Transcript to - Bank of Tanzania
17
TH
CONFERENCE OF FINANCIAL INSTITUTIONS
MEETING THE FINANCING NEEDS OF THE AGRICULTURAL SECTOR IN TANZANIA: THE SECOND PILLAR OF KILIMO KWANZA
Salum Shamte ( FM ) Vice Chairman Tanzania Private Sector Foundation Arusha, 24 th November, 2014
OUTLINE OF PRESENTATION
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OPPORTUNITIES AND CHALLENGES IN THE AGRICULTURAL SECTOR.
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RAPID TRANSFORMATION OF THE SECTOR KILIMO KWANZA AND ITS RESULTS.
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FINANCING OF THE SECTOR : - 2 ND PILLAR OF KILIMO KWANZA.
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TAKE HOME MESSAGES FOR FINANCIAL INSTITUTIONS.
OPPORTUNITIES IN THE AGRICULTURAL SECTOR
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2014 - UNITED NATIONS YEAR OF FAMILY FARMING.
INTERNATIONAL 2014 - AFRICAN UNION – AFRICAN YEAR OF AGRICULTURE AND FOOD SECURITY.
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2014 – BOT 17 TANZANIA.
TH CONFERENCE OF FINANCIAL INSTITUTIONS FINANCING AGRICULTURE AND ABRIBUSINESS IN AGRICULTURE CRITICAL FOR STRATEGIC GLOBAL SURVIVAL AND GLOBAL PEACE
OPPORTUNITIES ctd....
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Global Market Opportunities for Farmers Population Growth – – 10Bn By 2050; Urbanisation; Disposable FOOD - FIBRE - FUEL Income.
Africa’s Comparative Advantage - 46 % of Underutilised Arable Land; Water; Climate; 7 Fastest Growing Economies.
Tanzania – Sleeping Agricultural Giant Land; Water; Farmers; Robust Economy; Population; Geographical – Location; Political Commitment and Goodwill.
FARMERS MUST EXPLOIT OPPORTUNITIES
CHALLENGES FACING THE SECTOR
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Low Growth of 4%; Low Productivity; Poor Connectivity to Value Chains and Markets; Farm Sizes Too Small Leads to Average – 2 Acres Low Production and Productivity; : Lack Of Power Of Negotiation; Mechanisation; Technology; Processing And Marketing.
Policies Not Yet Fully Attractive To Agricultural Investment. Taxation and Special Incentives.
We Are Still Perpetuating Subsistence Agriculture Rather Than Commercialising.
CHALLENGES ctd....
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Focus Should Shift from Food Sufficiency To Surplus/Profit Generation.
Self Number Of Farmers Must Necessarily Go Down – Others Absorbed In The Value Chain [Not Everybody Who Lives In A Village Is Or Should Be A Farmer].
Youth Not Attracted to Agriculture If It Is Not A Business For Profit And If It Is Not Mechanised.
Agriculture Is Too Important and Complex to be Left to the Least Educated.
Too
CHALLENGES ctd...
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FINANCING FOR AGRICULTURE IS DISMAL
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Average of Only 10.32% Of Total Domestic Lending By Commercial Banks To The Agricultural Sector in the Last 5 Years.
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92% Went Into Trading – Only 9% Into Production [ LESS THAN 1% of Total Domestic Lending Into Agricultural Production !!!
]
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Interest Rates, Repayment, Collateral and Other Terms Untenable and Inappropriate for the Sector.
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The Farmer Carries the Total Risk Of The Chain.
FARMERS NEED PATIENT CAPITAL LONG TERM AT AFFORDABLE INTEREST RATES
KILIMO KWANZA RESOLUTION
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KILIMO KWANZA A Resolution to Rapidly Transform Our Agriculture to Take Advantage of the Opportunities and to Address the Challenges.
Launched by H.E. President Kikwete in 2009.
Culmination of Work Started in 2007 – Private Public Working Group under TNBC.
A TANZANIAN RESOLVE, DEVELOPED TANZANIANS, IMPLEMENTED BY TANZANIANS FOR THE PROSPERITY OF TANZANIANS.
BY Holistic Approach with 10 Pillars Implemented Concurrently Across Various Other Sectors.
TO MODERNISE AND COMMERCIALISE OUR AGRICULTURE
RESULTS OF KILIMO KWANZA
IMPRESSIVE RESULTS AFTER JUST 5 YEARS
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Agriculture High in Tanzania’s Economic Agenda and Big Results Now.
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Tanzania Has Food Surplus – Most Crops Have Doubled Production in 5 years !!!
