Final Report March 2019 Ministry of Economy, Trade and Industry Of

Fiscal Year 2018

Study on Business Opportunity of High-quality Energy Infrastructure to Overseas

Feasibility Study for Power for Food (P4F) Project:

Development of Agro-Processing Zones equipped with Solar Power

Generation and Battery Systems in the Republic of Tanzania

Final Report

March 2019

Ministry of Economy, Trade and Industry of Japan

Oriental Consultants Global Co., Ltd. Mitsubishi Corporation Co., Ltd.

Foreword

This report summarizes the outcome of "Fiscal Year 2018, Study on Business Opportunity of High-quality Energy Infrastructure to Overseas, Feasibility Study for Power for Food (P4F) Project: Development of Agro-Processing Zones equipped with Solar Power Generation and Battery Systems in the Republic of Tanzania" entrusted by Ministry of Economy, Trade and Industry to Oriental Consultants Global Co., Ltd. and Mitsubishi Corporation Co., Ltd. in fiscal year 2018.

The " Feasibility Study for Power for Food (P4F) Project: Development of Agro-Processing Zones equipped with Solar Power Generation and Battery Systems in the Republic of Tanzania" was conducted with the aim of forming infrastructure development projects that make use of the excellent technologies and know-how of Japanese companies, by carrying out integrated "energy" and "infrastructure development (industrial park)" in Tanzania, making differentiation by creating new business model in the fields expected to grow in the future which were indicated in the "infrastructure system strategy" formulated by the Japanese government.

We hope that this report will help to realize the project mentioned above, and also to be helpful for our stakeholders in Japan and Tanzania.

March 2019

Oriental Consultants Global Co., Ltd. Mitsubishi Corporation Co., Ltd.

List of Abbreviations

Abbreviation Proper Name AfDB Africa Development Bank AIP Agricultural Industrial Park CDC Colonial Development Cooperation DAWASA Dar es Salaam Water and Sewerage Authority EAC East African Community EOJ Embassy of Japan in Tanzania EPZ Export Processing Zone EPZA Export Processing Zones Authorities EWURA Energy and Water Utilities Regulatory Authority JICA Japan International Cooperation Agency MEM Ministry of Energy MIT Ministry of Industry and Trade MLFD Ministry of Livestock and Fisheries Development MOA Ministry of Agriculture MOFP Ministry of Finance and Planning NDC National Development Corporation REA Rural Energy Agency REB Rural Energy Board REF Rural Energy Fund SADC Southern African Development Community SAGCOT Southern Agricultural Growth Corridor of Tanzania SEZ Special Economic Zone SIDO Small Industries Development Organization TANESCO Tanzania Electric Supply Company TBS Tanzania Bureau of Standards. TDC Tanganyika Development Corporations TDU Textile Development Unit TFDA Tanzania Food and Drug Authority TIC Tanzania Investment Centre Tanzania Industrial Research and Development TIRDO Organization TPSF Tanzania Private Sector Foundation

TSB Tanzania Statistics Bureau VETA The Vocational Educational and Training Authority WB World Bank

Table of Contents Foreword List of Abbreviations Table of Contents Summary

Chapter1. Tanzania outline and project related sectors ...... 1 1.1 Economic and financial situation of Tanzania ...... 1 (1) Geographical Overview ...... 1 (2) Economic overview ...... 2 (3) Population / Industry Structure ...... 2 (4) Trade ...... 5 1.2 Outline of the related sectors for P4F ...... 5 (1) Agriculture sector ...... 5 (2) Electricity sector ...... 6 1.3 Government Policy Trends ...... 8 (1) National Development Plan ...... 8 (2) Policy trends in the agricultural sector ...... 9 (3) Policy Trends in the Electric Power Sector ...... 9 1.4 Investment environment for the project-related business in Tanzania ...... 10 (1) SEZ / EPZ development plan in Tanzania ...... 10 (2) Development plan of Bagamoyo Port ...... 11 (3) The development plan for agricultural product processing zone by AfDB/UNIDO ...... 12 (4) The Development of Textile Industrial Park by Textile Industry Development Unit (TDU) ...... 14 1.5 Outline of P4F candidate areas ...... 15 (1) Pwani Region ...... 15 (2) Morogoro Region ...... 16 (3) Iringa Region ...... 17 (4) Dodoma Region ...... 18 (5) Mwanza Region ...... 19 (6) Mbeya Region ...... 20 (7) Mara Region...... 21 Chapter2. Survey Summary ...... 22 2.1 Survey method / system ...... 22 (1) Survey Contents ...... 22

(2) Survey method ...... 23 (3) Survey implementation structure ...... 24 2.2 Survey schedule ...... 25 (1) Overall Survey Schedule ...... 25 (2) Field Survey Schedule ...... 25 Chapter3. Project contents and technological review ...... 30 3.1 Background and project needs ...... 30 3.2 Review of the project candidate sites ...... 31 (1) Method to select the project candidate sites ...... 31 (2) Current situation of the pilot project candidate sites ...... 33 (3) Results of consideration of pilot project candidate sites ...... 38 3.3 Examination toward the project implementation in Bagamoyo SEZ ...... 39 (1) Consideration of the geographical environment in Bagamoyo SEZ for the AIP development ...... 39 (2) Situation of infrastructure development in Bagamoyo SEZ ...... 39 3.4 Confirmation of regulations related to the implementation of the project ...... 40 (1) Scheme of the EPZ method and the SEZ method and preferential treatment for investors ...... 40 (2) About TFDA Certification Procedure ...... 43 (3) About TBS Certification Procedure ...... 45 3.5 Study on agricultural field with business potential ...... 46 (1) Overview of agriculture and fishery industry in Tanzania ...... 46 (2) Tanzania’s industrialization priority sectors ...... 51 (3) The situation of foreign companies of agricultural products processing that are expanding businesses in Tanzania and its surrounding countries ...... 59 (4) Consideration for implementation of AIP project ...... 65 3.6 Study on project size and basic design ...... 66 (1) Premises of the study of the business scale ...... 66 (2) Review of maintenance equipment in AIP ...... 67 (3) Consideration of AIP Basic design...... 69 (4) Solar power generation system ...... 71 Chapter4. Environmental and social aspects ...... 76 4.1 Policies, laws, and regulations related to environmental and social considerations ...... 76 (1) Overview of policies, laws, and regulations related to environmental and social considerations ...... 76 (2) Environmental laws and regulations related to this project in particular ...... 77

4.2 Practical procedures in environmental impact assessments ...... 78 (1) Environmental management related organizations ...... 78 (2) Procedures relating to EIA implementation ...... 79 (3) Procedures relating to SEA implementation ...... 80 4.3 Analysis of current environmental and social conditions ...... 81 (1) Current state of natural environment in the Bagamoyo SEZ studied by this project ...... 81 (2) Current state of the social environment in the Bagamoyo SEZ studied by this project .. 82 4.4 Expected impact from P4F project implementation ...... 85 (1) Pollution control measures and impact on the natural environment ...... 85 (2) Impact on the social environment ...... 87 4.5 Environmental Benefit from the project implementation ...... 88 Chapter5. Financial Viability ...... 92 5.1 Project cost estimation ...... 92 5.2 Preliminary financial analysis ...... 92 (1) Initial Conditions ...... 92 (2) Calculation of financial internal rate of return (FIRR) ...... 93 (3) Results of the financial analysis ...... 95 (4) Sensitive analysis ...... 95 Chapter6. Project implementation schedule ...... 98 Chapter7. Implementation capacity of the executing agency by Tanzania ...... 100 7.1 Outline of the operation agencies in Tanzania ...... 100 7.2 Organizational structure for project implementation in Tanzania ...... 103 (1) Outline of the Organizational Structure ...... 103 (2) Industrial management experience of EPZA ...... 104 Chapter8. Technology advantage of Japanese companies...... 107 8.1 Expected participation of Japanese companies ...... 107 8.2 Advantages of Japanese companies in implementing projects ...... 108 (1) Technological superiority of the solar energy system + storage battery system manufactured in Japan ...... 108 (2) Measures to strengthen cost competitiveness to be taken when Japanese companies participate in the project ...... 112 8.3 Measures necessary to promote orders from Japanese companies ...... 112 Chapter9. Action Plan and issues toward realizing the project ...... 114 9.1 The current progress toward realizing the project ...... 114 (1) Continuous consultation with related organizations of Tanzania ...... 114 (2) Interview potential companies (Japanese and local companies) ...... 114

9.2 Status of efforts by related government and implementing agencies in Tanzania for the project implementation ...... 115 9.3 Envisioned Financial Scheme ...... 115 (1) Possibility of Yen Loan and Japan's ODA Utilization ...... 115 (2) Possibility of cooperative support with other international cooperation agencies ...... 115 (3) Possibility of utilization of the international fund ...... 116 9.4 Future Initiatives and Issues towards the project implementation ...... 116

Summary of the Report

(1) Project Background

Tanzania, officially known as the United Republic of Tanzania, is located along the eastern coast of the African continent. The agriculture sector plays a central role in its economy. Agriculture employs 67.2% of Tanzania’s labor force but its contribution to the country GDP is of just only 30%. Due to the tropical climate and fertile geographical environment of Tanzania, various kinds of agricultural products with positive impact in the economy are produced, such as: tobacco, cashew nuts, coffee, tea, spices, cotton, sisal hemp, etc. Due to the increasing population in Tanzania, domestic demand for agricultural products has also augmented, with further growth of the domestic agricultural market expected to continue in the future. Within Africa’s regional markets, Tanzania is a member of the East African Community (EAC), a massive market of over 100 million people, and is also a member of the Southern African Development Community (SADC), comprised of developing markets of more than 200 million people. These alliances are expected to help drive further growth of intra-regional trade of processed agricultural products for Tanzania. The capacity of electric power plants in Tanzania was of 1,516 MW in 2015 and nearly 60% of Tanzania’s electricity was generated by thermal power. Tanzania depend on electricity imports from its neighboring countries to meet the demand for electricity in cities along the nation’s borders. Currently, only 32.8% of all households in mainland Tanzania have access to electricity, but it is assumed that a rapid increase in electricity demand accompanied by economic growth will be a major problem for Tanzania in the future. At the moment, Tanzania’s electricity demand is expected to reach 1,000 MW, but by 2025 it is expected that the maximum demand will increase more than 4 times up to 4,700 MW. In this context, it will become necessary to install large scale of power generation facilities to satisfy Tanzania’s expanding electricity demand. Based on the above background, "Tanzania Power for Food (P4F)" project was created. P4F aims to support the agro-processing industry and electricity generation sector through the construction of Agro-Industrial Park (AIP). The AIP will have their own power generation systems consisting of solar panels with a battery system incorporated. AIP will support value addition of agri-products in Tanzania and will expand sales in domestic and international markets. In order to evaluate the feasibility of this project, several surveys were conducted on site. Meetings with Tanzania’s Governmental agencies, with the private sector plus visits to potential sites for AIP construction allowed us to propose multiple scenarios regarding the AIP size, financial performance and correspondence with Tanzania’s development policies.

(2) Selection of candidate areas for AIP pilot project implementation

Tanzania is looking for the development of Special Economic Zones (SEZ) and Export Processing Zones (EPZ). In order to achieve this goal, the Export Processing Zones Authority (EPZA) was created. EPZA has selected 21 locations around Tanzania as SEZ / EPZ development candidate sites (Figure 1). In order to implement the proposed AIPs, the selection of appropriate locations is very important. Following the advice of local experts in preliminary surveys (before P4F), three regions were pre-selected, Pwani Region (holding Bagamoyo District), Morogoro Region and Iringa Region. In addition to this advice, during our field survey we received information that other areas of Tanzania also have potential to be AIP candidate sites: Dodoma Region, Mwanza Region, Mbeya Region and Malae Region (holding Bunda Disrict). The result of our reseach indicates that Bagamoyo SEZ is the most suitable option for the implementation of a pilot project for AIP introduction.

Figure 1. SEZ / EPZ development candidate sites owned by EPZA

(3) Project implementation evaluation ① Potential business In order to implement the AIP pilot project, we evaluated 11 products that Tanzania’s Government has positioned as a priority for the development of the industrial sector. Within these selection, food oil and fruit processing were selected as the most viable options.

