the year 2016/17 budget - ansaf...

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DECEMBER 2016 VOLUME VIIISSN 1821-8245farmer’s world

mkulima

THE YEAR 2016/17

BUDGETAgricultural Non State Actors Forum

Agricultural Non State Actors Forum

6

Feedback Form29

Letters to the Editor31

6 The Year 2016/17 Budget: What is different?

8 Staple food export ban: What can it do to value chain actors?

10 Personal Property Security Act reform (PPSA), economic growth and investment in Tanzanian agriculture

14 The future of the Collective Warehouse-based Marketing without funding

23 Leveraging agriculture-led industrialization:institutional setup, policy and legal framework

17 Open Government Partnership: Where does Tanzania want to be in 2018?

21 Rationale and opportunities for investments in livestock value chains in Tanzania

19 Making the milk industry more productive

16 What makes business difficult in Tanzania?

13 It is time to focus on women and youth economic empowerment

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FARMER’S WORLD DECEMBER 2017 3

Dear Esteemed Readers,

Message from the Executive Secretary


4 FARMER’S WORLD DECEMBER 2017Agricultural Non State Actors Forum

From TheEditor’s Desk

ExEcutivE SEcrEtaryAudax Rukonge

chiEf EditorMbarwa Kivuyo

contributorSCommunication Working Group

Audax Rukonge (ANSAF)Mbarwa Kivuyo (ANSAF)

Joseph Nyamboha (ANSAF)Edina Lugano (ANSAF)Dr. Amos Omore (ILRI)

Neema Rwebangira (ANSAF)Prof. Samuel Wangwe (WEMA

Associates)

diStribution/SalES & MarkEtingMedia and Communications

Department

PubliShEr:Agricultural Non State Actors Forum

(ANSAF)P.O. Box 33562, Plot 167,

Migombani Street, Regent EstateMikocheni A. Dar es Salaam,

Tel: + 255 22 2771566 / 2775970Fax: + 255 22 2773217Email: [email protected]

Website: www.ansaf.or.tz

dESigning & PrintingC & V Marketing Communication

Solutions (T) LtdP.O. Box 95092, Dar es Salaam

Tel: +255 787 808 055+255 712 464 649

Email: [email protected]

Dear Readers, Agricultural Non State Actors Forum


FARMER’S WORLD DECEMBER 2017 5Agricultural Non State Actors Forum


THE YEAR 2016/17 BuDgET: WhaT is DiffErEnT?By Joseph Nyamboha

The African Union (AU) ordinary assembly held in Maputo in July 2003 endorsed a declaration

on “Agriculture and Food Security in Africa.” The declaration contained several important decisions regarding agriculture, but prominent among them was the commitment by the Heads of State and Government to the allocation of at least 10% of national budgetary resources to agriculture and rural development policy implementation. Tanzania was among the AU member states that signed the protocol but for the past 13 years the

country has not been able to reach the agreed budgetary allocation threshold of 10%. Trends show that the highest allocation threshold ever attained was the 8.1% recorded in the 2010/2011 national budget. Of late, the allocation continued to decline despite the Malabo Commitment made in 2014 aimed at reaffirming the Maputo Declaration. In 2015/2016 it was 5.1% of the budget. The 2016/2017 sets aside 4.9% of the budget for the agricultural sector. The trend indicates that meeting the Maputo Declaration and the Malabo Commitments of allocating at least 10% of the budget

to spar an annual growth rate of 6% is a mere dream. The effects of the thin investment into the sector are seen in various manifestations. In 2015/16 financial year the central government failed to release funds for development expenditure for livestock and fisheries sub sectors. As a result, the value addition to livestock products (skins and hides, dairy, etc.) and reduction of post harvest losses in food crops were affected directly. Furthermore, the financing of key areas such as irrigation, market systems and infrastructure, input supplies, water, rural roads, rural electrification and R&D that have high impact on the agriculture sector remained perplexed. Every budget circle comes with a financing component for all the key areas, but in most cases the allocation trends show a constant decline. For example, in 2015/2016, the budget allocated to rural roads was TZS 27.5bn/-, equivalent to 10% of total roads fund has dropped to about TZS 22bn/-in 2016/2017. Allocations for inputs was about TZS 190.8bn/- in 2014/2015 but dropped to TZS 96.1bn/- in 2015/2016. It was not clear how much will go to inputs category in 2016/2017. At the same time, the budget which was proposed during the national development plan to build 98 warehouses for maize (17.82m/-) and 78 irrigation schemes for rice (14.617m/-) was not reflected in the 2016/2017 budget. Apparently the 2016/2017 budget appears to carry forward same weaknesses of the past budgets. First, it hardly touched on the marginalized groups (women, youth) which constitute a big portion of the population engaging in agriculture activities. Second, it does not match the intention of making Tanzania an industrial-led economy. There is no clear budget allocated for turning the Five Year Development Plan (FYDP II) agenda into reality. Very little investment is made into agro-processing subsector.

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Many other priority areas such as training for extension officers, land surveys and issuance of certificates of right of occupancy and support to entrepreneur development have received less attention in the current budget. It should be noted that the agriculture sector financing competes for scarce resources with other priority sectors such as social services (education, health and water) which gets about 26.4% of the total national budget; infrastructure (roads, railways, ports, energy), which carried about 22.4% of current total national budget. Experience shows that the financing of all development activities depends on the cash budget, that is, the government will release for spending only what it has in hand. In other words, getting enough revenue to finance the year 2016/2017 budget of TZS 29.5tri/- depends entirely on the revenue collection efforts and minimization of leakages. The FYDP II and annual development plans place emphasis on public-private partnership, but the 2016/17 budget does not clearly

indicate the contribution of the private sector in monetary terms. Tanzania is aspiring to become an industrial giant. With the level of endowment in the natural resource, the different agro ecological zones, peace and stability, it should be possible to get to where we want to be. We only need good leadership and hard work. A Tanzania with agro-based industries is possible.

— Joseph Nyamboha is the Policy & Budget Analysis Coordinator at ANSAF

WITH THE LEVEL OF ENDOWMENT IN THE NATURAL RESOURCE, THE DIFFERENT AGRO ECOLOGICAL ZONES,

PEACE AND STABILITY, IT SHOULD BE POSSIBLE

TO GET TO WHERE WE WANT TO BE.

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In July 2016 the Government of Tanzania temporarily suspended the export of food staples as a short-term measure to

protect domestic food security. The suspension, which covers staple foods such as maize, rice and beans, came at a time when farmers in the main food producing zones were harvesting their produce, thus created an oversupply of food in the domestic markets, while key export markets such as Kenya and Rwanda were experiencing a relative shortage of food supply. Shortly after the ban was announced, several export consignments were reported to have been stopped at border points in Namanga, Mutukula, Sirari-Isebania, Holiti-Taveta, Tunduma-Nakonde and Songwe-Kasumulu. In broad terms, the export suspension meant all existing export permits were suspended and no new permits will be issued. During a stakeholders meeting organized by the Eastern Africa Grain Council (EAGC) in collaboration with ANSAF, grain processors and exporters reported that trucks ferrying the commodities were stopped at border points and drivers arrested before they are turned back to where they came from. Although the suspension had targeted maize, rice and beans, it was unfortunate that the ban affected other commodities including wheat, green grams, tomatoes, onions, cassava and livestock. At some points, export of maize flour was also affected. Immediate severe effects of the ban included the failure by suppliers from Tanzania to meet existing contractual obligations to supply food staples to markets in the neighbouring countries. Stopping trucks and impounding the

