SOUTHERN AGRICULTURAL GROWTH CORRIDOR OF TANZANIA A partnership for sustainable, profitable development in Tanzania’s agriculture

SOUTHERN AGRICULTURAL GROWTH CORRIDOR OF TANZANIA

A partnership for sustainable, profitable development in Tanzania’s agriculture

SAGCOT: The partnership

SAGCOT Centre Ltd. 2

PARTNERSHIP & LEADERSHIP


Government of the United Republic of

Tanzania

Donors and development finance institutions

Local and international private

sector

SAGCOT partners include major actors from all relevant stakeholder

groups.

SAGCOT is supported by President Jakaya

Kikwete, donor groups and many private sector

actors.

http://www.unilever.co.uk/

http://www.yara.com/

http://www.agra-alliance.org/

http://expoweb.ift.org/IFTExpo/Data/EC/Event/Exhibitors/571/coLogo1.gif

SAGCOT VISION & CULTURE


Partners in SAGCOT are bound by a common vision, culture and set of principles:

• Agreement on the overall SAGCOT objectives. • Agreement to work with other members to promote a harmonised

approach and strategy. • Agreement to engage with the partnership, maintain communication and

support the SAGCOT Centre. • Agreement to contribute to the resolution of policy and infrastructure

constraints.• Agreement to consider new and innovative financing mechanisms.

“I know there will be challenges, but I am optimistic that through our cooperative endeavours we will overcome them. In the end we will create a corridor of highly productive and competitive agriculture...”

President Jakaya Kikwete

Working Group

Overview of SAGCOT Institutions

5

Task Forcese.g. Green

Reference Group

SAGCOT National Technical

Committee

MAFC

THE SAGCOT CENTRE

The SAGCOT Centre has been establish to facilitate investment and manage the coordination of the partnership to ensure the successful achievement of its objectives. Its activities include:


• Managing and expanding the Partnership• Information provision & Market intelligence• Facilitating of introductions• Facilitating access to finance• Coordination of cluster and corridor development• Identify enabling environment obstructions and

help address these• Monitor and evaluate progress

SAGCOT CATALYTIC FUND


Social venture capital fund

•Target: development and expansion of younger and generally smaller agribusinesses with supply chain links with smallholders.•Initial fund size: US$12.5m•Investment size: US$200,000 to US$1.5m

Matching grant facility

•Target: established commercial agribusinesses and companies, that want to develop and strengthen supply chains encompassing smallholder farmers.•Initial fund size: $40m •Matching grant size: $US250,000 to $1.5m

A ‘Catalytic Fund’ is under development to:

•Secure a critical mass of investments and investors.•Develop and expand commercially sustainable agribusinesses.•De-risk commercial investment.•Support projects through their initial startup and development, and also throughout the supply chain.

A leadership role in the international landscape• Since the initiation of the SAGCOT partnership at in May 2010, 4 similar Public-Private platforms have emerged

under the umbrella of WEF’s New Vision for Agriculture, representing over ten country led initiatives• Under the leadership President Jakaya Kikwete of Tanzania and President Armando Emilio Guebuza of

Mozambique a Pan-African platform, GrowAfrica was formed in May 2011, in an effort to replicate the partnership model of SAGCOT

• GrowAfrica is a coordinating platform to support African governments in increasing private-sector investment, partnership and collaboration to accelerate sustainable growth in agriculture. Countries involved are: Tanzania, Ethiopia, Kenya, Burkina Faso, Rwanda, Mozambique, Nigeria and Ghana

• GrowAfrica countries wil be presented as flagship initiatives to address Food Security during the G8 2012

Launch SAGCOTMay 2010

Launch Vietnam

Investment Blue PrintJan 2011

Launch Mexico

Launch Indonesia

Launch GrowAfrica

Grow Africa Forum/November

2011

8

WEF DavosJan 2012

WEF AddisJan 2012 G8 2012

SAGCOT: The corridor concept


THE CORRIDOR CONCEPT

Aims to:•Enhance Food Security•Environmental Sustainability•Reduce Rural Poverty

Through a coordinated multistakeholder effort that•Leverages Public and Private investments •Addresses Enabling Environment Constraints•Promotes Smallholder Engagement Models•Improves Value chains

Using•Innovative Financing•Value Chain approach•Institutional leadership•Long term commitment and focus

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HUBS & CLUSTERS


Clusters of agricultural projects are centred around logistical and infrastructure hubs, maximising efficiencies and promoting economies of scale.