Table 1: Evaluation of potential economic sectors for the project Evaluation index General a b c d e Candidate sector evaluation Cotton and Clothing ㇾㇾ Milk and Dairy Products ㇾ Cooking Oil ㇾㇾㇾㇾ ◎ Meat processing ㇾ Fruit Processing ㇾㇾㇾㇾ ◎ Cashew ㇾㇾㇾ〇 Sugar ㇾㇾㇾ Integrated paddy processing ㇾㇾ Maize processing ㇾㇾ Marine production ㇾㇾㇾ Horticulture production ㇾㇾ Where: a makes reference to the products included in Tanzanian government policy. b makes reference to those products with a stable production and distribution volume. c means Tanzania domestic market is large / this product is produced in Tanzania but also imported. d makes reference to those products that are expected to expand sales to Tanzania's foreign markets (including Japan) e. makes reference to those products expected to utilize Japanese companies' technologies. Source: Study Team

② Environmental and social aspects Based on the laws and regulations related to the environmental and social considerations including the Environmental Management Act in Tanzania, the expected impact from the project implementation was considered. In Bagamoyo SEZ including the proposed AIP target area, Tanzanian Government has already conducted the preliminary environmental and social assessment and strategic environmental assessment (SEA). The expected negative effects on the environment by the project implementation are air pollution, noise and vibration, water pollution, soil pollution, etc. These consequences are caused by the AIP construction, but as the project site is far from existing residential areas, the impact is limited. It is possible to deal with appropriate construction measures. The project site

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does not include designated protected areas, and no endangered species have been reported. Regarding the social impacts, EPZA has already finished the land acquisition in the AIP candidate site, and no new resettlement will occur. In addition, new job creation and regional economic revitalization are expected in connection with AIP construction and operation. During the implementation of the AIP pilot Project, if the impact from the reduction in existing green areas at the time of construction is subtracted from the effect of the substitution of electricity generated from fossil fuels with solar power generation, the reduction in greenhouse gas emissions will be of around 11,000t CO2/year.

③ Financial Feasibility

The estimated costs for the implementation of this project are shown in the table below. These costs have been calculated in reference to the “Infrastructure and utility costs” indicated in the BAGAMOYO SEZ MASTER PLAN. We also considered the cost for the development of 180ha. For the preliminary financial analysis, initial conditions such as costs for land expropriation or resettlement, lease/sales price, AIP occupancy rate and discount rate were set based on the MASTER PLAN mentioned above and analysis was conducted for the 30 years of project period.

Table 2. Project development costs (180ha) Cost Facility overview (Million USD) Critical infrastructure development 51.5 Solar power generation system (25MW) 29.2 Others facilities in the AIP 15.5 Contingency and facility supervision costs 12.5 Total 108.7 Source: survey team

The results of financial analysis for this project show that the IRR and NPV are positive, and the B/C is at least 1. In addition, the investment recovery period is within 10 years, so the project can be correctly viewed as a target for investment. However, taking into consideration the geographical distance from Japan and Tanzania’s country risk, it is not likely that this project would be considered as a project for private sector investment based on this financial assessment.

Table 3 Results of financial analysis (180ha) Analysis items Results IRR 13.1% NPV USD 25,559,000 B/C 1.2 Year of recovery of Year 7 investment Source: survey team

(4) Project implementation schedule

The implementation schedule of this project will differ depending on the scheme used and the project details, especially because in a large-scale project like this, construction activities are conducted after the preparations of the detailed design and the selection and procurement of construction vendors through competitive bidding, and subsequently permanent operations and management is conducted. Assuming that this project is conducted using a yen loan, the future action required by Tanzania’s Government and the assumed time frame for these actions are shown below.

Source: survey team Figure 2 Project implementation schedule (planned)

Table 4. Overview of assumed activities and time frame Activity Activity details Time frame Financing ・Study of different funding sources by local Less than 1 year government institutions such as MoFP and MIT ・Adjustments with donor countries or international cooperation agencies, etc. ・Preparation of inspection documents for financing ・Assistance request Design and ・Implementation of F/S 2 to 3 years construction ・Selection of consultants ・Creation of bid documents for selection of construction vendor, implementation of bidding ・Construction ・Establishment of AIP operations structure and technical cooperation Start of AIP ・Start of operations Semi-permanent operations Source: survey team

(5) Implementation capacity of the executing agency by Tanzania

MIT and EPZA play a key role in this AIP project. When this project is implemented with loans from Japanese government or international organizations, although MOFP will be responsible of international issues, MIT will oversee the entire project. Meanwhile, EPZA, which is a subsidiary of MIT, will be responsible for the actual operation of the project. EPZA owns the land of Bagamoyo SEZ and is responsible for the entire project process, from financing, development of AIP, operational management, and project maintenance using the funds acquired for the project. Cooperation between governments will be handled by MoFP and MIT, but the cooperation with third parties involved in the project, such as engineers and investors involved in the development and operation of AIP, land acquisition, infrastructure improvement outside of AIP, etc. will be carried out by EPZA. Along with attracting tenants and contracts, EPZA will provide a comprehensive service to domestic and foreign investors so that businesses within AIP can be implemented without problems. For the parties related to the development and operation of the infrastructure, EPZA will conduct respectively based on the contract between the commercial operator of EPC and the operator. Local government agencies related to the AIP project will support EPZA in accordance with the

specialized field of each agency. The expected implementation structure is shown below.

Figure 3 Implementation plan (made according to consultations with the government of Tanzania)

(6) Advantages of Japanese technology and experience

The participation of Japanese companies can be expected for the construction of infrastructure related to AIP by EPC contracts with EPZA, for the supply of equipment and materials and for equipment maintenance work under contract with EPZA. In addition, in response to EPZA requests, it may be possible to support the administration of AIP. Regarding basic infrastructure for the AIP, such as electricity, gas, roads, water supply, communication, sanitation equipment, etc. With regard to the power supply, it is proposed to introduce a "solar power generation system + battery storage system" in consideration with the accessibility to the electrical network and to ensure a stable power supply. Taking into account the latest market trends, solar panels are in a tendency to reduce prices worldwide, and the dominance of Japanese technology is decreasing. On the other hand, the storage batteries, the energy conditioning systems (PCS) and the energy management systems (EMS) required for the stabilization of the system, are important along with the increase of the photovoltaic generation capacity. Japanese technology can demonstrate superiority for this items.

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(7) Action Plan

After several discussions with related Government agencies of Tanzania regarding the implementation of the Agricultural Industrial Park (AIP) project, there has been no objection about the importance of the AIP project in Tanzania and we confirmed the direction towards the project implementation. On the other hand, through this survey, issues concerning the selection of pilot project area, funding and operation ability of EPZA were identified. Based on these issues, the Study Team requested MIT and EPZA to explain the project to MoFP, which will be in charge of managing the funding. As there is much uncertainty about the political decision making process for the implementation of the project within the Tanzanian government, it is important to lead to the implementation of this project by continuing discussions with MIT and EPZA.

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Chapter1.Tanzania outline and project related sectors

1.1 Economic and financial situation of Tanzania

(1) Geographical Overview

Tanzania, officially known as the United Republic of Tanzania, is located along the eastern coast of the African continent. The country shares its land borders with eight countries, namely Kenya, Uganda, Rwanda, Burundi, Democratic Republic of Congo, Zambia, Malawi, and Mozambique. Tanzania’s overall land area is about 2.5 times as large as Japan. Located in the northeast of Tanzania near the Tanzania/Kenyan border, is Mt. Kilimanjaro, the highest mountain in the African continent. Furthermore, in the northern area of Tanzania bordering Uganda and Kenya, lays Lake Victoria, the biggest lake in Africa. Dodoma, located in the central part of Tanzania is the official capital of the country. However, the largest city and economic center of Tanzania is Dar es Salaam which functions practically as the nation’s capital. As an important gateway hub for trade and transportation in Africa, the Port of Dar es Salaam is a point of cargo discharge for Tanzania’s neighboring inland countries. In addition, Tanzania and its neighboring inland country Zambia, connected not only by road traffic but also by the Tanzania-Zambia Railway built between Dar es Salaam and Kapiri Mposhi in central Zambia.

Source: Created by the study team based on Google Map Figure 1-1 Tanzania location map

(2) Economic overview

Tanzania's nominal GDP is of approximately US $52.1 billion, and the country has achieved an average annual growth rate of nearly 7% from 2010 to 20171. Although Tanzania still belongs to the list of Least Developed Countries (LDC), as shown in Figure 1-2, its economic scale ranks 2nd after Kenya among the six-member countries of the East African Community.

Despite Tanzania’s rapid economic growth, the poverty rate of Tanzania is still high, and 28.2% of the total population and 33.3% of the rural population are forced to live below the poverty line2.

Source：World Bank Open Data, December 2018. Figure 1-2 Comparison of nominal GDP of six-member countries of the East African Community

(3) Population / Industry Structure

According to the results of the National Census conducted in 2012 by the National Bureau of Statistics of Tanzania, Tanzania’s population is of approximately 50.15 million3, and is steadily increasing at a rate close to 3% per year. The ratio of youth among the overall population is high, and the population under the age of 35 accounts for around 78.9% of the total population. The

1 World Bank 2017 2 Household Budget Surveys 2011/12 3 Expected value as of 2016 based on the census of 2012

increasing youth working population and expanding market potential are the driving force of economic development in Tanzania. (See Figure 1-3). Like other sub-Saharan African countries, Tanzania's core industry is agriculture. Among the primary industries in Tanzania, agriculture accounts for the highest percentage 67.2% of the total labor force population, followed by 5.9% in the secondary industry (industrial sector), and 26.9% in the tertiary industry (service sector)4. In regards to Tanzania’s GDP, agriculture accounts for the highest percentage of nearly 30%, followed by 14% in the construction industry, and 11% in wholesale and retail trade, repair work, and etc. (See Figure 1-4).

Source: Created by the research group based on Population Distribution by Age and Sex 2013, National Bureau of Statistics of Tanzania Figure 1-3 Population pyramid diagram

4 International Labor Organization, ILOSTAT database from 2016 data

Source: Bank of Tanzania Annual Report 2016/17 Figure 1-4 GDP Breakdown by Industries

(4) Trade

According to UN Comtrade (UN Trade Statistics Database), Tanzania's export value in 2017 was of approx. 4.2 billion dollars and its import value was of approx. 7.8 billion dollars, a trade deficit of approx. 3.6 billion dollars. Tanzania’s trade deficit has been occurring for more than 10 years. (Figure 1-5). The primary commodity imported into Tanzania is mineral fuel, which accounts for approx. 20% of the total import sector, followed by other industrial products (19%), vehicle-related products (8%) and chemical products (5%). Vice versa, Tanzania's primary export items are precious metals such as gold, diamonds, and other minerals, which account for approximately 39% of the total export value. Besides precious metals, other important exports from Tanzania are garden plants (flowers, vegetables, fruits, perfumes, etc.), industrial products, coffee, cashew nuts, etc.

Source：UN Comtrade Database Figure 1-5 Tanzania's Trade Balance

1.2 Outline of the related sectors for P4F

(1) Agriculture sector

As mentioned previously, the agricultural sector is the backbone of Tanzania’s economy and not only supplies food for its people, but also plays a pivotal role as a source for creating new job employment and earning foreign currency. Due to the tropical climate and fertile geographical environment of Tanzania, various kinds of agricultural products such as cereals, vegetables, fruits, spices, etc., can be cultivated. The major agriculture products in Tanzania are: maize, rice, sorghum,

sweet potatoes, beans, peanuts, etc. Major export products are: tobacco, cashew nuts, coffee, tea, spices, cotton, sisal hemp, etc. (Table 1.2-1). Detailed information about major crop production is described in Chapter 3, Section 5. Due to the increasing population in Tanzania, domestic demand for agricultural products has also increased, with further growth of the domestic agricultural market expected to continue into the future. Within Africa’s regional markets, Tanzania is a member of the East African Community (EAC), a massive market of over 100 million people, and is also a member of the Southern African Development Community (SADC), comprised of developing markets of more than 200 million people. These alliances are expected to help drive further growth of intra-regional trade of processed agricultural products for Tanzania. In addition, there are also initiatives being conducted by developed countries to help promote trade in Africa such as the EU "Everything but Arms" initiative and the American "African Growth and Opportunity Act (AGOA)" that are encouraging the export of Tanzania’s products. Table 1.2-1 Major Tanzanian Agricultural Products '000' Tons

2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15r 2015/16 2016/17P

Food Crop:

Maize 3,593.7 3,555.8 4,733.1 4,122.6 5,240.0 5,288.4 6,734.5 5,902.8 6,148.7 6,680.0 Rice 896.7 875.1 1,722.6 1,439.1 1,128.3 1,342.1 1,678.1 1,936.9 2,229.1 1,593.0 Wheat 86.4 92.4 62.4 112.7 102.8 102.5 167.0 72.5 76.4 50.0