STApLE FOOD ExpORT BAn: WhaT can iT Do To valUE

chain acTors? By Mbarwa Kivuyo

consignments resulted in very heavy financial losses for Tanzanians. The effects have trickled down to bite at ordinary farmers. In one example, farmers working under a donor funded project were contracted to produce 10,000MT of maize to supply to a local Tanzanian trader with the promise that the local trader would export the consignment. The contract, worth approximately USD 2 million (TZS 4.3 billion) could not be fulfilled due to the export suspension. The farmers had received loans to obtain inputs and had managed to increase their yield by more than 50% in order to meet their contractual obligation. “They are now at a risk of not being able to sell their maize and therefore will not be able to repay the bank loans,” says Mr. Ikunda Teri who is the country coordinator for the Eastern Africa Grain Council (EAGC). Under the auspices of the EAGC,

non state actors in Tanzania met on August 26, 2016 to deliberate on the implementation of the export ban and its implications on Tanzanian businesses. The meeting held at New Africa hotel in Dar es Salaam shared updates on the food security situation in Tanzania, evaluated the impact of the export ban, and developed a stakeholder strategy to request the Government to review its decision for the interest of smallholder farmers and export traders. According to the stakeholders, free movement of food commodities domestically and across borders is vital for the Tanzanian economy. The first month of the implementation of the suspension left several casualties among smallholder farmers and export traders. Explicitly, the production of food crops for 2016 is estimated at 16 million metric tonnes while domestic consumption for the year is estimated

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at approximately 13 million metric tonnes. This means there is generally a food surplus of approximately 3 million metric tonnes for this year. This surplus could be sold to the neighbouring countries at a lucrative price. The export suspension has jeopardized the prospects of selling at good prices. Farmers with bank loans are likely to default on their loans. Stakeholders who attended the August 26 meeting shared testimonies on the consequences of the export suspension. They reported that more than 700 farmers in Dakawa, Morogoro Region had received over TZS 1.25 billion in agribusiness credit from banks, particularly the National Microfinance Bank (NMB) and CRDB Bank. Some of the farmers had secured the loans with their farmland as collateral. If they don’t access the export market, they will default the loans and risk losing their land. In Kilombero District, Morogoro region, 10 farmer groups received TZS760 million in agribusiness loans from NMB with the intention of boosting their rice production and marketing their produce through Kilombero

Plantations Limited. A registered grain miller in Arusha used to export mainly to Kenya 250MT of maize flour a month, worth over TZS 1 billion. Since the announcement of the export suspension, the sales had dropped to TZS300 million worth of flour a month. The company has an outstanding loan of over USD 1 million, and has delayed making monthly loan repayments since the exports suspension was implemented. The first casualties of the ban were the 60 out of 80 workers who lost their jobs. A Business-to-Business (B2B) linkages model being promoted by

the EAGC had helped grain producers, traders and millers in Tanzania to obtain lucrative contracts to supply food grains to Rwanda, Malawi and Kenya. Tanzanian businesses received contracts worth USD 30 million to supply maize, maize flour, rice, beans and other grains to the regional markets. “Tanzanian traders will lose more than TZS 60 billion as a result of the export ban,” concludes Mr. Ikunda Teri.

—Mbarwa Kivuyo is the head of media & communications, ANSAF

THIS SURPLUS COULD BE SOLD TO THE NEIGHBOURING

COUNTRIES AT A LUCRATIVE PRICE. THE ExPORT SUSPENSION

HAS JEOPARDIZED THE PROSPECTS OF SELLING

AT GOOD PRICES. Ph

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Over the last decade, I have had the privilege of working in Tanzania and visiting the country to talk

with smallholder farmers (SHF) on several occasions. I found them hard-working and intelligent, well informed as to farming techniques and how to get the best yields. Often several SHF combined their small lands together to achieve more total acreage for a more efficient operation. These SHF operations, however, still suffer from reduced yields because they lack the

pERSOnAL pROpERTY SECuRiTY ACT REFORM (ppSA),

EconoMic GroWTh anD invEsTMEnT in Tanzanian aGricUlTUrE

By Dale Beck Furnish

money to buy inputs like improved seed, fertilizers and pesticides, and equipment that would enhance their crops and operations. Change in the law could change that in Tanzania as it is changing it around the world. Currently, Tanzania’s laws on credit guaranties discourage using personal property assets that characterize the agricultural sector—for example, growing or warehoused crops, livestock, farm machinery and equipment, invoices and accounts, and inventory of inputs like seeds, fertilizer,

herbicides and pesticides—for collateral to lenders who might extend credit for farm operations. The laws are outdated. Because of the current outdated laws, Tanzania’s millions of smallholder farmers find it difficult or impossible to obtain credit. Even when credit might be available, its price—as expressed by the interest rates charged for it—makes it prohibitive. To pay the interest rate would eat up the extra profits the credit might make possible. Lack of credit and lack of credit at a reasonable price makes it

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virtually impossible for SHF to obtain commercial seed, fertilizers and other essential inputs. Their lack of such elements in their farming operations stunts their yields. Because of the same existing laws, Tanzania’s small and medium-sized business owners (“SMEs”) cannot finance increased inventory, nor purchase equipment and fixtures that would allow them to expand their operations and hire additional employees. Even large enterprises’ lack of credit curtails the size and profit of their operations. This article will concentrate on the potential effects of personal property guaranties in the agricultural sector, but a law that can help the SHFs in the agricultural sector can also help SMEs and even large enterprises gain more credit at a more reasonable price. More credit at cheaper prices can boost the whole economy. The existing legal restrictions on credit in Tanzania hamper the entire national economy, slowing growth and reducing employment. Tanzania is not alone. Many other countries struggle with outdated personal property security laws and reduced availability of credit at reasonable prices. The world knows about these credit problems, and has begun to take measures to reform the national laws on every continent. This negative situation need not exist. Within the last two decades, the World Bank and other international agencies1 have begun to offer models to carry out reform of national Personal Property Security Acts (“PPSA”) and similar laws. Countries around the world—in Africa,2 Latin America, Asia, and Eastern Europe—have begun to transform their national credit laws by adopting such model laws. The reform

movement has gathered momentum and is underway. There is no reason that Tanzania should not enact a reform PPSA and open the credit market to SHF and other productive borrowers.A team of Tanzanian and international legal experts has drafted a proposed new PPSA to change the national credit structure, and spur the country’s economic growth and development. The proposed law would unify existing diverse laws into a single system and establish a national electronic collateral registry for instant registration of guaranties against personal property, also known as movables or movable property to distinguish it from land. If the law passed, lenders would have lower risk and could make loans to SHF at lower interest rates. Much of the world’s wealth has become concentrated in moveable property (growing and stored crops, livestock, automobiles, equipment, accounts receivable, invoices, inventory, bank accounts, and intellectual property).

While real estate maintains its place as a high source of value and continues to serve as an important credit guaranty, moveable property has long surpassed it in aggregate value available to guaranty loans. As things stand now, Tanzania’s laws are diverse and dispersed. Any lender of credit always wants to know at the outset, “What happens if the debtor does not pay me and defaults on the debt? How will I get paid?” A guaranty or security interest in assets of the debtor put up as security for the loan—in a word, collateral—in event of default can make sure that the lender gets paid. If there is no guaranty of payment, then the lender has to charge much higher interest on the loan to take account of the risk. Even if the lender can get a collateral guaranty, there may be other lenders and creditors of the same debtor who claim an interest in the same asset. Then it becomes very important to sort out the priority between the various

1 United Nations’ Commission on International Trade Law (UNICTRAL, Legislative Guide 2007), the World Bank’s International Finance Corporation (IFC Toolkit 2010), and the Organization of American States (OAS, Model Law 2002; Model Registry Regulations, 2009), and the European Bank for Reconstruction and Development (EBRD),.

2 Liberia (2010), Nigeria (2011), Ghana (2011) and Malawi (2013) have new laws, while Mozambique and Zimbabwe are actively engaged in the process of reform right now.