These projects will include:• Production• Storage• Processing• Research • Associated service providers

SAGCOT has identified six priority clusters for quick win opportunities

The SAGCOT clusters

SAGCOT Centre Ltd. 12Priority regions for agriculture developmentPriority regions for agriculture development

Leveraging investments and partnerships through clusters


Clusters are geographic concentrations of interconnected companies, specialised suppliers, service providers and associated institutiions

Clusters are geographic concentrations of interconnected companies, specialised suppliers, service providers and associated institutiions

GREEN ECONOMIC VISION


• SAGCOT will pioneer a green growth model for agriculture. • A Green Reference Group has been convened to develop and build consensus around a green

growth programme and investment framework. • Green growth for the agriculture sector involves increasing food security and good nutrition

for all people, while conserving natural resources and limiting greenhouse gas emissions. • The initiative will identify ways in which potential social and environmental risks an be

addressed in the early phase

An Investment Framework for Green Growth

• Component investments that benefit or minimally compromise ecosystem health, that reduce or sequester greenhouse gas emissions, that provide social benefits and that help adapt to climate change,

• Spatial planning to realize synergies and reduce trade-offs by managing interactions between investments and land uses in different parts of the landscape,

• Democratic governance processes to negotiate development priorities and parameters, recognizing legitimate local, regional, national and business interests,

• Public policies and market mechanisms that shift incentives toward realizing elements 1-3 above.


Creating Access to Finance

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Indicative Timeline (10 years)

Project Funding

Support to smallholder farmers

Lesson learning and the policy environment

Public infrastructure development

SAGCOT Centre acts

as coordinator (information

flows)

Catalytic FundChallenge Funds (e.g. AECF)

Social Impact Investors (e.g. Transfarm)

Development Finance institutions (e.g. Norfund)

Commercial investors (e.g. equity funds)

NGO Programmes (e.g. through grants)

World Food Programme (Purchase for Progress)

African Policy Programmes(e.g. through AGRA, CAADP)

Investment Climate Facility window

Research institutions’ programmes

Removing trade barriers programmes (e.g. Trade Mark East Africa)Government Programmes

(e.g. ASDP)

Last mile infrastructure (e.g. Patient Capital

Commercial lenders

FOSTERING AN enabling environment


The landscape of local stakeholders

TNBCTNBC TICTIC ACTACT

FARMERSFARMERS PRIVATE SECTORPRIVATE SECTOR MINISTRIESMINISTRIES

DONORSDONORS MEDIAMEDIA

LOCAL GOVERNMENTLOCAL GOVERNMENT

RUBADARUBADAFSDTFSDT

TPSFTPSF

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Tanzania Agriculture Development Bank

Tanzania Agriculture Development Bank

GOVERNMENT COMMITMENT

The Government of Tanzania is an active partner in SAGCOT through a number of key institutions:


Key Government commitments:

• Promotion of global and intra-African trade.• Establishment of a fast, efficient and transparent system of securing titled land.• Building on current infrastructure development.• Promotion of innovative finance.• Increasing access to agricultural inputs.

• President of Tanzania• Prime Minister’s Office• Bank of Tanzania

• Ministry of Agriculture, Food Security and Cooperatives• RUBADA, TIC, TPA, TAZARA• Local Government Authorities

Government engagement in SAGCOT

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• President of Tanzania• Prime Minister’s office• Bank of Tanzania• Ministry of Agriculture, Food Security and

Cooperatives• Related ministries• RUBADA, TIC, TPA, TAZARA, • Local Government Authorithy

SAGCOT: Investment & Project opportunities


CASE STUDY: KILOMBERO PLANTATION LTD.


Kilombero Plantation Limited (KPL), a public-private partnership between RUBADA (8.7%) and Agrica (91.3%), was established in July 2008 to redevelop Mngeta Farm. Over US $ 30 million invested on irrigation over 215 hectares

When fully irrigated, Mngeta Farm will produce annually:• 33,000 tons of milled rice• 5,000 tons of rotation crops—beans and pulses• 1.5 MW of surplus biomass power for rural electrification

System for Rice Intensification (SRI)Demonstrated potential with Kilombero smallholders to lift yields from 3 tons/ha to over 5 tons/ha-20kgs of seed needed instead of 60kg-250 families-1350 new farmers are being added- Targeting 5,000 famer families by 2016

CASE STUDY: ECOENERGY BAGAMOYO

SAGCOT Centre Ltd.23

EcoEnergy is developing a modern agro-industry, producing 125,000 tons of sugar, 100,000 MWh power and 8,000 – 15,000 m3 ethanol from sugarcane on an abandoned state cattle ranch in Bagamoyo, Tanzania. The Government of Tanzania will have a long term shareholding of 25% in the company. The Bagamoyo Project will establish a sugar mill and approximately 11,000 ha of sugarcane plantations. EcoEnergy will grow 7,800 ha of sugarcane on their own land and out-growers will farm approximately 3,000 ha on village land (outside the EcoEnergy farm). The out-grower project will be developed with the village communities that are surrounding the EcoEnergy farm over a six-year time period.The out-grower development program•The out-grower program is a comprehensive “people development” process.•Local communities are empowered to engage in commercial sugarcane farming.•Smallholder farmers will join together and own and operate commercial sugarcane farms of ca. 100 ha, achieving economies of scale. •Approximately 30 farms, benefitting 1,500 out-growers, will be developed.•The out-growers will supply approximately 300,000 tons of sugarcane per annum.