Pulses 1,111.2 1,125.5 1,298.9 1,684.1 1,824.2 1,871.2 1,697.2 1,745.9 1,958.6 2,317.0

Cash Crops:

Coffee 43.1 68.5 34.6 56.8 33.3 71.2 48.8 42 59.6 48.3 Cotton 67.3 123.6 89.5 54.8 75.7 119.7 82.5 67.8 50.2 40.8 Tea 32.7 31.6 32.1 31.7 31.5 34.9 34.7 35.7 32.6 27 Cashew nuts 99.1 79.1 75.4 121.1 158.4 127.9 130.1 197.9 155.2 264.9 Tobacco 50.8 55.4 60.7 94.2 126.6 74.2 86.3 105.9 87 60.7 Sisal 34.1 23.8 24 35 36.6 34.9 37.8 40.3 41 35.6 Pyrethrum 2.3 3.3 3.3 5 5.7 6.1 6.6 1.8 1.8 n.a Source：Bank of Tanzania Annual Report 2016/17 Note: p denotes provisional data; and n.a, not available

(2) Electricity sector

Several organizations have ties to Tanzania's electricity sector which include the Ministry of Energy (MEM), the Tanzania Electric Supply Company (TANESCO), the Rural Energy Board

(REB), the Rural Energy Agency (REA), the Rural Energy Fund (REF), and the Energy and Water Utilities Regulatory Authority (EWURA). Tanzania’s entire electricity supply is under the jurisdiction of TANESCO which is wholly owned by Tanzanian government. Major operators of Independent Power Generator (IPP) are: the Independent Power Tanzania Limited (IPTL), Simbion Power, Aggco Power, Son Gas Tanzania, Mwenga Hydropower Company, Tanzania Wattle Company (TANWAT) and so forth. The capacity of electric power plants in Tanzania was of 1,516 MW in 2015 (Table 1.2-2) and nearly 60% of Tanzania’s electricity was generated by thermal power. Tanzania relies on electricity imports from its neighboring countries to meet demand for electricity in cities along the nation’s borders. Currently, only 32.8%5 of all households in mainland Tanzania have access to electricity, but it is assumed that a rapid increase in electricity demand accompanied by economic growth will be a major problem for Tanzania in the future. At the moment, Tanzania’s electricity demand is expected to reach a maximum of around 1,000 MW, but by 2025 it is expected that the maximum demand will increase more than 4 times up to 4,700 MW. As such, it will become necessary in upcoming years to install large amount of power generation facilities to satisfy Tanzania’s expanding electricity demand. (Table 1.2-2, Figure 1-6).

Table 1.2-2 Power supply situation in Tanzania Item Category Unit 2011 2012 2013 2014 2015 Installed Grid System MW 1,270.7 1,438.2 1,501.2 1,521.9 1,516.2 Capacity Maximum Grid System MW 829 851.4 898.7 934.6 988.3 Demand Generation Grid System GWh 5,050.4 5,339.6 5,758.3 6,029.0 6,188.0 Off-grid System GWh 83.6 149.9 178.5 191.8 201 Import from Neighboring GWh 61.6 60.9 60.2 61.0 70.5 Countries Sales Small Customers (D1) GWh 328.8 320.8 280.6 217.4 148.8 Middle Customers (T1) GWh 1,270.8 1,508.0 1,749.1 1,890.6 2,082.7 Big Customers (T2, T3 & GWh 2,151.6 2,301.0 2,570.4 2,595.3 2,721.1 T8) Zanzibar (T5) GWh 277.3 298.6 218.7 348.5 344.6 Source: Tanzania in Figure 2016 (Original data by TENESCO)

5 Energy Access Situation Report 2016, REA

Source: Created based on" Renewable Energy in Africa: Tanzania Country Profile” by African Development Bank, 2015 (predicted value after 2025) Figure 1-6 Peak Demand of Domestic Electric Power in 2013 – 2035

1.3 Government Policy Trends

(1) National Development Plan

In the year 2000, the Government of Tanzania announced the "Tanzania Development Vision 2025 (TDV)" as a long-term development goal for the country. The main goals of the “Tanzania Development Vision” (TDV) are to increase GDP per capita to more than $ 3,000 and to become a member of the middle-income countries from poorest countries by 2025. The development vision also aims to build a competitive and solid economy with the goal of achieving annual economic growth of more than 8%, while emphasizing on further infrastructure development and the conversion of the current agricultural economy to an industrial economy. Tanzania’s “Development Vision 2025”, is divided into multiple five-year development plans (FYDP-I, II, III) as concrete goals to achieve the development vision. The theme of the current plan in progress, FYDP-II (2016/17 - 2020/21), is "Promotion of industrialization for economic reform and human resources development". By 2020, the planned objectives for FYDP-II are to raise the growth rate of the manufacturing industry to 10.5% and to increase the share of the manufacturing industry within the national GDP to 12.5%. One of the major manufacturing industries is the food processing industry. Examples of processed food products include sugar, livestock products, edible oils, dairy products, milled flour, starch, feedstuffs, other food products (bread, chocolate, pasta, coffee, nuts, and spices) and beverages (juice, beer, wine). The infrastructure improvement plans include the proper maintenance of stable electric power sources in both urban and rural areas, and also the logistic services in the Special Economic Zone (EEZ) / Export Processing Zone (EEZ).

Figure 1-7 Image of Tanzania National Goals and Five-Year Development Plan

(2) Policy trends in the agricultural sector

In 2015, the Agricultural Sector Development Strategy was formulated as a comprehensive strategy to tackle points of growth in the agricultural sector. The goal of the strategy is to increase the GDP of the agricultural sector by 6% every year to achieve Tanzania’s "Development Vision 2025". One of the goals of this strategy is to promote increasing additional values of agribusiness and agricultural products. Concrete action plans include reducing post-harvest loss, promoting the processing of agricultural crops (threshing, milling, canning, juice processing, etc.) and livestock (dairy food manufacturing, meat processing, etc.) which can add more value, promoting of investments in improving product packaging and transportation, implementing the processing of environment-friendly crops, and securing adequate hygienic environments.

(3) Policy Trends in the Electric Power Sector

In 2003, the Tanzanian government set into motion the "National Energy Policy" aiming to achieve "Tanzania Development Vision 2025".The policy mandates breaking the dependence on fossil fuel power generation and a transition to renewable energy, using clear strategies. Some strategies are: the reduction and elimination of VAT and tariffs on the main components of solar panels to help to promote the combined energy diversification and increase in electric power supplies by bringing foreign private investments. Consequently, the Feed-In Tariff (FIT) system was launched in 2016 for small scaled (1 to 10 MW) solar and wind power generation.

1.4 Investment environment for the project-related business in Tanzania

This project aims to examine the possibility of developing Agricultural Industrial Park (AIP) with an independent energy supply system throughout the land under the jurisdiction of the Export Processing Zones Authority (EPZA) of Tanzania. The current situations of similar or related projects that operate in Tanzania are mentioned below.

(1) SEZ / EPZ development plan in Tanzania

Tanzania is aiming for the development of Special Economic Zones (SEZ) and Export Processing Zones (EPZ). In order to achieve this goal, The Export Processing Zones Authorities EPZA was created. 21 locations were selected throughout Tanzania as SEZ / EPZ development candidate sites which are owned by EPZA (Figure 1-8). Although the progress of development varies from each site, the most developed sites are partially shown as an example in Table 1.4-1.

Figure 1-8 SEZ / EPZ development candidate sites owned by EPZA

Table 1.4-1 Development status of major SEZ / EPZ Name of SEZ Location Developmental status Benjamin William Mkapa Mabibo Ubungo Basic infrastructure was developed by SEZ (10 km from Dar es the Tanzanian government. Multiple Salaam Port) companies have already moved in and products are being manufactured. BAGAMOYO SEZ Bagamoyo The development master plan was (40 km from Dar es created by EPZA. Bagamoyo is one of Salaam) P4F candidate sites. KAMAL INDUSTRIAL Bagamoyo(40 km from Basic infrastructure was developed by ESTATE EPZ Dar es Salaam) the private sector. Still looking for tenant companies. KI SEZ Kigoma Owned by Kigoma Municipal and (About 1240 km from EPZA.Basic infrastructure was already Dar es Salaam) constructed. Source：「Tanzania Special Economic Zones」, EPZA

(2) Development plan of Bagamoyo Port

Mentioned above, Bagamoyo SEZ (Special Economic Zone) is the area selected as one of the candidate sites of this project. In Bagamoyo SEZ, the development plan of Bagamoyo Port is planned as a joint investment between China and Oman. In 2014, the government of Tanzania entered into the Memorandum of Understanding (MOU), regarding the construction of Bagamoyo Port and its surrounding areas in Bagamoyo SEZ, between China Merchants Holdings (International) Company Limited (CMHI) and the State General Reserve Fund of the Sultanate of Oman. It is estimated that the total construction cost of the Bagamoyo Port project will be around 10 billion dollars. Bagamoyo Port is expected to become the largest port in Africa after its completion. Although the construction of the port was originally scheduled to start in 2015 after the MOU agreement, it has not yet begun. This is due to the change of political administration from President Kikwete, who promoted the project, to President Magufuli and also underlying issues of securing funds by the Tanzanian government. However, the master development plans in the area around Bagamoyo Port, are currently being upgraded by investments from Chinese companies.

Figure 1-9 Image of the coast of Bagamoyo SEZ

(3) The development plan for agricultural product processing zone by AfDB/UNIDO

The African Development Bank (AfDB) is making progress with its plan for developing agricultural product processing zones, called "Staple Crops Processing Zones (SCPZs)", in African countries including Tanzania. This plan is part of the Feed Africa" initiative, which is one of the first priorities of AfDB. Its ultimate goal is to build a strong base for the agricultural product processing industry in Africa in order to save millions of people from poverty. An SCPZ are agro-based spatial development initiatives designed to concentrate agro-processing activities within areas of high agricultural potential to boost productivity and integrate production, processing and marketing of selected commodities. These initiatives may or may not be granted Special Economic Zones status. They are purposely built shared facilities, to enable agricultural producers, processors, aggregators and distributors to operate in the same vicinity to reduce transaction costs and share business development services for increased productivity and competitiveness. By bringing adequate infrastructure (energy, water, roads, ICT) to rural areas of high agricultural potential, they attract investments from private agro-industrialists/entrepreneurs to contribute to the economic and social development of rural areas. The establishment of SCPZs are expected to play a pivotal role in improving agricultural productivity of Africa and strengthen the human resources of member countries in these processing Zones (54 countries in Africa, including Tanzania).Through this initiative, AfDB aims to increase agriculture related product’s value added, livestock and fishery sectors in Africa. This will be done by reducing food imports from outside the zones and changing not only the agriculture sector but also the whole economic structure within the region.

Figure 1-10 Introduction image of the SCPZs concept created by AfDB

AfDB is conducting a survey for the site selection aiming to introduce SCPZs concept in Tanzania. The candidate sites are: Mbeya Region, Lake Victoria, Mwanza Region, Zanzibar Island, and the survey was completed in Mbeya Region (as of March 2019). After completion of this survey, the feasibility study survey is supposed to be carried out as the next step. According to AfDB's agricultural experts, the government of Tanzania has requested $1 million loan to AfDB for the implementation of the SCPZ project.

(4) The Development of Textile Industrial Park by Textile Industry Development Unit (TDU)

TAMCO industrial park is currently under development planning in Kibaha, the capital of Pwani Region which is located next to Dar es Salaam. The land manager of the industrial park is the National Development Corporation (NDC), and factories of three manufacturing fields such as automobile assembling, chemical manufacturing and textile industry are planned to be built in this industrial park. Textile Development Unit (TDU) is promoting to develop the textile industry park. TDU is a government organization established under MIT in 2016 to develop textile industry and is funded by the Gatsby Africa Foundation and the United Kingdom International Development Agency. The industrial park is expected to develop approximately 40 hectares of land, which would be large enough to build 25 manufacturing units and facilities of electricity, water and security measures. However, this development plan is currently being suspended due to a funding procurement problem. The original construction of the textile industry park was supposed to cost approx. 88 million dollars and the Tanzanian government planned to contribute its portion of $15 million. However, the Tanzanian government was able to procure only 6 million dollars, resulting in a shortage of 9 million dollars. As a result, TDU is attempting to raise funds from public organizations and private investors.