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claimants. The lender who enjoys first priority should get paid, while the “guaranty” of those with lower priority claims often proves worthless. Tanzania’s current laws fail at both providing means to set up a collateral guaranty and at establishing a clear priority for that guaranty against other claimants to the same collateral. The problem is that there are too many laws that set up too many different legal mechanisms that all claim to establish credit guaranties. These laws include chattel mortgages, debentures, hire purchase, personal property security, finance leases, conditional sales with retention of title and a whole series of other laws. Secured parties register their various guaranties in different registries or do not register them at all, depending on which law they apply. No one can state exactly how the priorities among guaranties established under the various laws rank. Today, Tanzania’s quandary typifies the world’s legal systems that have not reformed their personal property security laws. But there is a better way, and country after country has adopted it. It appears that it will soon become the predominant system in the world, simply because it makes such a positive difference in the credit market. It is time for Tanzania to recognize that fact by adopting the proposed PPSA. Such a law could have a powerful effect on the majority of the Tanzanian people, comprised of predominately rural smallholders. Urban populations, however, also include a majority of smallholders engaged in business and commerce. Access to credit at reasonable interest rates could support more economic activity, increase employment and improve the economic situation for Tanzania’s millions of small farmers and for the small and medium-sized enterprises (SMEs) that make up most of its business activity. The basic idea is to create a single, unitary concept—usually called a “security interest—for guaranties based on collateral provided by the

debtor’s personal property, regardless of which law might be used to create the guaranty. Priority among all creditors may then be set by instigating a single collateral registry where creditors register their collateral interests by filling out a simple form (called a financing statement) that specifies the names of the debtor and lender, the collateral (which may be described generally or by generic category, such as “growing crops”) and the amount of the debt it guaranties. While the registration of such a simple form, indexed by the debtor’s name, cannot create an enforceable security interest, it establishes clear priority for any security interests the named debtor may extend to the named creditor. The registration sets a priority in favor that creditor from the date and time of its registration and does not vary for five years, renewable. Other creditors may make loans to the same debtor, but they will take inferior priority, based on the date and time of their registrations. The law establishes a clear hierarchy of claims. A secured creditor does not have to guess, or worry that some other unrevealed creditor will successfully challenge his priority. The creditor can rely on the order of registrations in the collateral registry. If a security interest is not registered there, it can establish no priority, no matter where else it may be registered. There are further aspects to the modern system of security

interests in personal or movable property, but they all serve the basic policy of making more credit available at lower interest rates. Tanzania has begun the reform of its credit laws. The Bank of Tanzania is currently working on a project that will lead to the submission of a proposed Personal Property Security Act, or PPSA, to the Parliament. Given that neighboring countries in Africa, and countries around the world, have adopted the same reform laws, Tanzania should in the next few years or even sooner have new laws and a collateral registry that will open the national credit market as never before. One of the original features of the Tanzanian initiative is that the collateral registry should be electronic, and allow registration by cellular telephone from anywhere in the country, as well as by internet access from anywhere in the world. As with any new law, it will take time for banks and other lenders, and for borrowers to become familiar with a new PPSA and all of its potential, so that they can take full advantage of it. Within the decade, however, the Tanzanian credit market and—more important—the Tanzanian agricultural sector may have changed for the better as they take advantage of the new laws described here.

— Dale Beck Furnish is Professor of Law Emeritus, Arizona State University

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iT iS TiME TO FOCuS On WOMEn AnD YOuTH EconoMic EMpoWErMEnTBy Joseph Nyamboha

Women and youth can substantially contribute to the agricultural productivity if they were supported to do so. Unfortunately in most cases these groups face major constraints in accessing productive resources. A report published in 2014 by the Food and Agriculture

Organization (FAO) indicates that women in Tanzania own less land compared to men, and their access to credit is limited. Consequently, self employed women and youth in agriculture earn significantly low. In his budget speech presented at the Parliament in June 2016, Minister for Finance and Planning Hon. Dr. Philip Mpango announced a plan by the government to allocate TZS50 million to each village to be used as seed money to support women and youth employment and economic empowerment at community level. According to the budget speech, the allocation will partly facilitate the establishment of agro-processing industries and microenterprises which will create jobs and generate more incomes particularly for women and youth. However, given the government financial anguish to support free education, there will be challenge to obtain the fund for every village given the size of the country. There are 19,200 villages in Tanzania, according to the 2012 census. The census also shows that the working age population (15 to 64 years) in Tanzania mainland was 22,754,122 people of which 11,903,215 (52.3%) was women. Furthermore, the year 2016/17 budget speech emphasized that 5% of local government authorities’ own income must be set aside for women empowerment projects. In addition, the government has budgeted TZS1.95 billion to boost capital for the Tanzania Women’s Bank and the Women Development Fund. These initiatives promote the participation of women in gainful economic and social activities mainly in urban areas, while the rural areas lack access to these opportunities.

A similar approach of support is taken for the empowerment of youth in the country. In the 2016/17 budget the government committed to support youth through Economic Empowerment Fund (EEF) and Youth Development Fund (YDF). The government pledged to continue with the implementation of the Youth Employment Creation Programme (2014/15 –2016/17) whereas a total of TZS1 billion has been budgeted and managed by Prime Minister’s Office (PMO) for youth development. Already, TZS250 million were provided to Mkongo-Rufiji Fund youth camp with the aim of supporting youth employment opportunities. The fund will be used to prepare 220 acres of land, construct irrigation schemes and train youth on agribusiness entrepreneurship. Despite these efforts to support women and youth groups, very little has been achieved in terms of improved access to financing opportunities for those who are engaged in agriculture and agribusiness. Immediate challenges include the fact that neither women nor youth in the rural areas have information on where to get the 5% allocated to them by Local Government Authorities (LGAs). The President’s Office, Regional Administration and Local Government (PORALG) emphasizes that the fund is for women and youth entrepreneurs, who in most cases live in towns, municipalities and cities. The entrepreneurs in urban areas are well informed of the available opportunities compared to rural areas. Another challenge is that women and youth fail to access the funds from the Tanzania Women’s Bank and the Women Development Fund for the case of women and EEF and YDF for the case of youth. The lack of information and collateral make borrowing from these financial institutions an unfriendly undertaking. Support to women and youth requires preferential treatment in the form of low interest rate loans and training on entrepreneurial skills. This will enable them improve their livelihoods and reduce income poverty particularly among rural youth and women.

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e.TiME TO FOCuS


The implementation of Tanzania’s Development Vision 2025 announced in 2000 started humbly and

did not gain its full momentum due to many internal and external factors. The slow pace prompted the government to embark on a new development model copied from Malaysia and dubbed the “Big Results Now (BRN).” The model picked six key sectors and agriculture was one of them. The objective of BRN in agriculture became to address critical sector constraints to speed up agriculture gross domestic product (GDP). Other objectives were to improve smallholder incomes and ensure food security by 2015 mainly through smallholder aggregation models for main cereals and high potential crops contributing to import substitution, farm income and food security. The spirit was “to bring to a complete halt the culture of ’business as usual’ and needless confidentiality amongst officials and officers serving the public; and eventually inculcate a new culture of ’business unusual’.” Three pathways were prioritized including: (i) profiling and rehabilitating or building 275 warehouse based trading system for maize in 12 districts; (ii) improving and managing 78 rice irrigation schemes professionally in 10 districts; and (iii) supporting 25 commercial farming (agri-business) deals for sugarcane and paddy in the Southern Agricultural Growth Corridor of Tanzania (SAGCOT) regions. The ANSAF study conducted towards the end of 2015 tried to measure the achievements of Collective Warehouse Based Marketing (COWABAMA) and find out whether its use have

THE FuTuRE OF THE COLLECTivE WarEhoUsE-BasED MarkETinG

WiThoUT fUnDinGBy Mbarwa Kivuyo

created a more robust buying and selling platform to enhance supply and pricing of farmers’ produce. The overriding theory of change focused at product-market as the prime mover of agricultural transformation. Analysis of data collected from Katavi, Rukwa, Mbeya, Ruvuma, Njombe and Iringa regions; and complemented by literature review as well as one-to-one interviews in Dar es Salaam revealed myriad successes and challenges. One of the successes was the formation of new farmer organizations at village level. It was evident that COWABAMA can indeed help the government to fast-track the attainment of the Development Vision 2025. The communities that received training from a private service provider were better at managing the

warehouses than those that did not get the training. Challenges include the interpretation and implementation of the Public Procurement Act (PPA) of 2011. During the rehabilitation of the warehouses the government followed the PPA to procure expensive contractors and other service providers, a process that does not allow local artisans to bid. The introduction of COWABAMA was perceived as an imposed project on LGAs and was not directly linked to the existing District Agricultural Development Plans (DADPs). The rehabilitation of the warehouses was not an item in the agenda of some village meetings. Funding of the project had suffered a great deal to the extent that some of the warehouses

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were instead used as offices of political parties, voter registration centres, residential houses for health workers, stores for Rural Energy Agency (REA) equipment and houses for technicians. Donors were not comfortable to channel funds through LGAs because of alleged mismanagement. By the end of September 2015 only 125 warehouses were rehabilitated and only 20 of them traded during the season 2014/2015. There limited knowledge on the advised chemical use thus endangering consumer health. Farmers were using one of the dangerous insecticides (liquid Actellic) to treat their maize before storing them in the warehouses; this might jeopardize one of COWABAMA’s objectives on quality and standards. There were signs of anomalies in the administration of cash transfers from the central government to the local governments. For example, cash transfer which was meant for supervision in Songea District was channelled through the Songea District Council SACCOS Limited bank account. This money was used for purposes not related to COWABAMA supervision. In most cases, the transfer documents lacked details of the purpose of the money. The transfers especially for supervision sometimes tagged “EPICA” thus could certainly be spent on LGA activities other than the rehabilitation of warehouses. Although it might be too early to assess the performance of COWABAMA, there is a need to address the present challenges before more arises. The COWABAMA could be promoted albeit the existence of other marketing mechanisms. For project benefits to be sustained, farmer groups must be part of the project design, thus invest more on strengthening farmers’ institutions. It is only when they are part of the design that they can also perform social accountability monitoring.

