid runs through corridor, with major hydro supply already available and potential for agri-based cogen power producers to supply directly to grid
6
23 Southern Agricultural Growth Corridor of T anzania
Figure 3.1 Agricultural potential and backbone infrastructure
SAGCOT’s backbone infrastructure provides a
reasonable but incomplete platform upon which
to develop commercial agriculture in the southern
corridor. The majority of infrastructure was built after
Tanzanian independence as an alternative to the South
African and M ozambican transport links to Zambia,
and includes:
• the Port of Dar es Salaam, which currently handles
approximately eight million tonnes per year,
• the Tanzania-Zambia Railway Authority (TAZARA)
network of 1,870km of rail, commissioned in 1976
to link Dar es Salaam Port to Kapiri M poshi and
then to the Zambian Railways (and the DRC and
Southern African rail networks),
• The Tanzania-Zambia (TANZAM ) Highway, a
paved trunk road system of 1,762km linking Dar es
Salaam Port to Kapiri M poshi,
• the TANESCO electricity grid servicing major towns
along the corridor within Tanzania, and
• total renewable water resources amounting to
93km3 per year, of which 84km3 per year is
produced internally.
If this backbone infrastructure is going to provide
the services that are needed for agricultural
growth, several important improvements are
needed. Firstly, Dar es Salaam Port ’s capacity
needs to be expanded and customs procedures
accelerated. Secondly, the road system requires
rehabilitation and maintenance. Thirdly, even
though rail transport is less expensive than
road haulage, it is currently slow, unsecure
and unreliable. Interchange facil it ies must be
improved and railway wagon and locomotive
stock upgraded to make it more competitive.
Fourthly, the power grid will need upgrading
in places and national shortages in generating
capacity will need to be met.
Investments in some of these improvements
are already taking place (see Figure 3.4
Anchor investment map). The government and
development partners, with cooperation from the
private sector, must be committed to see proposed
infrastructure investments completed, including
cooperation from state-owned enterprises.
Source: JICA, SAGCOT technical team estimates
7
Introduction to SAGCOT
Our portfolio of partners represents a balanced mix of local and international institutions across all stages of agri-business value chains
8
SAGCOT partners work together in ‘clusters’ that aggregate different value chains and nucleus farms in a supportive eco-system
Cluster Approach gives large and small actors access to shared infrastructure and services
SAGCOT Cluster Overview6 main SAGCOT clusters have been identified; currently focus is on the Ihemi cluster
Introduction to SAGCOT
9
Currently, SAGCOT is facilitating 20 investments worth approximately USD 1 Billion and with the potential to lift approximately 50,000 farmers out of poverty by 2018.
Introduction to SAGCOT
The SAGCOT Initiative works across
13 interconnected value chains
Partners providing services across inputs, production, storage, processing, infrastructure research and services
$1bn
50,000
10SAGCOT Centre Ltd. 10
Overview of the Tanzania Investment Landscape
Introduction to SAGCOT
Overview of Ihemi cluster and key value chain opportunities
11
Ihemi as an Investment Cluster
SOURCE: SAGACOT Center Annual Forum report http://www.sagcot.com/fileadmin/documents/2016/SAGCOT_Annual_Forum_2015_Report.pdf
Ihemi Cluster Overview
SAGCOT’s work to date has focused on the Ihemi cluster, two regions within this (Iringa and Njombe) and 5 main value chains
5 Key value chains
• Tomato• Potato
• Soya• Dairy• Tea
Potential investment in infrastructureIrrigation: 26 schemes across 46,438Ha.Roads: additional 312km of feeder roadsPower: 3 new 33kV powerlines
Total area (ha) 2,066,000
Total arable land (ha) 973,150 (47% of total)
Land under irrigation 24,080 (1% of total)
Population: 970,000
12
Ihemi Cluster Compact
12
IhemiCluster
Compact Signatories
RAS Iringa
MtangaFoods
ANSAF
Rationale
The Partnership (Signatories)
Compact Expectations
Public Sector
Service Sector Private Sector
• Partnership approach is needed for transformation to be realized
• Dialogue space to address challenges and seize opportunities
• Parties agreed to be party and actively promote SAGCOT Vision to enhance food security, improve livelihoods and ensure environmental sustainability
Public Sector• Regularly conduct open and transparent dialogue
amongst parties• Asses and communicate progress on agreed measures• Increase public investment in support to public goods• Speed up review of legislation• Harmonise roles of regularity institutions to reduce
bureaucracyPrivate Sector• Create employment for qualified Tanzanians• Build capacity of farmers• Work with partners to ensure increased access to
financial services Service Providers• Create mult stakeholders forums • Organise farmers into groups• Support integrated planning approaches• Conduct research and advocacy
13
Butcher
Slaughter house
Fattening unit
Retailer
Wholesaler
Milk processing unit
Consumers
Input suppliers
Cattle FarmersDairy Farmers
Retailers
Wholesalers
Oil Millers
Regional traders
Soya farmers
SAGCOT is building cross value chain linkages in the cluster
Soya Dairy LivestockAnimal Feed
Animal feed unit
Retailer
Wholesaler
Maize
Retailers
Wholesalers
Flour Millers
Regional traders
Maize farmers
21 3 4 5
14
Investment Opportunities: Soya value chain
SOURCE: Evaluation of Market Opportunities for Soybean in Tanzania USDA FAS Soya ni Pesa Project December 2012,
Technoserv Soya Value chain assessment, 2015
There is currently significant unmet demand in the production of soybean, primarily for use in animal feeds. This unmet demand is partly serviced by imports.