Figure 1-11 TDU development image

1.5 Outline of P4F candidate areas

In order to implement the proposed AIP project, the selection of appropriate locations is very important. Following the advice of local experts in the preliminary surveys, three districts such as Pwani Region (holding Bagamoyo District), Morogoro Region and Iringa Region were pre-selected as suitable for the project. In addition to this advice, we received information during our field survey that Dodoma Region, Mwanza Region, Mbeya Region and Malae Region (holding Bunda District) also have potential as AIP candidate sites. The outline of each region is mentioned as below.

(1) Pwani Region

Puwani Region is located in the eastern side of Tanzania and surroundings of Dar es Salaam. The capital city Kibaha is located approx. 35 km from Dar es Salaam and is easily accessible from one another. Pwani means "coast" in Swahili, and its coast on the eastern side of the state faces the Indian Ocean. 83.9% of its population is composed of farmers engaged in cultivating grains, such as maize primarily cultivated on 40% of the farm land6. In addition to maize, fruits such as coconuts, mangos, bananas, oranges are also cultivated.

6 Expected value as of 2016 based on the census of 2012

Table 1.5-1 Basic information of Pwani Region

Capital city Kibaha Area 32500Km2 Population 1,098,668 Pwani Region Annual average 31.9℃ maximum temperature（2016） Annual average ‐ lowest temperature （2016） Annual rainfall（2016） 677.0 ㎜ Source：2016 Tanzania in Figures Figure 1-12 Location map of Pwani Region

(2) Morogoro Region

Morogoro Region is located in the southeast part of Tanzania and Morogoro is the capital city, located on the center of the main road connecting Dar es Salaam and Dodoma. It is one of the Region well known for agriculture, of which sugar cane cultivation takes up 50% of farm land and rice cultivation approx. 30% of farm land. The main cultivated vegetables are tomatoes. In Morogoro Region, the proportion of irrigated farm land is as high as 8%, and the percentage of farmers selling crops in local markets are also higher than that in other Regions6. Table 1.5-2 Basic Information of Morogoro Region

Capital city Morogoro Area 70,600 ㎢ Population 2,218,492 Morogoro Annual average 19.5℃ Region maximum temperature （2016） Annual average 23.7℃ lowest temperature （2016） Annual rainfall（2016） 854.2 ㎜ Source: 2016 Tanzania in Figures ｓ Figure 1-13 Location map of Morogoro Region

(3) Iringa Region

Iringa Region is located in the southern highland of Tanzania with Lake Malawi in the south. The main industry is agriculture and 98% of the working population is engaged in agriculture and livestock breeding7. Wheat cultivation is very active in Iringa Region’s and both the number of farmers and land area for cultivation are the largest in Tanzania6. Agricultural products such as cabbages, potatoes, peanuts, tea, beans and corn are cultivated here. Dairy farming is also an active practice in the area.

Table 1.5-3 Basic information of Iringa Region

Capital city Iringa Area 35,500 ㎢ Population（2012） 941,238 Iringa Region Annual average 27.2℃ maximum temperature （2014‐16） Annual average 15.3℃ lowest temperature （2014‐16）

Annual rainfall（2016） 757.6 ㎜ Figure 1-14 Location map of Iringa Region Source：2016 Tanzania in Figures

7 Iringa Regional Profile 2013

(4) Dodoma Region

Dodoma Region is located in the middle part of Tanzania and Dodoma is the National Capital of Tanzania. In February 1996, the legislative governments moved from Dar es Salaam to Dodoma, but a substantial portion of capital functions, mainly of administrative agencies, are still located in Dar es Salaam. Within agriculture, sunflower cultivation is active in central areas including Dodoma. Livestock industry is also active because of the large number of livestock in the area.

Table 1.5-4 Basic information of Dodoma Region

Capital city Dodoma Dodoma Area 41,300 ㎢ Region Population（2012） 2,083,588 Annual average 29.4℃ maximum temperature （2014‐16） Annual average 17.8℃ lowest temperature （2014‐16） Annual rainfall（2016） 545.2 ㎜

Source：2016 Tanzania in Figures Figure 1-15 Location map of Dodoma Region

(5) Mwanza Region

Mwanza Region is located in the northern part of Tanzania and the capital city of Mwanza faces Lake Victoria. On the shores of Lake Victoria, fisheries represented by the Nile perch and seafood processing industry are popular. In inland areas, agriculture like cotton cultivation are quite popular. Due to the accumulation of surrounding industries around the region, Mwanza is seeing a steady growth in development as an industrial city and is the second largest city after Dar es Salaam.

Table 1.5-5 Basic Information of Mwanza Region

Capital city Mwanza Area 9,500 ㎢ Mwanza Region Population（2012） 2,772,509 Annual average 28.6 ℃ maximum temperature （2014‐16） Annual average 18.7℃

lowest temperature Figure 1-16 Location map of Mwanza Region （2014‐16） Annual rainfall（2016） 1,039.3 ㎜ Source：2016 Tanzania in Figures

(6) Mbeya Region

Mbeya Region is located in the southwestern part of Tanzania and is a trading hub that shares national borders with both Zambia and Malawi. TAZARA Railway (TAZARA) running through the state connects Tanzania with Zambia. Cultivation of maize, rice and banana are popular in the area. The region is also one of the candidate sites for a grain processing complex (SCPZs) development project by AfDB, as mentioned above.

Table 1.5-6 Basic information of Mbeya Region

Capital city Mbeya Area 37,700 ㎢ Population（2012） 1,708,548 Mbeya Annual average 24.6℃ Region maximum temperature （2014‐16） Annual average 13.5℃ lowest temperature （2014‐16）

Annual rainfall 952.6 ㎜ Figure 1-17 Location map of Mbeya Region （2016） Source：2016 Tanzania in Figures

(7) Mara Region

Mara Region is located in the northern part of Tanzania, bordering Kenya on the north side. The capital city is Musoma, located on the coast of Lake Victoria. Fisheries such as Nile perch, sardine and tilapia fishing are thriving around the coast. Agriculture also thrives in Mara Region, where beans production is of 1.5 t/ha having the largest portion in Tanzania. EPZA owns 500 hectares of development land in Bunda District within the state.

Table 1.5-7 Basic Information of Mara Region

Capital city Musoma Area 21,800 ㎢ Mara Population（2012） 1,743,830 Region Annual average 28.8℃ maximum temperature （2014‐16） Annual average 18.0℃ lowest temperature （2014‐16）

Annual rainfall 627.2 ㎜ Figure 1-18 Location map of Mara Region （2016） Source：2016 Tanzania in Figures

Chapter2. Survey Summary

2.1 Survey method / system

(1) Survey Contents

The following items were investigated in this survey.

① Benefits for Tanzania · Estimation of the outcomes of this project in the economy, job creation, reduction of CO2 emissions, etc. · Explanation of the benefits of P4F to the relevant Ministries and other Governmental/ Private agencies. ② Policy trends of Tanzania’s Government · Information collection and organization of relevant policies in Tanzania such as "Tanzania Development Vision 2025” · Explanation to Tanzania’s Government that this Project is in line with Tanzania’s policies and development goals ③ Infrastructure basic design · Identification of the project implementation site and creation of the outline design of the AIP · Consideration of several business models in different phases from the construction phase to operation and maintenance phase ④ Collection, investigation and analysis of information for the AIP construction · Information collection regarding the Laws and regulations related to AIP construction (civil works, environmental and social considerations, development applications) ・Information collection regarding the potential AIPs sites (infrastructure situation including electric power, existing industries, etc) ・Identification and examination of the agricultural sub-sectors which have business potential for AIP project implementation ⑤Business size estimation · Business size estimation based on the items collected in point 4 · Consultation with Tanzanian government officials regarding business scale · Information sharing with the Ministry of Economy, Trade and Industry in Japan

⑥ Project implementation structure and business schedule study · Discussion about the implementation structure with Japanese companies and local companies · Preparation of potential schedules including necessary periods for the different application procedures ⑦ Review and proposal of a financial plan · Discussion with officers of the Government of Tanzania about the potential of utilizing ODA loans · Reporting/consulting this project to JICA and other Japanese ODA implementation organizations · Policy support study ⑧ Policy support potential · Consideration for the utilization of policy support for the implementation of AIP. Evaluation of ODA ⑨Environmental effects · Calculation of CO2 emissions reduction based on the project scale · Summarize laws and regulations related to environmental and social considerations · Creation of environmental checklists such as JICA's "Environmental and Social Consideration Guidelines" ⑩Study of the advantages of Japanese companies and survey for business enhancement · Interviews with Japanese companies in order to clarify Japanese technology advantages. ·Tanzania’s Government requests consideration to develop businesses ·Establishment of countermeasures against problems which were found by this survey. ⑪ AIP dissemination · Consideration of concrete possibilities for the AIP dissemination in Tanzania. ⑫Measures to strengthen cost competitiveness in case Japanese companies participate in the project · Study to strengthen cost competitiveness of Japanese companies

(2) Survey method

The study was done in Japan and Tanzania. For the work done in Japan, information regarding the survey objects from extensive collection of information through books, internet resources, and existing statistic materials was done. In Tanzania, local surveys were carried out 3 times. In Tanzania we visited different public organizations, international donors and private sector. The schedule and summary of the survey are

shown in the tables below. The mission was to organize meetings with many local affiliated organizations, such as MIT and EPZA, which are important organizations for examining the implementation of AIP projects.

(3) Survey implementation structure

The survey was conducted by three companies: Oriental Consultants Global Co, Ltd., Mitsubishi Corporation and Mitsubishi Corporation Machinery, Inc. The implementation system and the roles of each company are shown in Figure 2-1.

【Head Managing company】Oriental Consultants Global Co. Ltd. Main roles： General management, AIP Project Design, Policy Information Collection / Environmental Society, Report Preparation.

Mitsubishi Corporation Main roles： Subcontractor Economic / financial analysis, consultation with related companies

Mitsubishi Corporation Machinery, Inc. Main roles: Sub-subcontractor Evaluation of AIP project

Figure 2-1 Survey Implementation Structure

2.2 Survey schedule

(1) Overall Survey Schedule

The overall schedule of the survey is shown in Table 2.2-1

Table 2.2-1 Survey Schedule 2018 2019 Survey items 8 9 10 11 12 1 2 3 Field Survey

The 1st Survey: Collection of data and information

The 2nd Survey: Confirmation of feasibility

The 3rd Survey: Discussion towards the project implementation

Survey in Japan

Data collection/analysis

Design of AIP project

Meeting and interview with stakeholders in Japan

Preparation meeting for the field survey

Debriefing session of the field survey

(2) Field Survey Schedule

In this project, a total of three field surveys were conducted. The schedule and summary of the survey are shown in the tables below.

Table 2.2-2 Outline of the first survey Schedule Place to visit Items discussed/ information collected

8/27/2018 Dr. Meru (Former Vice ・ Industrial structure and development issues of (Mon) Minister of MIT, the 1st Tanzania President of EPZA) ・ Issues of AIP project implementation

Small and Medium ・ Outline of SIDO and main tasks Enterprise Development Organization (SIDO)

8/28/2018 Tanzania Investment Center ・ Cooperative measures with TIC (Tue) (TIC) ・ Matters to consider for AIP project implementation

African Development Bank ・ Exchange of opinions on cooperative measures with (AfDB) AfDB

Ministry of Industry and ・ Confirmation of agreement with the policy of the Trade (MIT) Tanzanian government ・ MIT's Industrialization Strategy Priority Areas

8/29/2018 SIDO ・ Visit industrial park owned by SIDO in Dar es (Wed) Salaam

8/30/2018 MIT ・ Affiliated ministries to be discussed with for project (Thu) implementation ・ Basic design required by MIT for AIP business

Ministry of Livestock and ・ Outline of Tanzania livestock sector Fisheries (MLFD) ・ Business scope of livestock. (Livestock sector)

8/31/2018 MLFD ・ Outline of Tanzania Fisheries Sector (Fri) ・ Major fishery processing method

Ministry of Agriculture ・ Outline of Tanzania agriculture sector (MOA)

9/3/2018 Tanzania Export Processing ・ Major preferential treatment of economic special (Mon) Zone Agency (EPZA) zone (SEZ) ・ Outline of AIP introduction candidate site

9/4/2018 Japanese Embassy ・ Matters to consider for AIP project implementation

(Tue) JICA ・ Overview of Tanzania Agriculture Support by JICA

Morogoro Region SEZ ・ Progress of SEZ development, future development Development Land plan

9/5/2018 Kamal Industrial Estate ・ Facility inspection (Wed) (Tanzania's first private export processing zone)

Bagamoyo County SEZ ・ SEZ development progress situation, geographical Development Land condition

Morogoro Region ・ Outline of agricultural production in Morogoro Administrative Office Region

9/6/2018 Outline of agricultural ・ Outline and issues of Tanzania FVC (Thu) production in Morogoro ・ Adaptability of Japanese technology Region

9/7/2018 Tanzanian Bureau of ・ Statistics collection (Fri) Statistics (TSB)

9/10/2018 SIDO (industrial cluster ・ Industrial park construction cost unit (Mon) expert) ・ Related laws and regulations

9/11/2018 Matoborwa Co. Ltd ・ Distribution route of agricultural products · market (Tue) (Japanese food processing price enterprise)

Table 2.2-3 Outline of the second survey Schedule Place to visit Items discussed/ information collected

11/22/2018 Dr. Meru（ex-vice minister of ・ Matters to consider in selection of AIP (Thu) MIT、1st president of EPZA） development area ・ Reference case: Textile industrial park development by TDU

SIDO ・ Participation policy for AIP development project

Textile Industry Development ・ Acquisition method, etc. Advice for the Unit (TDU) development of AIP.