—Mbarwa Kivuyo is the Head of Media and Communications and chief editor of

Ulimwengu wa Mkulima

FOR PROJECT BENEFITS TO BE SUSTAINED, FARMER GROUPS MUST BE PART OF THE

PROJECT DESIGN, THUS INVEST MORE ON STRENGTHENING FARMERS’ INSTITUTIONS.

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WHAT MAkES BuSinESS DifficUlT in Tanzania?

By Mbarwa Kivuyo

A survey of business leaders’ perceptions in Tanzania has shown that the factors that make it difficult for businesses to focus on running and growing their business are tax administration on the top of the hierarchy, followed by power and the level of taxation. Corruption,

which was on the top in past surveys, has dropped to the fourth position, just above the access to finance. Until 2015, power (electricity) has always been the highest problem. The survey conducted by the Tanzania Private Sector Foundation (TPSF) with financial support from BEST Dialogue, aimed at testing the investment climate in Tanzania. Key parameters included the enabling environment factors that are important to the business investment, the factors that make it difficult to do business in Tanzania, the perception of whether and how government is addressing each factor and the leaders’ views on whether each factor would be likely to deter future investment. Presenting the “Business Leaders’ Perceptions on the Investment Climate in Tanzania – 2015” report in Bagamoyo in mid-October 2016, the Director of Public Policy at TPSF Mr. Gilead Teri said business leaders perceived the costs of complying to tax requirements as too high. Direct cost of licensing including the cost of the licences themselves, the staff time required to complete paperwork associated with regulation and the effective cost through staff time of dealing with the enforcers of regulation are really expensive. “Making an effort to reduce the costs of regulation would free up valuable resources that business leaders could use to reinvest in their businesses,” he said. Although the level of taxation ranks the third, it was not much of a serious problem compared to the administration part of it. The Business Leaders’ Perceptions report does not diverge much from the World Bank’s “Doing Business 2016” report where Tanzania ranked 139, suggesting deterioration from 2014. In 2011, Tanzania set a target of reaching the top 99, thus the current 139th position is rather “disappointing,” the report says.

table 1: doing business rankings, World bank 2016

2010 2011 2012 2013 2014 2015 (db11) (db12) (db13) (db14) (db15) (db16)

Ease of doing business 128 127 134 145 131 139Starting a business 122 123 113 119 124 129Dealing with licences 179 176 174 177 169 126Getting electricity 78 96 102 87 83Registering property 151 158 137 146 123 133Getting credit 89 98 129 130 151 152Paying taxes 120 129 133 141 148 150Enforcing contracts 32 36 36 42 45 64Trading across borders 109 92 122 139 137 180

The World Economic Forum also publishes its “Global Competitiveness Index” annually, which indicated that Tanzania has been slowly falling down the ranking. In 2009/2010 it was ranked 100 but it dropped to 113 in 2010/2011. It fell again to 120 in 2011/2012 and slipped to 121st position in 2014/2015. The Global Competitiveness report presents an array of answers to one key question: “what problems do business people face in doing business?” For the 2014 report, the responses included corruption, access to finance, ineffective government bureaucracy and tax rates. Other responses that came on the top of the list were the inadequate supply of infrastructure, tax regulation, inflation, inadequately educated workforce and crime and theft. The PSPF survey “did not bring up new things,” says Teri. Instead, it presented the perception of business leaders on how they see Tanzania’s business environment. Improved business environment is not only for the benefit of the business people, but also it is one of the drivers Tanzania from where it is today to a “middle income country by 2025 with a per capita GDP of $ 3,000 and a GDP growth rate of at least 10%. The current per capital GDP is about $ 1,400, and the country’s growth rate of GDP is 7%. “The opinions of business leaders like AZAM and IPP are crucial in informing the government on areas to improve,” the Director of PSPF Godfrey Simbeye says.

—Mbarwa Kivuyo is the Head of Media and Communications at ANSAF

BuSinESS


OpEn gOvERnMEnT pARTnERSHip: WhErE DoEs Tanzania WanT To BE in 2018?

By Mbarwa Kivuyo

The government has reiterated its commitment to continue working with civil society organizations in

its effort to promote transparency by implementing the Open Government Partnership (OGP) framework. OGP is a multilateral initiative that was formally launched in September 2011 with the aims to secure concrete commitments from governments to promote transparency, empower citizens, fight corruption, and harness new technologies to strengthen governance. The launch was made at the sidelines of a UN General Assembly meeting when the Heads of State from eight founding governments namely Brazil, Indonesia, Mexico, Norway, Philippines, South Africa,

United Kingdom, and the United States endorsed the Open Government Declaration, announced their country action plans along with an equal number of leaders from civil society. The eight founding members also welcomed the commitment of 38 governments to join OGP and Tanzania joined the next day. Since its formation, OGP has over 2,500 commitments made by over 65 participating countries, covering a third of the world’s population. The OGP operates as a partnership initiative between Governments and CSOs. The OGP aims at strengthening the role of civil society organizations and encouraging greater collaboration with governments to forge more innovative and open ways of working. Tanzania has already completed two

phases of the OGP cycle of which the Phase I was implemented between 2012/13-2013/14 and Phase II was executed between 2014/15-2015/16. On September 6, 2016 the President’s Office convened a meeting of OGP stakeholders to endorse the beginning of Tanzania’s Third National Action Plan (NAP III). NAP III draws on the experiences and lessons from NAP II, constructive inputs from CSOs and different government departments, recommendations from the Independent Reporting Mechanism (IRM) have also been taken into account. Tanzania’s Third OGP Action Plan focuses on seven priority areas of which five of them were partially implemented in the Second Action Plan and two have been added.

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The previous Action Plan dwelt on the enactment of the Access to Information Act, Open Budgets, Open Data, Land Transparency and Extractive Industries Transparency. The two additional commitments are Medical and Health Service Transparency; and Performance Management Systems.

Access to InformationAccess to information is both a cornerstone of open government and a key democratic right. During the meeting held at statehouse, the government promised to enact Access to Information Act by December 2016 with related Regulations developed by June 2017.

Open DataOpen data is part of the broader Tanzania Government commitment to OGP. Open and free use of data unlocks opportunities in social and economic spheres. Open Data has the potential to empower citizens with informed decisions, advance research and enable improved investment decisions. The commitment of the government is to establish a strong and open data system and practice by June 2018.

Open BudgetsIn the consultative meeting, the government committed to publish online key budget documents in order to provide citizens with comprehensive information on the government’s plans and expenditure. In particular, online information in a user friendly and machine-readable format provides a useful platform for budget stakeholders to analyze the budget using a wide range of techniques. “The citizens should expect to see budget data (eight key budget reports) published, audit committee reports and tax exemptions publicly available each year,” says the convenor from the State House.

Land TransparencyLand transparency is an important component in the government’s commitment to ensure fair, equitable

and efficient governance of land matters, and to reduce the potential for land conflicts. The government has committed to make land use plan, land delivery service system and demarcated areas for large scale land deals accessible online for public use by June, 2018. This will includes publishing land use plans and make it accessible both at national and local levels making Land Delivery Service System available on line; publishing demarcated areas for large scale agricultural investment (farming and livestock keeping); and publishing a list of approved titles that need to be collected.