Domestic: Production: estimated 5,000 MTCrushing capacity: estimated 26,000 MTCrushing utilization: 19%
Imports: Soya cake: 43,000 MTSoya oil: 3,000 MT
Cost of production: US$125 per MT
Market Price:Farm Gate: US$267- $534 (seasonal variance) Retail market: US$1,334/MTWorld Market price: US$548 – $598 MT
Edible oils: 400,000 MT of edible oil per annum, over 50% is imported
Animal feed: 800,000 MT per annum is purchased, demand is for 2,000,000 MT per annum.
SUPPLY DEMAND
15
Soya experiences global demand from humanconsumption and animal consumption due to highprotein content (40%, versus 20% of other legumes)
An increase in productive capacity would lead to anincrease in extrusion capacity and the usage ofhigher quality seeds.
Short term opportunity: Increased use of soybeans and associated products in animal feeds.
Longer term opportunity: Change in human consumption patterns for increase demand in soya products (oil, milk, etc.)
Investment Opportunities: Soya value chain
Highest Production Lowest Production
Producing regions: Southern highlands
The short-term opportunity is for the increase of productive capacity for production of animal feed, with longer term potential of increasing human consumption
16
Seed Production
Seed multiplication
Soya FarmersAggregators/
TradersProcessors (crushers)
Feed Manufacturers
International Trader
1. Seed Production
Conduct research and
development into new
seed varieties for
commercial licensing and
production of foundation
seeds; there are 7
research institutions in
TZ, and an under-utilized
seed lab in Uyole
Inve
stm
en
t O
pp
ort
un
itie
s
2. Seed
Multiplication
Multiplication of
foundation seed
for sale to
farmers
5. Product Processing &
Manufacture
Uses of SOYA:
• Animal Feed (beef, lamb,
pork, poultry , fish)
• Food (soya milk, soya sauce,
tofu, oil, infant formula)
• Industrial Products (oils,
soaps, cosmetics, resins,
plastics, inks, solvents, etc.)
• Biodiesel (soya is the prmary
source of biodiesel in the US)
3. Growing
Establishment of
commercial soya
farms or small
holder farmers
outgrower schemes
4. Storage &
Transportation
Warehousing and
storage units for
raw soya beans.
Transportation of
beans to processors
for soya meal
Investment Opportunities: Soya value chain
Alongside supply and demand dynamics, SAGCOT analysis has identified 5 investment opportunities across the value chain
Val
ue
Ch
ain
17SOURCE: CGIAR World Potato Atlas
Tanzania is a net exporter of potato although the domestic demand is set to soar. It has significantly variable yield capacity which will need to be increased to meet this demand.
Domestic: Production: estimated1,700,000 MT
Exports: Net exporter: circa 600,000 MT
Yield variability: under 10 MT p/ ha –over 40MT p/ ha (dependent on variable farming practices)
Current demand: 1,100,000 MTFuture demand (2025): 2,400,000 MT
SUPPLY DEMAND
Investment Opportunities: Potato value chain
18
Seed Production
Potato
Farmers
Aggregators/ Traders
Processors Consumers
1. Seed Production
Production and
distribution of higher
yielding and quality
variety potatoes to
replace current poor
stock Inve
stm
en
t O
pp
ort
un
itie
s 2. Crop Services
Provision of
services, e.g.
fertiliser and
pesticide treatment
3. Storage &
Transportation
Warehousing and
storage units for
potatoes.
Transportation of
potatoes to central
markets
Investment Opportunities: Potato value chain
Similarly, SAGCOT analysis of the potato value chain has also presented many investment opportunities
Val
ue
Ch
ain
1919
Geoffrey Kirenga is currently the Chief Executive Officer of theSAGCOT Centre Ltd. He is the former Director of the CropDevelopment Division at the Tanzania Ministry of Agriculture,Food Security and Cooperatives. Prior to this position, Mr.Kirenga specialized in crop promotion services, pest managementand plant protection.
Mr. Kirenga has an extensive network in both the Tanzanian andinternational agriculture and agribusiness communities, and he ishighly committed to driving the SAGCOT Centre Ltd to deliveringon its role as the catalyst dedicated to transforming Tanzania'sagriculture sector.
Geoffrey Kirenga| CEO | SAGCOT Centre [email protected] Building Mwaya street, Masaki P.O. Box 11313 | Dar es Salaam, TanzaniaTel: +255 (0) 22 2 601024| Mobile: +255 (0) 756 480 069www.sagcot.com
2020
Jennifer Baarn is an experienced professional in the developmentand facilitation of international public-private partnerships(PPPs), with a particular focus on the role of partnerships inagriculture as drivers of economic growth. Prior to joining theSAGCOT Centre, Jennifer was an Associate Director at the WorldEconomic Forum (WEF) where she helped develop the WEF’sNew Vision for Agriculture initiative. Jennifer spent a number ofyears in financial services at Rabobank International, identifyinggrowth opportunities in food and agribusiness and developingkey insights into the agricultural sector. A South American whohas lived in Europe and holds a passion for Africa, Jennifer bringsknowledge and experience from around the globe to apply infurthering the objectives of SAGCOT.
Jennifer Baarn | Deputy CEO | SAGCOT Centre [email protected] Building Mwaya street, Masaki P.O. Box 11313 | Dar es Salaam, TanzaniaGeneral phone number: +255 (0) 22 260 1024www.sagcot.com