11/23/2018 TIC ・ Discussion on implementation system of AIP (Fri) project

・ Related laws and regulations

National Development ・ Advices on implementation system of AIP Corporation (NDC) project

11/26/2018 TSB ・ Statistics collection (Mon)

11/27/2018 MIT ・ Discussion on implementation system and (Tue) funding of this project

11/28/2018 MOA ・Discussion on implementation system of this (Wed) project

MLFD ・Discussion on implementation system of this project

11/29/2018 EPZA ・Discussion on implementation system and (Thu) funding of this project

11/30/2018 Tanzania Food and Drug ・TFDA license acquisition procedure (Fri) Administration (TFDA) ・Discussion on implementation system of this project

Tanzania Standards Office ・Procedure to acquire TBS certification (TBS) ・Discussion on implementation system of this project

12/1/2018 Bagamoyo County SEZ ・Confirmation of relocation status of residents (Sat) Development Land ・Aerial shooting

12/3/2018 Local consulting companies ・Confirm progress of Bagamoyo SEZ (Mon) development plan by Chinese enterprises

Japanese Embassy ・Matters to consider for AIP project implementation

12/4/2018 Dar es Salaam Water and ・Regarding water supply and sewer facilities in (Tue) Sewerage Corporation Bagamoyo SEZ area information (DAWASA)

JICA ・Information gathering and consultations on funding ・Assistance in the future of this project

EPZA ・Discussions on how to proceed with this project

12/5/2018 Southern Tanzania Agricultural ・Information on Tanzania Agriculture sector (Wed) Growth Corridor (SAGCOT)

World Bank ・About the trend of loan projects in Tanzania information

12/6/2018 Bagamoyo County Council ・Agreement acquisition related to project (Thu) implementation in Bagamoyo Prefecture

Table 2.2-4 Outline of the third survey

Schedule Place to visit Items discussed/ information collected

2/6/2019 EPZA ・ Discussions on EPZA, MIT, OCG, Mitsubishi (Wed) Corporation's future business promotion policy

2/8/2019 African Development Bank ・ Information sharing for co-financing with (Fri) Tanzania Office AfDB

2/11/2019 Tanzania Private Sector  Collect information on TPSF's organization (Mon) Foundation outline  Discussions for future cooperation

African Development Bank  Discussions for future cooperation Tanzania Office

2/12/2019 JICA Tanzania Office  Sharing information with JICA (Tue)  Advices on how to proceed with this project

Embassy of Japan in Tanzania  Advices on how to proceed with this project

Chapter3.Project contents and technological review

3.1 Background and project needs

For the sub-Saharan African countries, lack of electricity power access, unstableness of electric power and low agricultural productivity are factors that stop financial development. According to the African Development Bank's announcement, 6.4 billion people live in areas with no electric power supply and 2.3 billion people are under malnutrition condition. In Sustainable Development Goals (SDGs) adopted by UN, it is stated that “promoting sustainable agriculture as well as ending to hunger, achievement of stable food supply and improvement of nutritious conditions (Goal 2) and “securing access to reasonably-priced for everybody, sustainable and modern energy (Goal 7), and improvement of electric power access and agricultural productivity are urgent issues which should be solved, with cooperation of international societies. Tanzania is one of the countries of the sub-Saharan Africa, and as mentioned above, the electrification rates are still as low as 32.8%. Tanzania’s electricity power demand is expected to increase according to its population growth in the future. Agriculture is its basic industry, but the agricultural processing production is little, and the majority of exports are unprocessed agricultural products. Based on this background "Tanzania Power for Food (P4F)" was created. This Project aims to provide solutions to the "food problems" and "energy problems" through construction of the agricultural product processing park (Agro-Industrial Park, AIP) with dispersed power source (solar panel + battery system). It is expected to increase additional value of Tanzanian agricultural products and selling them to both local and foreign markets, through producing agricultural processed products utilizing electric power generated by solar panels. In addition, in the future, there are possibilities that AIP projects can be expanded to each country of sub-Sahara Africa, not only including Tanzania, while expanding AIP projects to each area of Tanzania utilizing the method of AIP project gained thought this project.

Figure 3-1 Development of Agro-Industrial Park (AIP)

3.2 Review of the project candidate sites

(1) Method to select the project candidate sites

The SEZ/EPZ development candidate sites owned by EPZA are expanded all over Tanzania as is shown in figure 3-2, and its development circumstances are different at each site, but EPZA is supporting companies investing in sites and the development of industries and their commercial activities. The companies investing in SEZ/EPZ can take advantages of all kinds of priority treatment measures including the income tax and customs duties. EPZA has already reserved the sites for the development of SEZ/EPZ, so it is possible to save labor and time in the land expropriation. As mentioned above, SEZ/EPZ are established and managed by EPZA. In order to select pilot project candidate sites, the field survey visited some of the pre-selected sites and collected information of the following 3 areas (Puwani Region, Morogoro Region and Iringa Region) with positive advice received at the preparatory survey, and 4 areas (Dodoma Region, Mbeya Region, Mwanza Region and Mara Region) named candidate sites by local agencies during the survey.

Figure 3-2 Sites owned by the Export Processing Zone of Tanzania (EPZA) / Development destination area of the Export Processing Zone

In the local field survey, we collected and organized information about each area, regarding essential matters generally considered in selecting industrial park development candidate sites.

Table 3.2-1 Essential considerable matters in selecting development candidate sites Category Contents a. Location Distance from major cities, distance to harbors, access to main agricultural production areas b. Surrounding roads Maintenance condition of surrounded roads c. Accumulation of labor Labor (productive-age population) d. Available Land Site areas, development condition e. Others Others special matters

(2) Current situation of the pilot project candidate sites

1） Pwani Region, Bagamoyo SEZ ① General Outline Bagamoyo SEZ is a huge economic zone of Bagamoyo District in Pwani Region and is located 50 km north of Dar es Salaam. It is located approx. 12 km from the district capital city Bagamoyo, and coastal land is reserved as SEZ development site (Figure 3-3). In SEZ, not only industrial parks, but also IT parks, tourist development zones, residential and commercial facilities are planned, and the projects of the port development managed by China and Oman and IT park development by South Korea are currently in progress. The road condition from Dar es Salaam to Bagamoyo is fair, and it is possible to reach Bagamoyo SEZ in approx. 1 hour and half by car without traffic jams.

Figure 3-3 Bagamoyo SEZ location

Figure 3-4 Development image (created by EPZA)

② Current outline of Bagamoyo SEZ The result of the survey on Bagamoyo SEZ is described in Table 3.2-2.

Table 3.2-2 Results of Bagamoyo SEZ survey Category Present condition Evaluation a. Location Distance to Dar es Salaam: Approx.50 km Evaluation: A major cities Reason: Good access to Dar es Distance to Dar es Salaam Port: Approx. Salaam. Easy transportation for ports 70 km agri-products and processed ※The port is planned to be products. Convenient access developed inside the site for investors Access to major Active fruits production agricultural nearby, although far away production area from other major agri-products production areas, but no problem of transportation due to easy access to Dar es Salaam, the biggest market where agri-products are transported from other areas

b. Surrounding Maintenance Bagamoyo Road is Evaluation: A roads condition of constructed between Dar es Access road from Dar es surrounding Salaam and Bagamoyo Town Salaam is already roads (Capital of Bagamoyo well-maintained District) along southern border of Bagamoyo SEZ candidate site c. Productive-age Approx. 590,2000 Evaluation: B Accumulation population ※but approx.3.5million Productive-age population of of labor including Dar es Salaam State Pwani Region is low, but it has possibility to secure high ability labor from Dar es Salaam d. Available Total area 9,000ha Evaluation: A Land Development Among the total are, partial The residents of the total area situation residents have already moved have not moved out yet, but it out, but large areas are still is possible to obtain moved-out undeveloped. Some areas are places as AIP project candidate still occupied by local sites residents. e. Others Maintenance Running water: According to Evaluation: A situation of Dar es Salaam Water and Easy to make detailed project infrastructure Sewerage Authority plans due to established master (DAWASA), water pipes of plan 40mm diameter are installed along major roads Establishment In 2013 BAGAMOYO SEZ situation of MASTER PLAN was development formulated. The revised plan plan is under development by EPZA. Source：National Bureau of Statistics Population Distribution by Age and Sex 2013

Photos：Bagamoyo SEZ surrounding area

Condition of Bagamoyo Road Bagamoyo SEZ land where residents already move out

Bagamoyo SEZ land where residents already BAGAMOYO SEZ MASTER PLAN move out

2） Morogoro Region・Star City （SEZ） ① General Outline The development candidate site of Morogoro Region is named Star City, and is managed by Star Infrastructure Development Limited which is a Tanzanian company. Star city is located along the major road between an industrial city Dar es Salaam and the national capital city Dodoma, and it is characterized by the possibility of transporting products to both cities because a railway station between Dar es Salaam and Dodoma is planned to be built in the neighbourhood. The road condition from Dar es Salaam to Morogoro is fair, but traffic accidents happen frequently due to large traffic of big-sized vehicles. In Star City, joint development plan between Singapore and Tanzania is under progress, and the Zoning plan (Figure 3-6) was created. The zoning map includes logistic zone, warehouse zone, commercial zone, education zone and so on. Originally those were planned to be built step by step, but the development is stopped due to the withdrawal of Singaporean capital.

② Current summary of Star City (SEZ) The results of the survey of Star City (SEZ) are described in Table 3.2 3

Table 3.2-3 Current Situation of Star City （SEZ） Category Present condition Evaluation a. Location Distance to Dar es Salaam: Approx.180 Evaluation: B major cities km. Dodoma: Approx. 265 Easy to obtain agricultural km products due to easy access to Distance to Dar es Salaam Port: its production areas. Possible to ports Approximately 190 km transport products to both Access to Morogoro State is major major agricultural area and has Dodoma and Dar es Salaam, agri-productio easy access to various but possible risk of cancelled n area agri-products like rice and logistics due to traffic jams and plants accidents. The opening time of railway is also uncertain. b. Surrounding Maintenance Maintenance condition of Evaluation: A roads condition of surrounding roads Access road between Dar es surrounding Salaam and Dodoma has been roads constructed c. Productive-ag Approx.1.2million and 6900 Evaluation: B Accumulation e population people Large labor population but of labor anxious about ability of workers due to rural city d. Available Total area Approx. 4300 ha Evaluation: A Land Developed Almost all residents moved land condition out and lands are abandoned. Residents already moved out. Developed only around Star City office. e. Others Formulation Zoning plan was formulated, Evaluation: C situation of but surveys for development It needs more time for survey development preparation was not of development preparation plan conducted yet which was not conducted.

Picture: Surroundings of Morogoro SEZ

Entrance of Star city site Planned development land in Star City ( approx. 13 km up to fence)

Large rice plantation of Morogoro Region Traffic accident at Morogoro Road

3） Other SEZ development candidate sites Regarding to Iringa Region, Dodoma Region, Mwanza Region and Mbeya Region, we received the advices that those areas are hopeful as AIP development candidate sites from the local government agencies during the survey. However, as the result of meeting with a chairman of EPZA, it became clear that these 5 SEZ areas are not ready yet to secure AIP development land since the land expropriation was still under progress. Also, in SEZ development candidate site of Bunda Region, Mara Region, land expropriation was completed, but the development plan was not formulated yet, and then it is necessary to wait for the conduction of the survey for formulating development plan by EPZA, to proceed AIP projects.