Extractive Industries TransparencyTanzania as a member of Extractive Industries Transparency International (EITI) has continued to fulfil EITI requirements. To date Tanzania has produced six EITI reports covering the Fiscal Years 2008/9 up to 2013/14. In this case, the government aims to integrate Contract Disclosure portal on Online Transactional Mining Cadastre Portal (OTMCP). This commitment aims at incorporating an online, searchable and user friendly database for contract disclosure into OTMCP. Once established, users will be able to search contracts and view summaries of key social, environmental, fiscal and operational provisions as well as download full contracts.

Medical and Health Service TransparencyThe Ministry of Health, Community Development, Gender, the Elderly and Children intends to further apply the OGP principles of transparency, openness, accountability, and innovations for improvement of service delivery in the sector. In this regard, three commitments have been earmarked as the installation of mobile tool for monitoring client satisfaction on services offered; post key Health Statistics on the Ministry Portal by December, 2018; and posting orders and receipts of medical supplies from the Medical Store Department (MSD) online by December, 2018.

Performance Management SystemThe government developed the Performance Improvement Model (PIM) in 2001 which is used as a tool for instituting performance management systems across the public service. PIM is a four stage interlinked process comprising a series of integrated tools, components and approaches for planning, implementation, monitoring, performance reviews and evaluations to facilitate continuous improvement in organizational performance and service delivery.


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FARMER’S WORLD JAnuARY 2017 19Agricultural Non State Actors Forum

MakinG ThE Milk inDUsTryMORE pRODuCTivEBy Mbarwa Kivuyo

Tanzania ranks third with the number of cattle in Africa after Sudan and Ethiopia. It is estimated that Tanzania

has over 21.3 million cattle, whereby 680,000 are dairy cattle with the capacity to produce a total of 1.65 billion liters annually. The country is the third milk producer in East Africa after Kenya and Uganda. Yet its milk import level is shocking. Kenya, Sudan and Egypt also rank among the top milk-producing countries on the continent, all contributing significantly to Africa’s 13.4 million dairy farms. A study conducted by the Economic and Social Research Foundation (ESRF) provided a better understanding of the impact that milk imports has on Tanzania’s dairy markets. The livestock industry accounts for 4.4% of the Gross Domestic Product

(GDP), with the dairy sub-sector contributing 30% of this output. Dairy industry is reported to be an important component in livestock sector with great potential of improving the standard of living of people through cow milk consumption and sales of different cow milk products. The diary sector, though not fully commercialized, employs more than two million households and over 100,000 intermediaries through their participation in milk processing and marketing. Over the last two decades, the total milk production has increased at a rate of about 2.8% per annum largely due to increases in cattle population rather than increases in productivity. The per capita milk consumption is 45 litres per person per year against 130 litres and 80 liters for Kenya and Uganda

respectively. The study shows that according to Tanzania Revenue Authorities (TRA) records in 2016, between the period 2011 and 2013, Tanzania had imported 36,766 tons of milk worth TZS 90 billion. Out of this 14,500 tons were powder milk worth TZS 47 billion and the rest is in the form of concentrate. This means that 40 per cent of milk imported by Tanzania was powder milk, which cost more than 50 per cent of the total amount spent by the country for importing milk. UNCOMTRADE statistics published in 2016 also show that for the period 2011 to 2014, Tanzania imported 85,000 tons of milk products worth USD 109.6 million, of which 17,000 tons were powder milk worth USD 20.3 million. However, the ESRF study commissioned by the Tanzania Milk

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Processors Association (TAMPA) acknowledges the comparative advantage that Tanzania has in terms of the suitability the environment for dairy farming. Leading milk producing regions such as Mbeya, Musoma and Kilimanjaro have been successful due to favourable weather conditions that support the subsector. In such regions, production is very high especially during rainy seasons, but due to lack of reliable markets several litres of milk are wasted. Analysis shows that it is important to take careful measures to control the rate of milk imports in the country, even though the biggest market is in Dar es Salaam. Most worrying fear raised amongst some of the stakeholders, is the probability of local processors to switch into use of imported powder milk to process adulterated UHT milk. This is an alarming situation, which if not addressed may eventually result to significant impact to more than two million milk depending households.

• Investment in long shelf-life (LSL) milk processing by the Private Sector will be crucial for overcoming the huge projected milk deficits

• Now there are 74 dairy plantsoperating at 30% capacity which produce mainly short shelf life products like pasteurized yoghurt, etc.

• LSL dairy product processingneeds to be undertaken especially during the rainy season flush periods of too much milk supply

• The LSA strategy includesadditional LSL dairy plants: 3 UHT and 2 powder milk processing plants (2 UHT and 1 powder plant in the Highlands and 1 UHT and 1 powder plant in Lake & Coastal zone

• Thekeypolicychangesneededare incentives to increase investment in long shelf-life (LSL) milk processing and milk quality standards enforcement

In this context, Tanzanian producers and value chain operators need a much improved business environment. Stakeholders in the sector urged the government to introduce quotas for milk imports so as to control and regulate milk importation in Tanzania.


INVESTMENT IN LONG SHELF-LIFE (LSL) MILK PROCESSING BY THE

PRIVATE SECTOR WILL BE CRUCIAL FOR

OVERCOMING THE HUGE PROJECTED

MILK DEFICITS

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RATiOnALE AnD OppORTuniTiES for invEsTMEnTs in livEsTock

valUE chains in Tanzania

The case for livestock as a good investment for Tanzania’s agriculture-led industrialization is strong.

The role of livestock as part of the solution is, however, often neglected here in Tanzania as it is elsewhere. This presentation highlights evidence for livestock being central to Tanzania’s addressing its rural commercialization,economic and food securitychallenges. With the third largest livestock population in Africa, Tanzania is well placed to benefit from the skyrocketing demand for livestock products that is taking place. The fact that livestock production is largely in the hands of smallholders and

By Amos Omore

provides considerable employment for millions, the livestock sector can play a huge role in improving livelihoods and sustainable development.Livestock are powerful instruments for leveraging the systemic changes we need both to end hunger and to create sustainable food systems. Globally, some one billion people currently rely on livestock for livelihoods; they have a special role for women (who may own and benefit from animals) and potential for youth employment. About 15% of the calories and 25% of the protein comes from animal source foods which have a crucial role in balanced diets that reduce stunting and enhance cognitive ability in the youngest and poorest of the population. The increasing value

of livestock products is particularly good for agribusiness given that five of the top six highest value global agricultural commoditiescurrently

WITH THE THIRD LARGEST LIVESTOCK

POPULATION IN AFRICA, TANZANIA

IS WELL PLACED TO BENEFIT FROM

THE SKYROCKETING DEMAND FOR

LIVESTOCK PRODUCTS THAT IS TAKING PLACE.

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comprise animal source foods (milk, pork, beef, chicken and fish) with a total value of US Int $715 billion.However, though livestock contributes at least 40% to agricultural GDP in many of the world’s poorest economies, it receives only 4% of agricultural official development assistance. In Tanzania, livestock contribute only 13% of Tanzania’s agricultural GDP – much lower than countries with fewer livestock!This can change given moreinvestments to exploit emerging opportunities. By 2050, the global meat and milk markets are projected to increase 145 and 155 per cent, respectively, over 2005/07 levels. More notably, over this period, Africa’s increase in volume of meat consumed will be on a par with that of the developed world and that of Latin America. Gains in the size of milk markets will be stronger in Africa, especially in East Africa, than in any other region except South Asia. The increase in livestock production is not expected to keep pace with the continent’s increasing levels of consumption of meat, milk and eggs. It is anticipated the continent will increasinglybecome a net importer of animal-sourced foods unless investments are rapidly deployed to tap the widespread societal benefits that inclusive and sustainable growth of the livestock sector can generate.The increasing demand for livestock commodities in Tanzania and the continent will be met – the only question is how. Three scenarios are foreseen: 1) importing livestock products, 2) importing livestock industrial production know-how and 3)transforming smallholder livestock systems. Replacing the 90% of locally produced animal commodities with imports is not feasible – the import bill will be unaffordable. Transforming smallholder livestock systems that dominate production is therefore the only realistic option with immense livelihood benefits as outlined above. Given its asset base of so many animals,