INVESTMENT OPPORTUNITIES


Mbozi Farm

Centre

Rungwe Avocados

Sao Hill Industrial Park

Soya Extrusion / Wheat Mill

Rice Value Chain

Enhancement

Seed Production Banana,

Macademia, Mango, Citrus

Seed Potatoes

Agro-dealer /

Extension

Beef production

and processing

Beef production

and processing

Sugar Outgrower

Consolidation

Seed production

and livestock

CLUSTER COMMODITY OPPORTUNITIES


Crops Ihemi Mbarali Kilombero LudewaSumbawanga /

Northern Zambia

Maize Wheat Barley Rice Soya – Sunflower Irish Potatoes –Beef Poultry Pigs Citrus Mangos Macademia –Avocado Bananas Beans – Seed Crops Onions Tomatoes – – Legumes and Pulses –

Potential High Medium Low –

Challenges to Cluster Development

Challenges Ihemi Mbarali Kilombero LudewaSumbawanga /

Northern Zambia

Major Road Access – Feeder Road Access Rail Access – Presence of Commercial Farmers – – Electricity Grid Access Local Electricity Reticulation Grain Storage – Processing Capacity Service Industries Market Access – Artificial Barriers to Market Securing Land – – – – –Access to Affordable Long-Term Finance Economies of Scale – Policy (including Taxes and Export Barriers) Private Sector Coordination Quality of Information Consistent Quality Standards Access to Improved Seeds and New Technology –

Degree of Challenge Low Medium High –

These constraints on commercial agriculture are recognised by the Government of Tanzania, and hence the launch of Kilimo Kwanza

INFRASTRUCTURE PRIOTIES


Investments needed to compliment the following infrastructure priorities:

RAIL: Tanzania-Zambia Railway Authority (Tazara)US$39m interest free loan from China for upgrade Links Dar to Zambia, DRC and Southern African rail networks

ROAD: Tanzania-Zambia Highway 1,762km paved highway linking Dar to Kapiri Mposhi

AIR: Julius Nyerere International AirportUS$300 million upgrade underwaySongwe International Airport Construction underway

SEA: Port of Dar es SalaamTanzania Port Authority has invested US$18m in upgrades, with a further US$80m planned. Yara plan a US$20m dedicated fertiliser facility

POWER: TANESCO electricity gridMultiple funded and planned electricity upgrade projects, totaling US$100s of millions

THANK YOUContact Us

Dan Mrutu

Chief Executive Officer

Email: [email protected]

Mobile: (+255)754781078

Jennifer Baarn

Deputy Chief Executive Officer

Email: [email protected]

Mobile:(+255)786839665


SAGCOT Centre LimitedP.O.Box 14130Dar es Salaam Visit our webpage on www.sagcot.com

Appendix


SAGCOT Management


Dunstan Mrutu – CEO, SAGCOT Centre

Dunstan Mrutu holds 30 years experience in private sector development in Tanzania. With a strong understanding of the role of agriculture in furthering economic growth and development, Dunstan co-authored Tanzania’s Kilimo Kwanza (‘Agriculture First’) and serves as a Trustee of the Private Sector Agriculture Support Scheme Trust (PASS). Before joining the SAGCOT Centre, Dunstan was Executive Secretary of the Tanzania National Business Council (TNBC). He further holds several key posts including Vice Chairman of the Tanzania Ports Authority Board, Member of the Export Processing Zone Authority and once Ministerial Advisory Board member of the National College of [email protected]

Jennifer Baarn – Deputy CEO, SAGCOT Centre

Jennifer Baarn is an experienced professional in the development and facilitation of international public-private partnerships (PPPs), with a particular focus on the role of partnerships in agriculture as drivers of economic growth. Prior to joining the SAGCOT Centre, Jennifer was an Associate Director at the World Economic Forum (WEF) where she helped develop the WEF’s New Vision for Agriculture initiative. Jennifer spent a number of years in financial services at Rabobank International, identifying growth opportunities in food and agribusiness and developing key insights into the agricultural sector. A South American who has lived in Europe and holds a passion for Africa, Jennifer brings knowledge and experience from around the globe to apply in furthering the objectives of [email protected]

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SOUTHERN AGRICULTURAL GROWTH CORRIDOR OF TANZANIA A partnership for sustainable, profitable development in Tanzania’s agriculture