(3) Results of consideration of pilot project candidate sites

According to the results of this survey as for the reasons explained above, this survey supports Bagamoyo as the most appropriate site for the implementation of P4F pilot project. From now on, concrete information for the development of Bagayomo AIP will be provided.

3.3 Examination toward the project implementation in Bagamoyo SEZ

(1) Consideration of the geographical environment in Bagamoyo SEZ for the AIP development

Using as reference the topographical base map of Bagamoyo SEZ, the construction of the AIP will be easy due to the flat land. The altitude is 40 m in the highest and the lowest position in the direction of the overseas line. Since most of the lands are covered with low density herbs and palm trees are dispersed, soil levelling is required before construction. Regarding natural disasters, there is no danger of being affected by earthquakes or volcanic eruptions, but there is a possibility of a tsunami, so if an AIP is built near the coast, measures against the tsunami should be considered. The coastline lasts about 100 km, but the terrain is hard, making it suitable for building construction

Figure 3-5 Typographical Base Map of Bagamoyo SEZ

(2) Situation of infrastructure development in Bagamoyo SEZ

1） Roads condition Bagamoyo SEZ is located along the paved road (Bagamoyo Road) connecting Dar es Salaam to

Bagamoyo town. Bagamoyo Road is a one-way lane with a return of 20,000-30,000 vehicles a day around Dar es Salaam and 1,500 a day around Bagamoyo. On the other hand, the roads of Bagamoyo SEZ are not paved, their condition needs improvement because there are many steep slopes and furrows. Implementing the AIP project, it is necessary to improve the road from the Bagamoyo Road to the project site.

2） Water supply According to the MASTER PLAN BAGAMOYO SEZ created in 2013, the pipe that supplies the water in the Lub river basin managed by DAWASA to the northern part of Dar es Salaam passes near the special economic zone of Bagamoyo and also supplies water from the main pipeline part of the special economic zone. In addition, according to DAWASA in this survey, we got the information that a 50 mm diameter pipe was updated in Bagamoyo SEZ facilities. Future plans will combine water and groundwater pipelines and water will be supplied according to demand within the SEZ. Although it is necessary to improve the water supply from the existing pipelines to the AIP project implementation site, we consider that the maintenance of the water supply facilities could be carried out relatively easily.

3） Electricity and gas Although the main energy source of this AIP project will be solar energy, the electric power of the network will be additionally used according to the demand. Electricity in the vicinity of Bagamoyo is supplied by the Tanzania Electricity Supply Authority (TANESCO), and a 33 kV transmission line that comes from Dar es Salaam and Murandisi in Bagamoyo town. Currently, there is no automatic switching system in case of problems in the transmission of energy, a manual response is required, so it cannot be said that the power supply is stable. However, since it is assumed that the power supply of the network will only be used part of a time, as peak energy demand, it is not considered a major problem in this AIP project. Also, since the pipeline is not ready around Bagamoyo SEZ, it is necessary to examine the maintenance for AIP construction.

3.4 Confirmation of regulations related to the implementation of the project

(1) Scheme of the EPZ method and the SEZ method and preferential treatment for investors

By implementing this AIP project in Bagamoyo SEZ, investors in AIP projects can receive various tax incentives, such as exemption from taxes, according to the following regulations:

Table 3.4-1 Regulatory list related to export processing zone / economic special district The Special Economic Zones Act,2006 The Export Processing Zones Act. 2006: The Special Economic Zones Regulations, 2012

The "Special Economic Zone Law" was enacted in 2006 with the aim of promoting domestic economic development, increased exports,job creation, domestic and abroad investments. The competent authority of the Special Economic Zone is EPZA (Export Processing Zone Agency), but the business area to be developed within the "Special Economic Zone" is broader than the "Export Processing Zone", the EPZ is for special economic zones, which include the Free Trade Area, the Park of Information and Communication Technologies (ICT), the Tourism Development Zone, etc. In addition, as the law that focuses on the SEZ that stipulates provisions relating to its establishment, development and management of operations, is the "Law of the Export Processing Zone" which was also enacted in the same year. The "Regulation on the Special Economic Zone", promulgated in 2012, aims to clarify the roles and functions of the SEZ and the EPZ of the EPZA. When a company invests in EPZ or SEZ, the acquisition of a license issued by EPZA is required. Table 3.4-2 shows the requirements for the acquisition of the license.

Table 3.4-2 Requirement to acquire business license SEZ Business operator EPZ Business operator Be a new investment Foreign-affiliated companies: Capital over To export 80% or more of production $ 500,000 Domestic enterprises: Capital over 100,000 dollars The investment destination must be within the Foreign companies: export more than Special Economic Zone $ 500,000 Domestic companies: export more than $ 100,000 * Application fee is USD 250 and the annual fee is USD 5,000 for SEZ/EPZ developers. Annual fees for EPZ/ SEZ operator is USD 1,000

Since the SEZ license issued by EPZA is considered equivalent to the commercial license granted by local government agencies and other regulatory agencies, the companies that acquired the SEZ license, with the exception of some important regulations published by the Tanzania Food and

Drugs Authority (TFDA), are exempt from the acquisition of other licenses. The licenses that EPZA issues are the following four types.

① Developer / operator license SEZ For companies that do business in construction and lease infrastructure, operations management. ② User license SEZ For companies that carry out commercial activities focused on the manufacturing and processing industries for the national market in SEZ ③ EPZ user license For companies that do business primarily for the manufacturing / processing industries for foreign markets. ④ SEZ permit. For companies that implement businesses for SEZ / EPZ users. (* These licensed companies do not have economic incentives provided by the Economic Protection Law).

Preferential treatment for businesses varies according to the type of license. Typical incentives for each license are as follows.

① SEZ Developer / Operator license: ・ Tax exemption on capital goods such as machinery, equipment and heavy machinery used for EPZ / SEZ construction ・ Exemption from corporate tax, withholding tax and property tax (initial 10 years) ・ Exemption from VAT on utility charges ・ Exemption from conformity inspection for imported goods within SEZ.

② SEZ User license: ・ Exemption of customs tax and value added on raw materials and capital goods related to production in SEZ. ・ Exemption of interest withholding tax on foreign capital loans ・ Exemption of conformity inspection for imported cargo ・ Implement the inspection of rates in SEZ. ③ EPZ user license: ・ Exemption of customs tax and value added tax on raw materials and capital goods related to production within the EPZ ・ Exemption from income tax and withholding tax (10 years)

・ Exemption from taxes of local governments for products produced in EPZ (10 years) ・ Exemption of conformity inspection for imported cargo.· Implementation of tariff inspection in industrial free zones. ・ Exemption of the value added tax (VAT) for public service and usage fees.

(2) About TFDA Certification Procedure

The certification from Tanzania Food and Drug Administration (TFDA) is required to manufacture and sell food in Tanzania. TFDA is an institution affiliated with the government that oversees the safety and quality of food, pharmaceutical products, cosmetics, medical devices, with the aim of protecting the health and safety of consumers. The TFDA indicates the provisions that must be followed for each product, and the provisions related to the foods that are listed in the guidelines referred to in Table 3.4-3. In particular, the complete regulations on food processing factories are summarized in the "Guidelines for good manufacturing practices for food".

Table 3.4-3 Food-related TFDA certification guidelines list Guidelines Application for Registration of Pre-packaged Foods in Tanzania

Guidelines for Food Promotion Control

Guidelines for Importation and exportation of Food

Guidelines for Investigation and Control of Food Borne Diseases

Guidelines for Registration and Licensing of Food Premises

Guidelines for Importation and exportation of Food

Guidelines for Good Manufacturing Practices of Food Products

The procedures to acquire the TFDA certification are: 1. Acquisition of factory equipment certification, 2. Acquisition of product certification itself. First, submit the TFDA certification application regarding the installation equipment and the commercial license for the food processing business. At the time of application, the manufacturer pays the application rate stipulated in accordance with the manufactured article. Following the guidelines stated above: The developers of the AIP have to fill and submit the applications for food premises and permit to operate food business to the Director General of the TFDA. Depending on the type of establishment to be registered the producer will have to pay different registration fees and charges. After registration, and inspector of the TFDA will conduct an examination of the facilities and if approved a food premises certification and business permit will be provided. This certification has to be annually renewed.

The “Guidelines for Registration and Licensing of Food Premises” will evaluate the following items: - Location of the food premises - Premises design - Equipment, utensils and food contact surface - Personnel - Storage facilities - Sanitation and Hygiene - Documentation and record keeping

After the premises are registered, the production will also be subject of inspection by the TFDA. Guidelines will slightly differ depending on the characteristics of the products. At this stage of the project the consultant suggest following the “Guidelines for Importation and Exportation of Food”. If the AIP will export food the TFDA has to provide a health certificate to accompany food for exports.

The TFDA also provides the interested food producers with “Guidelines for Good Manufacturing Practices for Food”. These guidelines describe the minimum requirements that the TFDA consider necessary for the production of food for human consumption. These guidelines address the requirements for premises, equipment, personnel, quality and process controls, documentation, storage, validations, and manufacturing processes including packaging and labeling. Once all TFDA registration has been approved, the producer has to ask for certification to the TBS. TBS has nine supervisory committees in charge of the evaluation of standards. For food related industries the committee in charge is the Agriculture & Food Divisional Standards Committee (AFDC). They will be in charge of the evaluation of the food products and in the approval or rejection of the license to use the Standards Mark. Once the product gets the standards mark the producer can start the commercialization of the product. TFDA classifies foods in the following three categories. 1) High-risk foods (specific nutritional foods): baby foods, food supplements, etc.Low risk foods: other foods. If there is no particular problem, the period required to obtain the TFDA certification is approximately 50 days for high-risk foods and approximately 40 days for low-risk foods.In addition, although the cost required for TFDA certification differs according to the target product and commercial content, at each stage, are

required for example, the costs shown in Table 3.4-4.

Table 3.4-4：TFDA cost of certification (Example) Acquisition cost of factory equipment TSZ2500008 （For large-scale facilities） certification Renewal fee for factory equipment certification TSZ 150,000（For large-scale facilities） (annually) Health Certificate TSZ 50,000 Food inspection fee (bacteria test) USD130～（Depends on the type of bacteria） Acquisition cost of product certification USD250（In the case of nuts）

(3) About TBS Certification Procedure

Once TFDA finishes the registration of the premises and approval of the product, the producer has to register its products to the TBS. Following standards, such as the ISO 17020 and ISO 9000, the TBS will provide certification of products and will provide a license to use the quality mark. The Standards Mark of Quality is a symbol which manufacturers may use to promote their products and consumers seek as prima facie evidence of quality

8 1TSZ ≒ 0.0477Yen （A partir de marzo de 2019）

Figure 3-6 TBS Standards Mark of Quality

Figure 3-7 Logo of the TBS in food products

3.5 Study on agricultural field with business potential

(1) Overview of agriculture and fishery industry in Tanzania

As mentioned above, Tanzania's participation in agriculture and fishing in its GDP is high, representing around 30%. With respect to the active population, primary industry, including agriculture, represents 67.2% of the total work power

1） Agricultural production The main agricultural products produced in Tanzania are corn, rice, sorghum, sweet potatoes, legumes, peanuts, etc. The main export crops are tobacco, cashew nuts, coffee, tea, spices, cotton, sisal hemp, etc. Below is the production situation of each agricultural product.