Tanzania is in a good position to tap into thisrapidly rising market value of Africa’s animal-source foods, that in 2050 is estimated at USD151 billion. This presents significant opportunities for private-sector investment, whether that be investing in production, or investing in the provision of livestock inputs and services for the plethora of small- to medium-scale livestock operations that characterize livestock systems in today’s developing and emerging economies. Both public and private interventions in livestock value chains however need to factor its inherent complexities, which impinges on key environmental and human health issues. We must take account of the different potential ‘development trajectories’ of Africa’s livestock sectorto ensure that the contributions this sector makesbenefit not only food and nutritional security butalso equitable (broad-based) socio-

economic development, human health and the environment. Whether public or private investments, the key question right now is to identify the right entry points that avoid the missteps of the past. Livestock are undoubtedly fundamental to agriculture-led industrialization in Tanzania, but we need better information about the true impacts of livestock and a balanced assessment of the benefits of livestock (e.g., food, nutrition, income, sustainable mixed crop-and-livestock cropping) as well as the harm they can cause (polluted water, degraded lands, increased disease burden) to exploit the full potential of the livestock sector for sustainable, development.

—Amos Omore is the Country Representative for International

Livestock Research Institute (ILRI) in Tanzania

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LEvERAging AgRiCuLTuRE-LED inDuSTRiALiZATiOn:

insTiTUTional sETUp, policy anD lEGal fraMEWork

By Prof. Samuel Wangwe

The ANSAF Annual learning and experience sharing event held at the beginning of December 2016 in Dodoma was

anchored on the theme “Leveraging agriculture-led industrialization: setting the ground for a mega take-off.” A dozen papers were presented where the leading made by Prof. Samuel Wangwe examined the aims of Tanzania’s Development Vision 2025 transform Tanzania to a middle income economy by 2025 with a strong and competitive economy that is characterized by a higher level of industrialization and a modern high productivity agriculture and sem. The agricultural sector is a critical pillar in the process of industrialization. Questions as to the nature and pattern of industrialization and institutional framework implications will need to be examined and clarified. Agriculture being the mainstay of Tanzanian’s economy and employer of the majority of the people of Tanzania has a key role to play the process of industrialization in Tanzania. In order for Tanzania to attain the desired industrial development, it must reexamine the institutional setup, policy and legal framework in the context of the African experience with a view to identifying good practice that can be adopted as a model for agriculture-led industrialization.

agriculture-led industrialization in the regional contextEconomic growth in Africa is still largely driven by commodity exports. The economic structures of several

African countries, especially the resource-rich countries, have become more concentrated, making them more vulnerable to external shocks (Kormawa and Jerome, 2014) This is in sharp contrast to the growth pattern of other developing regions, especially Asia, where growth has been driven by a solid industrialization agenda underpinned by manufacturing. Recent growth in Africa has been associated with little structural transformation in terms of reallocation of resources from low-productivity activities into modern, high-productivity sectors such as manufacturing (UNECA 2014; ACET 2014). Africa is still home to a disproportionate 30 percent of the world’s poor compared to its lower share of 12 percent of the world population. Africa’s recent growth has not been inclusive and has not provided remunerative employment opportunities for its rapidly growing youthful population. Most economic activities take place in the informal sector where productivity and earnings are very low. The informal sector is

estimated to be accounting for more than half of GDP and employing more than 80 percent of the population (World Economic Forum 2015). The sector is currently dominated by small enterprises producing a large number of low-quality domestic goods. Africa’s informal goods and services sector must play a major role in future growth strategies. Industrial development strategies must go beyond traditional manufacturing to target growth and modernization in the in-between sector. Unlike the experience of other major developing regions, Africa’s informal goods and services sector will play a major role in future growth and industrialization. Industrialization is at the core of diversification based on agriculture and value addition This is consistent with the Economic Report for Africa1 which argues that commodity-based industrialization can provide an engine of growth for the continent, enhance beneficial positioning in the global economy and collectively harness the opportunity to promote economic transformation, reduce poverty,

1 Economic Report on Africa 2013 on “Making the most of Africa’s commodities: industrializing for growth, jobs and economic transformation” UNECA and AU, 2013.

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inequality and youth unemployment by capitalizing on their resource endowments and changes in how global production processes are organized. The strategy is to embark on a development path based on its current and dynamic comparative advantages in terms of agriculture as a springboard towards developing competitive production driven by higher levels of value addition while transforming from low to high level technology. This strategy represents a more sustainable, inclusive and equitable growth path in agriculture dominated economies by harnessing backward and forward linkages for agricultural production and adopting effective industrial policies and agriculture based industrialization and strengthening industrial linkages to agriculture making the agricultural sector serve as a springboard for long-term diversification, industrialization and competitiveness. The case studies reported in the Africa Economic Report 2013 suggest that development of backward and forward linkages needs to take into account the technical characteristics of the global value chains and the structure of the specific industry in question. Global value chains (GVCs) are an important feature in today’s global economy as transnational companies are fragmenting their production processes, taking advantage of advances in information and communication technology and

regulation. Africa is still a marginalized player in global trade in value-added, accounting for only 2.2 percent in 2011 and remains at the low rungs of the ladder, a situation which does not guarantee structural transformation (UNECA 2015). Yet participation in GVCs is key for Africa’s transformation, and significant opportunities exist for upgrading to higher levels. African countries can further integrate into GVCs by opening up to trade, targeting regional and emerging markets, modernizing infrastructure, promoting local entrepreneurship, and investing in technical education (OECD 2015). Institutional capacities in terms of government policies, legal and regulatory frameworks and local domestic capabilities are critical determinants of entry into the global value chains reinforced by coordination of the key stakeholders notably farmers, growers, processors and exporters. Successful development of global value chains requires a subtle balance between trade and industrialization policies with a view to promoting synergy and complementarity between them. Trade measures supporting demand for domestically produced goods are necessary for supporting industrialization through global value chains. Industrialization strategies have been developed in SADC and EAC to which Tanzania is a member. In these strategies the importance of value addition is seen in the context of the

imperative of objectives of:(i) Promoting sustainable and

equitable economic growth and socio-economic development that will reduce poverty with the ultimate objective of its eradication;

(ii) Promoting self-sustaining development on the basis of collective self-reliance, and the interdependence of member states;

(iii) Promoting and maximizing productive employment and sustainable utilization of the resources of the region.

Lessons learned in the region suggest that industrialization needs to facilitate competitive and diversified with a view to increasing the region’s productive competitiveness and supply side capacity adopting the strategy of developing regional value and value addition in selected priority sectors. The lessons learned have shown that socioeconomic transformation based on homegrown strategies for building industrial competitiveness have yielded benefits of economic growth, creating employment opportunities and reducing poverty as well as achieving significant benefits of globalization through moving up the value chain in the context of value addition. The regional value chain approach to industrialization was adopted in the SADC Industrial Development Policy Framework and work programme in 2012 with indication on key intervention areas for the policy and strategy for regional value chain development; promoting industrial upgrading through innovation, technology transfer and research and development; improving standards, technical regulations and quality infrastructure; developing and upgrading skills for industrialization; developing a mechanism for industrial financing; improving provision of infrastructure for industrial development and promotion of local cross border and foreign direct investment (RISDP, 2014)2. The regional value chain approach