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Government Budget to Agriculture increased from 2.2% in 2005 to 8% in 2013.
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Inputs Subsidies Increased from 7.48 Bn/= in 2006 to 92 Bn/= in 2013.
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Agricultural Window Established At TIB Development Bank.
RESULTS OF KILIMO KWANZA ctd..
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Tanzania Agricultural Development Bank Being Established. Board and MD In Place.
Importation Of Tractors Increased From 356 In 2005 To 13,037 In 2012.
Revival Of Agricultural Research and Training Centres – Employment Of 9,200 Extension Officers.
ASDP 2 Being Implemented And CAADP Compact Signed Targeting 6% Growth Rate And Investment Of US $ 5.3 Billion.
RESULTS OF KILIMO KWANZA ctd..
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Implementing SAGCOT Concept To Attract US $ 3.2bn/= In Investment; Create 100,000 Commercial Smallholder Farmers And 2,400,000 Lifted Out Of Poverty By 2030.
Reduction In Agricultural Taxation.
Educated Youth And Other Emerging Farmers Becoming More Attracted And Involved In The Sector.
Many Other Initiatives Being Planned And Implemented To Improve The Sector.
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ND
PILLAR OF KILIMO KWANZA – FINANCING THE RESOLUTION
CRITICAL TO IMPLEMENT FULLY IF THE TRANSFORMATION PROCESS IS TO SUCCEED.
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IT HAS THE FOLLOWING RECOMMENDATIONS: Increase Government KILIMO KWANZA.
Budgetary Maputo Resolution Allocation – 10%.
To Establish and Mobilise Resources for a Tanzania Agricultural Development Bank (TADB). Start with Capitalisation of US $ 500 Million.
Tanzania Investment Bank (TIB) To Have A Special Window For Concessionary Lending To The Sector.
Establish A Special Fund To Address Land Survey Costs, Investment, KILIMO KWANZA.
Capacity Building And Guarantees To Complement The Requirements Of
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PILLAR OF KILIMO KWANZA – FINANCING THE RESOLUTION ctd...
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Enhance Agriculture Sector Development Programme Implement (ASDP) Governmental KILIMO KWANZA.
And Development Partners’ Basket Funding To Mobilize And Attract Enhanced Agricultural Investment By Private Sector – Small, Medium And Large. Local and Foreign.
Empower Farmers’ Cooperatives And SACCOS To Mobilize, Manage And Channel Funds For Agricultural Production To Their Members.
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PILLAR OF KILIMO KWANZA – FINANCING THE RESOLUTION ctd...
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Negotiate And Legislate For Commercial Banks To Lend A Percentage Of Their Deposits On Concessionary Terms To Agricultural Production. [
Moral Suasion Not Working
].
Extend The Establishment Of Community Banks In Every Region Of Tanzania.
Establish Special Agricultural Credit.
Units In Financial Institutions For Mobilizing And Disbursing
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PILLAR OF KILIMO KWANZA – FINANCING THE RESOLUTION ctd...
Establish Commodity Efficiently and Effectively.
Exchange to Market Facilitate The Easier Floatation of Agribusiness Companies On The Dar es Salaam Stock Exchange.
Pension, Empowerment And Other Funds To Agree On Mechanism To Invest In Agricultural Production At Concessionary Terms.
Establish Farmers.
Social Security Arrangements For Institute Policy Instruments To Facilitate Insurance Companies To Extend Cover And Lending To Agriculture.
OTHER FINANCING INITIATIVES WHICH NEED TO BE SUPPORTED
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Value Chain Financing To Reduce Risk For The Farmer.
Share and Contract Farming/Outgrower Schemes.
‘’Hub And Spoke’’ Schemes.
Catalytic Funds And to Leverage ‘’Last Mile Investment More Investment Capital.
Private Sector Advance Equity Financing And Venture Capital.
Agricultural Machinery Rings to Accelerate Mechanisation.
TAKE HOME MESSAGES FOR FI’s
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Financial Institutions Should Realise The Great Potential And Opportunities In The Agricultural Sector – Mutually Beneficial.
Change Attitude And Mind Set The Agricultural Value Chains.
In Order To Invest In FI’s Take Deliberate Actions To Finance Innovative [Business Unusual] Agricultural Value Chains.
Share Part of The Risk.
Interact Closely With Farmers and Organisations To Understand Their Needs.
Support Emerging Especially Youth .
Commercial Farmer Farmers – SUPPORT Sectors KILIMO KWANZA Initiatives In All