Table 3.5-1 ：Main agricultural products status (area, production） Category Crop Data 2005/2006 2010/2011 2014/2015 Cereal Crop Maize Area ( '000' ha) 2,570.99 3,287.85 3,787.75 Production ( '000' tons) 3,423.03 4,340.82 5,902.78 Paddy Area ( '000' ha) 633.77 1,119.33 1,154.47 Production ( '000' tons) 1,238.56 2,248.32 2,979.86 Sorghum Area ( '000' ha) 715.87 811.16 755.84 Production ( '000' tons) 711.64 806.57 676.77 Wheat Area ( '000' ha) 53.22 108.284 85.60 Production ( '000' tons) 109.53 112.66 72.48 Barley Area ( '000' ha) 19.52 7.51 6.64

Category Crop Data 2005/2006 2010/2011 2014/2015 Production ( '000' tons) 20.59 6.90 14.44 Bulrush Area ( '000' ha) 258.56 215.21 285.50 Millet Production ( '000' tons) 189.87 192.95 249.87 Finger millet Area ( '000' ha) 64.61 137.10 67.09 Production ( '000' tons) 56.79 204.11 80.19 Roots Crop Cassava Area ( '000' ha) 993.171 739.786 1,094.90 Production ( '000' tons) 6,158.30 4,646.52 5,886.44 Sweet Area ( '000' ha) 590.47 699.07 746.60 Potatoes Production ( '000' tons) 2,606.04 3,573.30 3,454.49 Irish potatoes Area ( '000' ha) 177.24 203.09 175.42 Production ( '000' tons) 1,583.02 1,555.52 1,480.72 Other Food Banana Area ( '000' ha) 499.62 532.08 452.56 Crop Production ( '000' tons) 3,507.45 3,143.83 3,584.53 Pulses Beans Area ( '000' ha) 646.09 737.66 1,124.71 Production ( '000' tons) 707.62 675.95 1,201.92 Chick pea Area ( '000' ha) 10.16 74.83 39.73 Production ( '000' tons) 7.00 71.18 33.89 Cow pea Area ( '000' ha) 155.93 218.08 216.93 Production ( '000' tons) 154.77 172.74 180.78 Garden pea Area ( '000' ha) 17.41 45.97 14.52 Production ( '000' tons) 20.84 52.29 29.93 Pigeon pea Area ( '000' ha) 137.49 288.16 253.09 Production ( '000' tons) 140.65 272.61 261.89 Soya Beans Area ( '000' ha) 3.61 2.88 5.87 Production ( '000' tons) 5.00 2.50 6.03 Green gram Area ( '000' ha) 2.94 48.21 8.87 Production ( '000' tons) 2.91 44.43 49.55 Oil seeds Sunflower Area ( '000' ha) 174.14 753.76 1,787.89 nuts crop Production ( '000' tons) 373.39 786.90 2,878.50 Groundnut Area ( '000' ha) 309.43 675.23 1,624.68 Production ( '000' tons) 782.12 651.40 1,835.93 Sesame Area ( '000' ha) 101.60 510.47 978.82 Production ( '000' tons) 221.42 357.16 1,174.59 Bambara nuts Area ( '000' ha) 13.78 65.06 42.21 Production ( '000' tons) 16.12 48.72 43.77 Coconut Area ( '000' ha) 17.45 42.31 32.34 Production ( '000' tons) 26.07 54.93 101.82 Oil Palm Area ( '000' ha) 11.67 14.10 23.86 Production ( '000' tons) 11.36 17.00 41.48 Cash crop Coffee Area ( '000' ha) 226.46 116.51 221.76 Production ( '000' tons) 34.33 60.58 41.67 Cashew nut Area ( '000' ha) 319.97 406.60 483.37 Production ( '000' tons) 90.38 121.07 197.93 Cotton Area ( '000' ha) 319.49 226.51 450.00 (Seed cotton) Production ( '000' tons) 376.59 163.64 203.31 Tea Area ( '000' ha) 19.23 8.55 22.51 Production ( '000' tons) 30.00 32.00 35.75 Tobacco Area ( '000' ha) 61.47 168.49 77.52 Production ( '000' tons) 56.50 130.00 87.74 Sisal Area ( '000' ha) - 56.10 48.85 Production ( '000' tons) - 24.83 39.20 Pyrethrum Area ( '000' ha) 1.75 7.39 13.09 Production ( '000' tons) 2.50 5.00 6.05

Sugarcane Area ( '000' ha) - 57.07 44.00 Production ( '000' 3021. 3,133 tons) - 31 .07 Source: Statistics Unit-Ministry of Agriculture, Food Security and Cooperatives

2） Fishery industry According to the Annual Fisheries Statistics Report - 2016, the fishery industry in Tanzania has seen steep declines between 2005 and 2008, but after that there was a tendency for a steady growth.

(m tons)

Source: Annual Fisheries Statistics Report – 2016 Figure 3-8 Evolution of fishery production in Tanzania

Approximately 85% of Tanzanian fisheries production is due to inland fisheries, and the proportion of occupied ocean fisheries is around 15%. The center of the interior fishery is Lake Victoria, and in addition to that, the main fishing grounds are Lake Tanganyika, Lake Nyasa, Lake Nyumba and Mungu, the Mtera Dam.

Table 3.5-2 ：Status of fishery production in major water bodies in Tanzania Numbers Numbers Water bodies Fishers Fishing Catches Values crafts (m tons) (Tsh.s '000) Lake Victoria 109,397 31,773 238,096.80 984,954,579.99 Lake Tanganyika 26,612 11,506 53,170.61 230,643,255.13 Lake Nyasa 5,550 2,632 10,093.35 38,462,450.40 Lake Rukwa 3,428 1,786 3,240.93 12,240,084.42 Mtera Dam 2,369 1,238 2,609.40 4,152,860.08 Nyumba ya Mungu Dam 783 432 968.2 2,067,013.54 Minor water bodies 879 321 592.30 1,965,160.00 Small scale Marine 54,511 9,650 53,823.30 211,891,899.18 Total 203,529 59,338 362,594.89 1,486,377,302.74 Source: Annual Fisheries Statistics Report – 2016

3） Balance trade of agricultural and fishery products The status of import and export of agricultural and marine products in Tanzania was established from the import and export data of each country by UN COMTRADE (2017).As mentioned above, the largest amount of exports are cashew nuts contained in the fruits and nuts of Class 8 (fruits and nuts, edible, citrus peel or melons), and then the cigarettes of category 24 and continue 9 categories of coffee. In addition, exports of fish and crustaceans of the third category, etc., are important. Edible vegetables of the seventh categories, also the beans contained in the roots and tubers (vegetables and certain roots and tubers, edible). On the other hand, it is largely negative in the trade balance, the category 10 of grains, including wheat and rice, animal or vegetable fats and oils of category 15, including palm oil, sugar of the category 17.

Table 3.5-3: Status of import and export of agricultural and marine products in Tanzania Import Value Export Value Export-Import HS code＆Category (US$) (US$) (US$) 1Animals; live 2,241,961 54,265,771 52,023,810

2Meat and edible meat offal 6,989,737 13,306,642 6,316,905

3Fish and crustaceans, mollusks and other 14,553,536 192,766,423 178,212,887 aquatic invertebrates 4Dairy produce; birds' eggs; natural honey; 12,749,461 404,715 -12,344,746 edible products of animal origin, not elsewhere specified or included 5Animal originated products; not elsewhere 80,999 2,404,005 2,323,006 specified or included 6Trees and other plants, live; bulbs, roots and 615,413 27,086,268 26,470,855 the like; cut flowers and ornamental foliage

7Vegetables and certain roots and tubers; 8,652,337 171,273,984 162,621,647 edible 8Fruit and nuts, edible; peel of citrus fruit or 4,651,928 554,778,926 550,126,998 melons 9Coffee, tea, mate and spices 1,785,811 204,531,058 202,745,247

1Cereals 204,268,748 27,198,713 -177,070,035 0 1Products of the milling industry; malt, 23,518,338 55,616,290 32,097,952 1 starches, inulin, wheat gluten 1Oil seeds and oleaginous fruits; 17,814,315 89,470,755 71,656,440 2 miscellaneous grains, seeds and fruit, industrial or medicinal plants; straw and fodder 1Lac; gums, resins and other vegetable saps 591,751 165,253 -426,498 3 and extracts 1Vegetable plaiting materials; vegetable 5,618 218,588 212,970 4 products not elsewhere specified or included

HS code＆Category Import Value Export Value Export-Import (US$) (US$) (US$) 1Animal or vegetable fats and oils and their 278,496,797 19,778,578 -258,718,219 5 cleavage products; prepared animal fats; animal or vegetable waxes 1Meat, fish or crustaceans, mollusks or other 1,220,759 134,851 -1,085,908 6 aquatic invertebrates; preparations thereof

1Sugars and sugar confectionery 125,452,084 2,109,584 -123,342,500 7 1Cocoa and cocoa preparations 2,186,333 16,765,592 14,579,259 8 1Preparations of cereals, flour, starch or milk; 17,941,633 2,170,712 -15,770,921 9 pastry cooks' products

2Preparations of vegetables, fruit, nuts or other 5,189,022 3,743,960 -1,445,062 0 parts of plants 2Miscellaneous edible preparations 16,367,572 2,197,553 -14,170,019 1 2Beverages, spirits and vinegar 47,796,957 17,634,045 -30,162,912 2 2Food industries, residues and wastes thereof; 12,385,650 39,876,272 27,490,622 3 prepared animal fodder 2Tobacco and manufactured tobacco 5,813,973 216,984,878 211,170,905 4 substitutes 3Pharmaceutical products 425,232,633 863,840 -424,368,793 0 3Fertilizers 145,570,011 29,954,460 -115,615,551 1 4Raw hides and skins (other than foreskins) 78,724 5,954,088 5,875,364 1 and leather 4Articles of leather; saddlery and harness; 12,108,147 46,208 -12,061,939 2 travel goods, handbags and similar containers; articles of animal gut (other than silk-worm gut) 4Fur skins and artificial fur; manufactures 2,994 2,199,392 2,196,398 3 thereof 4Wood and articles of wood; wood charcoal 24,475,860 27,530,596 3,054,736 4 4Cork and articles of cork 94,165 25,396 -68,769 5 4Manufactures of straw, esparto or other 54,460 130,202 75,742 6 plaiting materials; basket ware and wickerwork 4Pulp of wood or other fibrous cellulosic 879,224 708,941 -170,283 7 material; recovered (waste and scrap) paper or paperboard 4Paper and paperboard; articles of paper pulp, 106,062,513 42,026,015 -64,036,498 8 of paper or paperboard 4Printed books, newspapers, pictures and other 20,901,177 1,645,190 -19,255,987 9 products of the printing industry; manuscripts, typescripts and plans 5Silk 32,086 10 -32,076 0

HS code＆Category Import Value Export Value Export-Import (US$) (US$) (US$) 5Wool, fine or coarse animal hair; horsehair 15,649 74,830 59,181 1 yarn and woven fabric 5Cotton 37,673,181 53,744,196 16,071,015 2 5Vegetable textile fibers; paper yarn and 1,591,069 24,787,042 23,195,973 3 woven fabrics of paper yarn 5Man-made filaments; strip and the like of 11,738,703 200,292 -11,538,411 4 man-made textile materials 5Man-made staple fibers 26,842,206 5,041,021 -21,801,185 5 5Wadding, felt and nonwovens, special yarns; 9,613,387 26,046,888 16,433,501 6 twine, cordage, ropes and cables and articles thereof 5Carpets and other textile floor coverings 2,043,416 95,250 -1,948,166 7 5Fabrics; special woven fabrics, tufted textile 1,736,048 67,401 -1,668,647 8 fabrics, lace, tapestries, trimmings, embroidery 5Textile fabrics; impregnated, coated, covered 5,510,163 54,213 -5,455,950 9 or laminated; textile articles of a kind suitable for industrial use 6Fabrics; knitted or crocheted 7,990,805 4,075,755 -3,915,050 0 6Apparel and clothing accessories; knitted or 23,123,133 17,477,564 -5,645,569 1 crocheted 6Apparel and clothing accessories; not knitted 29,028,429 42,107,990 13,079,561 2 or crocheted 6Textiles, made up articles; sets; worn clothing 88,660,885 96,929,328 8,268,443 3 and worn textile articles; rags

Source: UN COMTRADE database

(2) Tanzania’s industrialization priority sectors

1） Priority industrial development field in 'National Integration Execution Program for Industrialized Economy'

The Government of Tanzania formulated the "National Integration Execution Program for Industrialized Economy" as one of the strategies for achieving "Tanzania Development Vision 2025" in 2018 and has positioned the following 11 areas as priority development sectors: i Cotton and Clothing; ii Milk and Dairy Products; iii Fertilizer and Chemical; iv Leather and Leather Products; v Cooking Oil;

vi Meat processing; vii Fruit Processing; viii Cashew; ix Sugar; x Industrial Medicine (Pharmaceutical Industries); xi Soda Ash

2） Industrial products assumed for BAGAMOYO SEZ MASTER PLAN In the above-mentioned BAGAMOYO SEZ MASTER PLAN, the following are listed as products having industrial potential.