1 Revised Regional Indicative Strategic Development Plan. SADC. Third Draft for August 2014.

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to industrialization is underpinned in the Industrial Upgrading and Modernization Programme aiming at enhancing the competitiveness of existing industrial capacity and promoting the development of regional value chains in nine priority sectors across the region. Endorsement of CAADP, Tanzania has strived to align its agricultural programs and implement the pillars and targets set in the CAADP framework. A review of experience in implementing CAADP revealed that investment in agriculture is facilitated by a supportive business environment that may be driven by initiatives in sectors outside agriculture. In response to this review of CAADP, in June 2014, heads of states meeting in Malabo for the 23rd AU Assembly, reiterated that agriculture and food security was still at the top of their agenda but they recognized that challenges in the agricultural sector are more effectively addressed through actions in other sectors. The Malabo Declaration on Accelerated Agricultural Growth and Transformation for Shared Prosperity and Improved Livelihoods contains many more commitments in areas like infrastructure, natural resources, land tenure, trade and nutrition which are typically beyond the mandate of the Ministry of agriculture. The Malabo Declaration (2014) anchors to transform agriculture and ensure inclusive growth through doubling of agricultural productivity, enhance value chains and tripling intra-African trade in agricultural goods and services; to providing technical and financial support for the transformation of the agriculture sector and the development of the agro-based private sector, promoting commercial agriculture. Drivers of change that are likely to influence the trajectory of African economies include more volatile food and energy prices; rapid urbanization, increasing incomes, and the rise of a middle class; rapid increase in a young population entering the labor force; greater climate variability; and agriculture remaining as the largest source of employment. The pace at which African countries are likely to cope with these drivers

will be influenced by policy and public investments such as investing in the education value chain to upgrade the skills of those entering the labor force; implementing policies to promote broad-based agricultural growth, including investments in research and development; investing in physical infrastructure to reduce the costs of production in both industry and agriculture, and thus promote competitiveness and employment opportunities; pursuing industrial policies that promote synergies between the nonfarm sector and agrifood systems; investing in urban planning in anticipation of an increasing proportion of Africa’s population that will live in urban areas in the coming decades; and mobilizing adequate funding to finance these various investments and leverage complementary private sector-investments (Badiane and Makombe, 2014). Survey results from countries in eastern and southern Africa show that processed food now represents a significant share of food purchases, even for the rural poor. Diets have also diversified beyond grains into horticulture, dairy, livestock, fish, and pulses. Domestically produced food, rather than imports, accounts for the bulk of diets in both urban and rural areas. Accompanying these changes has been the emergence of a “quiet revolution in African food supply chains,” led mainly by small- and medium-scale enterprises operating in food processing, wholesale, retail, and transport. The most abundant resource that Tanzania already possesses is the of natural resource in agriculture, mining, and other natural resources. These are necessary for transforming economic and social development.

Position of agriculture in the transformation ProcessAccording to Vision 2015, it is envisioned that by 2025 Tanzanians will have created a substantially developed, people- centred, peaceful, stable and united society with high quality livelihood and high level of human development. The economy will have been: ―transformed from a

low productivity agricultural economy to a semi-industrialized one, led by modernized and highly productive agricultural activities which are effectively integrated and buttressed by supportive industrial and service activities in the rural and urban areas. A solid foundation for a highly productive, competitive and dynamic economy will have been laid. Agriculture provides about 65-70 percent of employment, accounts for about 23 percent of GDP, 30 percent of exports and 65 percent of inputs to the industrial sector. There has been improvement in productivities of some of the crops (maize, rice, oil seeds, livestock and fisheries), but there has also been a decline in some previously key cash crops (cotton, cashew-nuts, coffee and sisal to mention but a few). Most of the agricultural exports have continued to be in raw form, mainly due to a weak agro-processing industrial base. The strategy is start from the current position and lay down strategies for moving up the value chain.

Priority agriculture-led industriesFYDPII has identified priority industries such as:(i) Agro-Industries and Agro-

processing adding value to agricultural, livestock, forestry and fisheries products depends on the existence of agro-processing industries in Tanzania. Revamping the textile, garment and clothing industries; establishing leather industries in Dodoma and Singida; developing edible oils industries.

(ii) Sugar industry has indicated the need to address challenges of low cane. Poor harvesting logistics and governance issues, low priced sugar imports.

(iii) Edible Oil is high priority but faces challenges of lack of modern mechanical extraction equipment and ineffective way to increase productivity in agriculture. Plan interventions include increased research, availability of quality seeds, incentives, deepening of potential value chain on oil seeds.

(iv) Food and Beverages is a priority with much opportunity but is facing challenges of reliable market

inDuSTRiALiZATiOn


information and complicated business environment.

land use Planning and managementLand use planning and management are a key variable for unlocking the potential for growth by making land accessible for productive uses in rural and urban areas. Renewed focus on formalization of land ownership and commercialization can be combined to solve land disputes.

formalizationFYDP II embeds efforts to formalize the economy, including (i) instituting a robust national identification system for the country; (ii) preparing comprehensive land use plans and making the same accessible; and (iii) maintaining a comprehensive transaction based businesses registration database.

decentralizationIn order to ensure effects both from economic growth and service delivery permeate to local levels and households, FYDP II supports further decentralization of the Government system in order to respond to local needs in a timely manner or the transformation enhancement through greater decentralization, accountability and transparency. This has to go hand in hand with further entrenching BRN methodology at local levels.

implementation imperativeFYDPII has identified challenges of implementation largely relating to institutional capacities required to ensure that good governance, accountability, and enforcement of the legal and regulatory frameworks. Core reforms are to be undertaken, reviewed, mainstreamed, accelerated and deepened as appropriate with a view to creating an enabling environment for the all stakeholders to contribute and participate effectively in bringing about the desired economic growth and human development. These reforms are to pay special attention to public service management; public finance management; public goods and services delivery systems; Local-Central government relations; business

and investment environment; citizens’ participation; access to legal and judicial services; citizens and corporate responsibility; and enforcement of rule of law and order with view addressing the key implementation challenges. Effective implementation requires inculcation of discipline, hard work, and recourse to business unusual strategic interventions. BRN has generated good lessons, which warrant scaling up with a view to entrenching working culture, and attitudes that will engender high productivities. It is proposed that the departments responsible for Policy and Planning in each MDA be empowered to become delivery units, and will link up with respective departments responsible for FYDP II delivery in the Ministry of Finance and Planning. Specifically, the Plan propositions are the following:i. Reforms to make governing

institutions effective in pursuing their functions;

ii. Reforming public and private institutions with aim to foster transparency, responsibility and accountability. These should be the key features that must be part and parcel of each institution in the country;

iii. Effective coordination of all functions and records of key outcomes of all government institutions, including LGAs;

iv. Establish and enforce mechanisms with respect to national level strategic projects, which involve several actors and bold decisions, to refer to the Cabinet for implementation guidance; and

v. Introducing a special window in the procurement process to deal with national strategic projects.

Based on the experience from BRN implementation, the Ministry of Finance and Planning is to host a full fledged FYDP II Delivery Unit with highest possible political support from the top leadership; adequate operational funds; establish a rigorous inter-institutional coordination, mainstream the BRN’s innovative approach to problem identification and solving. The FYDP II Delivery Unit will coordinate BRN labs for strategic projects of the Plan. FYDP II proposes an expanded use of Human Capacity

Management Information System (HCMIS) for strategic staffing decisions in the public sector and for improving performance management within the delivery units.

implications of institutional SetupThe institutional set must be able to cope with the demands for diversification, linkages and support of other sectors of the economy. In agriculture led industrialization the institutional set up appropriate for agriculture-led industrialization path characterized by speeding up and deepening value addition of local production linkages to the agricultural sector by developing national and regional value chains to ensure persistent pursuit of movement up the value chain. In this regard, ASDS-2 is guided by four strategic objectives : (i) Expand sustainable water and land resource management (ii) Improve agricultural productivity and profitability driven by improved research, extension, input access and mechanization; (iii)Strengthen and promote competitive value chain development in the agricultural sector (crops, livestock, fisheries), driven by empowered farmers organization, improved value addition and enhance access to markets, finance and rural infrastructure; and (iv) Strengthen institutional performance, enablers (policy and regulatory framework) and effective coordination of public and private sector institutions in the agriculture sector at national and local levels. The key drivers of ASDP2 implementation are sector-wide coordination and focus of local investments targeting prioritized commodity value chains (CVCs) with improved balance between sub-sectors in line with their comparative advantage in each zone and focused support to district clusters. ASDP-2 envisages to gradually increasing investments at local level with implementation focused on DADPs investments around priority commodity value chains (CVCs) in selected clusters with gradual up scaling. The close link to industrialization is depicted by the value chain approach that has been adopted in

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ASDP2.) Value chain development articulates the position the various stages from production, processing and marketing/distribution systems of key commodities in the chain. The approach is to enhance the efficiency for farmers and their organizations, to access profitable input/output markets and value addition (including agro-processing) opportunities in priority commodity value chains and improving the environment for the private investment. The approach shows a clear focus on smallholder producers and improving their role and relationships within the value chain(s) with attention to the development of the institutional capacity of smallholder organizations to negotiate and manage new marketing arrangements with private sector actors, leading to productive alliances and viable commercialization partnerships. In this regard, empowerment of the smallholder farmers will require (i) identification of a viable business model, consistent with agro-ecological conditions, farmers ‘resource endowments and market opportunities; (ii) effective group (organization) governance and accountability; and (iii) access to necessary technologies, information, production and processing inputs, and credit.

key interventions in value chains and institutional SetupAccording to ASDP2, a key result output is strengthened Institutions, enablers and coordination framework (policy, regulatory and institutional framework enhanced; institutional capacity, knowledge management and ICT strengthened; food and nutrition security, and safety net improved; sector coordination improved; M&E and agricultural statistics strengthened). Strengthening of enablers and coordination at all levels (national, regional and local) will address Policy and regulatory framework; Institutional capacity development; communication and knowledge management and ICT; and monitoring & evaluation (including Agricultural statistics). The institutional set must be able to identify value addition by taking

stock of the value of the agricultural sector base and linkage opportunities as a basis for making medium- and long-term interventions. Profiling the priority sectors sub-sectors with focus on agro-food processing and identifies bottlenecks and constraints to the value chain development and propose action to be taken to operationalize potential value chains and to appropriately locate in regional and global value chains. The institutional set up must have the capacity provide support to supply competitively based on comparative advantage and driven by moving up the value chain and upgrading from low technology to medium and high technology. The institutional set up should be able to identify of constraints and chart action for strategically locating in global value chains. Lengthening and deepening value chains; use of modern technologies and R&D and innovation; Quality and standards; Skills promotion along the value chains; commercialization and market promotion; improved infrastructure; promotion of producer groups including out growers; improved access to financial services; and MSMEs. This strategy is to be complemented by an institutional set that is capable of coordinating the wide range of initiatives and activities that must come together to realize high productivity agriculture as a driving force for industrialization. These include infrastructure networks and services; harnessing Science, Technology and Innovation (STI), and promoting private sector development by improving the environment for doing business in the region as well as to ensure effective policy and institutional mechanisms for engagement with the private sector. Science, technology and innovations (STI) is a key driver of competitiveness. The strategy is predicated on collectively building the capacity to produce higher value products as a basis for promoting trade. This requires strategic decision to seek technological transfer from those investors in agriculture. The objective is to engage in technology and innovation that has the capacity to turn the primary commodities into

high-value finished products not only for the national market but also for the regional and global markets. STI and new technologies offer solutions to transformation by facilitating integration into value chains with a view to improving livelihoods for individuals and communities that are part of local, regional or global value chains. Productivity increase and competitiveness can be achieved by stimulating technological upgrading and investment in R&D, transfer of advanced technologies and promoting close collaboration between research institutes and the enterprise sector and investing in education and skills development. The institutional setup needs to ensure empowerment of national firms to insert themselves and compete in national, regional and global value chains..harnessing local and foreign investmentThe institutional set up will be conducive to taking action to selectively attract credible foreign direct investment (FDI) to invest in the country’s value chains, transfer technology and facilitate entry of local SMEs into global value chains focusing on specific priority agro-processing sectors. Priority will be accorded to FDI which forges linkages with domestic firms, transfers technology and facilitates entry into global value chains in priority sectors in agro-industry. Adopting modern technology and making science-based improvements to agriculture can increase productivity and thus generate more decent farm employment and raise the level of income for rural communities. There are cases where agricultural investments (e.g. in the SAGCOT initiative) are enhancing local agricultural production and facilitating involvement in global value chains through local sourcing that gives them an edge in global markets. These experiences suggest that local and foreign investment in agriculture can be harnessed strategically to boost production, jobs and incomes while providing opportunities for increased participation in the global chains.

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SAGCOT is among the first programmes under Kilimo Kwanza approach where partnership between government, small-scale farmers and large-scale commercial farmers/processors is emphasized. These developments channelled additional support for mainly parallel implemented projects to be coordinated’ within the overall ASDP framework. According to ASDP2, smallholder farmers have to begin producing for the market and be supported to forge strong and dynamic linkages with commercial input and output supply chains in order to connect with a growing agro-industrial sector and expanding food demand from urban consumers. The role of linkages with large scale farmers has a huge potential which should be replicated from good practices demonstrated by SAGCOT and other models in Tanzania and elsewhere.

facilitating investment and EntrepreneursThe institutional set up will facilitate entrepreneurs to tap into the regional and global value chains by harnessing the potentials of value addition. According to the World Bank’s Doing Business Report 2016, Tanzania was ranked 139th out of 189 countries down from 136th in 2013 and 128th in 2011. Priority will be placed on creating a conducive environment for doing business, harnessing broad based private sector development including the domestic small and medium size enterprises.

human Skills developmentInstitutional capacity must facilitate human skills development broadly and specifically in specialized skills for the priority sectors in the value chain. Action will be taken to identify specialized skills required for value chains in the priority sectors, especially agro-industry in learning and training institutions. Considering that local upgrading is a continuous process, industrial policies are designed to be supportive to the development of competitiveness in the local value chain.

development finance institutionsCost effective long term industrial

financing is a glaring gap which is calling for action to make interventions on industrial financing with special attention to long term finance to facilitate entry of small and medium enterprises in the into global value chains. Action needs to be taken to expedite the operationalization of the commodity specific Development Fund as a cost effective long term industrial financing window. Considering the whole value chain, financing will need to be accessed by all actors in the chain including (i) promote services of existing community banks and start-up of new ones at local level; stronger and well capitalized grassroots MFIs such as SACCOS and Village Community Banks (VICOBA) as first-line financial services for small-scale commercial farmers; and strengthen overseeing/regulatory functions of the Cooperative Department at local level as part of promotion of MFIs; accelerate efforts to expand agricultural finance services through TIB-Agricultural window and the Tanzania Agricultural Development Bank, for medium- and long-term investment in agricultural production and processing and lending for agricultural investments from commercial banks.

broad Stakeholder consultationThe institutional set up will facilitate broad stakeholder consultations and participation such as private sector and civil society to ensure sustainable buy-in at national level as well as at the sub-regional level. The institutional set up will develop prioritized industrial-policy roadmaps for value addition in the context of a multi-stakeholder institutional mechanism (e.g. council of representatives of firms and of research and innovation institutions) with a focus on developing linkages to the agricultural sector. The consultative institutional mechanism will be charged with three responsibilities:i. Developing a joint, strategic

vision for agriculture-led industrialization—gathering the most reliable information and elaborating an appropriate step-by-step linkage strategy.

ii. Outlining support policies and mechanisms that are needed for implementation to be successful

including supportive business environment, infrastructure, human skills, technological infrastructure and capabilities, promoting local entrepreneurship, quality certification and operationalizing industrial financing mechanisms.

iii. Put in place a strategic action plan specifying who is to do what by when specifying activities, outputs and time frame.

Monitoring and EvaluationMonitoring and Evaluation mechanism will be put in place specifically for tracking progress in development of value addition in priority sectors in the value chain. According to FYDPII, the M&E framework involves general and specific objective indicators and targets to be realized at macro, sector and project or intervention levels. It also spells out institutional arrangements, roles and responsibilities as well as assumptions underlying an effective FYDP II M&E system. The proposed M&E framework for FYDP II emphasizes the importance of availability of reliable data in gauging quantitative and qualitative performance indicators and the importance of having in place analytical capabilities to generate new insights for policy makers and the citizenry on progress of implementation. The mechanism will provide evidence-based research and knowledge required for more effective performance management of the value chains. MDAs, LGAs, CSOs, private sector, research and academic institutions will be involved in formulation and implementation of M&E activities in an integrated approach that entails involvement of all key actors and primary stakeholders. The FYDP II result matrix will establish baselines and set targets, disaggregated appropriately by gender, location, etc. Appropriate decision making and action will be taken on the basis of feedbacks from practical experience and lessons.

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