Table 3.5-4 ：Target sector of the project in BAGAMOYO SEZ MASTER PLAN Rice milling, rice bran oil extraction and refineries, Integrated paddy cattle feed, power production using husks, silica processing extraction and units for extraction of specialist chemicals such as orsinol, lisithinol etc. Maize processing Maize and tapioca starch, dextrin, modified starches, liquid glucose, high maltose and fructose corn syrup, corn gluten, maize germ, corn steep liquor etc. Sugar refining Refining of industrial white sugar as input for food and beverage industries. Marine production Production of fish feed. Agro-business, Processing of crustaceans (crab, prawns, and food and lobsters), molluscs (squid, cuttlefish, and octopus) beverage and others that can be frozen, dried, canned or diced. Meat and poultry Abattoirs, rendering plants, processed/semi production processed meat/poultry products etc. Specifically also linked with game meat farming and processing. Food and beverage Confectionary, juices, sauces, honey processing, manufacturing snack food products, food packaging, spices. Dairy production Milk/milk products (cheese, butter, milk powder, milk-based drinks, yoghurt, ice cream etc.) Horticulture Flower growing, sorting, grading and packaging. production Packaging Packaging supplies Cartons, aluminium and tin cans, bags, tubes, jars, bottles, cups, tapes, foils, fasteners. Chemicals Downstream industries Plastics, textiles, apparels, footwear fibres, building materials, pharmaceuticals, fertilizers (for instance blending and packaging) and petrochemicals. Construction Inputs to construction Doors and window frames.

materials of house Insulation materials. Piping, cement mixing and distribution. Sheet glass processing, production of iron rods. Metal and Miscellaneous Animal fodder milling and pelleting equipment. machinery equipment Fishing gear equipment. Source: 'Feasibility Study for the Bagamoyo Special Economic Zone in Pwani Region (Updated), March 2011', published by EPZA

3） Overview of the sub-sectors of agriculture, livestock and fisheries is related to the project Among the subsectors of the agricultural and fisheries industries above mentioned, the outline of the sub-sectors that seems to be related to the proposed AIP project is as follows.

① Cotton and Clothing Cotton is of the major cash crop in Tanzania, and according to the 2016/2017 Annual Agriculture Sample Survey Initial Report, approx. 380,000 farmers are engaged in cotton production. The main production areas are Simiyu, Shinyanga and Geita. According to the import and export data of the countries by UN COMTRADE, raw cotton made in Tanzania is mainly exported to India and Indonesia, and the export amount of 2016 was USD 56.1 million. On the other hand, light pure woven cotton are imported from China, and the import amount of 2016 was USD 152 million. According to this situation, it is considered that there are possibilities to get more foreign currencies, through industrializing pure cotton and promoting clothing industry by controlling the import of the first processed products from other countries and exporting of processed products, not only pure cotton. In Tanzania, the development of textile industrial parks leaded by the government is under consideration. Studies to build Textile Development Unit (TDU) within MIT are in progress. However, since it is difficult to raise funds, financing is in the process of being adjusted.

② Milk and Dairy Products According to 2014/2015 Annual Agriculture Sample Survey Report, the breeding number of Cows is 7,444,213 in Tanzania mainland and 59,585 in Zanzibar. The major production areas are Tabora (799,395 heads)、Manyara (657,582 heads)、Mwanza (542,032 heads) and Mbeya (544,144 heads). According to the Annual Report 2016/2017 of Tanzania Bank, the growth rate of livestock industry was 2.6％ in 2016. Milk production is also increasing year by year (2,058 million litres in 2015 and 2,127 million litres in 2016). Regarding dairy production, 60% of the production is from traditional livestock industries and 40% from its commercial sectors. In 1995, 7 factories owned by the National Dairy Company

(Tanzania Dairies）were privatized, and moreover new processing factories were established in the center of the regions such as Tanga, Iringa, Dar-es Salaam and Mara. Although the production is increasing, the rate of factory operation is low and many dairy products depend on importing from other countries. The import amount in 2016 was approx. US$12 million, combined with fresh milk and concentrated milk, which were imported from France, Uganda, South Africa, Kenya and others. According to the local hearing, livestock industries are growing together with its market infrastructure consolidation, but currently there are many pasture lands and the production control is still under difficult situation.

③ Cooking Oil According to the 2016/2017 Annual Agriculture Sample Survey Initial Report, oilseed product crops of Tanzania are Groundnuts, Sunflower and Sesame. Approx. 660,000 farmers are engaged in producing sunflower which is largest in production, and the main production areas are Dodoma, Singida and Tabora. The crops of the second largest production is Groundnuts, and approx. 1.13 million farmers are engaged in production, and the main production areas are Tabora, Dodoma and Geita. Approx. 280,000 farmers are engaged in producing sesame, and the main production areas are Lindi, Pwani and Ruvuma. According to FAO Report (2015), Tanzania is the second producer, after South Africa, of Sunflower seeds and Sunflower oil in African countries, but most of the production is consumed within the country and the amount of exports is very limited. According to the Import and Export Data of countries (2016) by UN COMTRADE, the amount of export of Oil seeds is US$ 131 million, while the amount of import of Palm oil is US$ 366 million, and the balance of trade of cooking oils is in negative situation. Based on these situations, it is considered that there are possibilities to expand gaining foreign currencies, through controlling the import of palm oil from other countries, expanding consumption of processed products (such as Sun flower oil) in the domestic market and exporting them to surrounding countries.

④ Meat processing According to the 2014/2015 Annual Agriculture Sample Survey Report, the breeding heads of livestock animals in Tanzania mainland and Zanzibar are as the following chart.

Table 3.5-5 ：The head count of breeding livestock animals in Tanzania Livestock Tanzania Mainland Zanzibar type Total Cattle 25,654,182 158,021 25,812,203 Goats 18,934,878 85,182 19,020,060 Sheep 5,574,300 328 5,574,628 Pigs 1,745,675 - 1,745,675 Chicken 39,484,082 1,336,276 40,820,358 Ducks 1,504,931 57,980 1,562,911 Guinea Pigs 411,923 - 411,923 Turkey 181,597 1,512 183,109 Rabbits 276,968 4,195 281,163 Donkey 454,067 3,512 457,579 Source: 2014/2015 Annual Agriculture Sample Survey Report

According to the Annual Report 2016/2017 of Tanzania Bank, the production amount of processed meat products was 579,757 tons in 2015 and 648,810 tons in 2016. The amount of exports is increasing and the country is exporting the products to Mozambique, Vietnam, Oman, Qatar, UAE and others. Although livestock industry is growing, as mentioned about milk and dairy products above, the production control is still in difficult situation because of the current many pasturing.

⑤ Fruit Processing According to the 2016/2017 Annual Agriculture Sample Survey Initial Report, approx. 420,000 farmers are engaged in producing vegetable and fruits in Tanzania, and the total production amount was of 419,006 tons in 2016/17. The production situation of cultivated vegetables and fruits is as follows; Mango is the most important cultivated product among fruits, and approx. 200,000 farmers are engaged in producing mango. The cultivation area is 48,657 ha, and the main production region is Pwani. Approx. 80,000 farmers are engaged in producing Oranges, and the cultivation area is 34,085ha. In Tanzania, Tanga and Pwani region are the main production areas and approx. 80% of the total cultivation area is in Tanga. Also, the coastal area such as Bagamoyo is famous for production area of pineapple.

Table 3.5-6 Production of fruits and vegetables in Tanzania

Category Crop Data 2014/2015 2016/2017 Fruits and Tomatoes Area ( '000' ha) 44.33 45.60 Vegetables Production ( '000' tons) 217.63 247.14 Cabbage Area ( '000' ha) 5.13 2.01 Production ( '000' tons) 14.77 18.06 Amaranth Area ( '000' ha) 4.91 23.29 Production ( '000' tons) 4.47 51.61 Cucumber Area ( '000' ha) 0.85** 1.59 Production ( '000' tons) 2.92** 5.20 Pumpkins Area ( '000' ha) 6.14 6.68 Production ( '000' tons) 23.10 5.55 Egg plant Area ( '000' ha) 1.46** 3.25 Production ( '000' tons) 3.60** 9.78 Onion Area ( '000' ha) 11.64 - Production ( '000' tons) 24.34 - Okra Area ( '000' ha) 12.71 10.94 Production ( '000' tons) 22.48 16.84 Yield (tons/ha) Chilies Area ( '000' ha) 1.16 - Production ( '000' tons) 1.61 - Watermelon Area ( '000' ha) 7.30 14.59 Production ( '000' tons) 41.98 65.10 Rambutan Area ( '000' ha) 0.20 - Production ( '000' tons) 0.14 - Orange Area ( '000' ha) 26.83 21.38 Production ( '000' tons) 79.26 9.84 Mango Area ( '000' ha) 17.41 20.66 Production ( '000' tons) 32.56 78.43 Source: 2014/2015 & 2016/2017 Annual Agriculture Sample Survey Report

According to the imports and exports data (2016) by UN COMTRADE, the amount of exports of fruits was approx. USD 15 million, and processed products (like fruits juice）was USD 20.6 million. On the other hand, the amount of imports of processed products (fruits juice) was USD 4.6 million.

Table 3.5-7 Imports and exports of fruits and vegetables in Tanzania Net weight Trade Code Commodity (kg) Value (US$) 701 Potatoes; fresh or chilled 100377 6957 702 Tomatoes; fresh or chilled 954001 88508 703 Onions, shallots, garlic, leeks and other 5134516 2799182 alliaceous vegetables; fresh or chilled 705 Lettuce (lactuca sativa) and chicory 708 900 (cichorium spp.) fresh or chilled

Net weight Trade Code Commodity (kg) Value (US$) 707 Cucumbers and gherkins; fresh or chilled 30 6 708 Leguminous vegetables; shelled or unshelled, 8063196 6345804 fresh or chilled 704 Cabbages, cauliflowers, kohlrabi, kale and 15000 5405 similar edible brassicas; fresh or chilled 710 Vegetables (uncooked or cooked by steaming 4443488 1119938 or boiling in water); frozen 709 Vegetables; n.e.c. in chapter 07, fresh or 282301 788616 chilled 711 Vegetables provisionally preserved; (e.g. by 231 30 sulphur dioxide gas, in brine, in sulphur water or in other preservative solutions), but unsuitable in that state for immediate consumption 712 Vegetables, dried; whole, cut, sliced, broken 47478486 65563023 or in powder, but not further prepared 713 Vegetables, leguminous; shelled, whether or 160812673 92772683 not skinned or split, dried 714 Manioc, arrowroot, salep, Jerusalem 473471 1782926 artichokes, sweet potatoes and similar roots and tubers with high starch or inulin content; fresh, chilled, frozen or dried, whether or not sliced or in the form of pellets; sago pith 803 Bananas, including plantains; fresh or dried 899227 51105 804 Dates, figs, pineapples, avocados, guavas, 4395377 4836130 mangoes and mangosteens; fresh or dried 805 Citrus fruit; fresh or dried 0 1620428 806 Grapes; fresh or dried 600334 158415 807 Melons (including watermelons) and papaws 314692 293273 (papayas); fresh 808 Apples, pears and quinces; fresh 17778 17567 811 Fruit and nuts; uncooked or cooked by 20714 6471 steaming or boiling in water, frozen, whether or not containing added sugar or other sweetening matter 810 Fruit, fresh; n.e.c. in chapter 08 83664 89900 813 Fruit, dried, other than that of heading no. 107187 46207 0801 to 0806; mixtures of nuts or dried fruits of this chapter 814 Peel of citrus fruit or melons (including 8528 25448 watermelons); fresh, frozen dried or provisionally preserved in brine, in sulphur water or in other preservative solutions Source: UN COMTRADE database

In Tanzania a big percentage of fruits and vegetables lose the product values before being sold at the markets, due to lack of appropriate storage and processing facilities. Based on this situation, it is considered that there are possibilities to expand the income of foreign currencies, though not only expanding consumption in the domestic market, but also exporting processed products (fruit juice and frozen/dried/ canned vegetable & fruits, etc.）by fruits and vegetable industrialization.

⑥ Cashew nuts Cashew nuts are of the main cash crops in Tanzania, and according to the 2016/2017 Annual Agriculture Sample Survey Initial Report, approx. 670,000 farmers are engaged in its production. The major production areas are Mtwara, Lindi and Pwani. Cashew nuts made in Tanzania are exported mainly to India and Vietnam. Tanzania exports cashew nuts to India for processing. Tanzania lacks of enough facilities for removing shells and skins. Therefore, India is the largest production and export country of cashew nuts in the world, using their own methods of removing shells.

⑦ Sugar According to the 2016/2017 Annual Agriculture Sample Survey Initial Report, approx. 60,000 farmers were engaged in producing sugar cane in Tanzania, and the total production amount is 446,708 tons in 2016/17. According to the import and export of countries (2016) by UN COMTRADE, the amount of the import of raw sugar was USD 119 million. Also, according to the Annual Report 2016/2017 of Tanzania Bank, the production amount of processed sugar was 286,700 tons in 2016. Based on this situation, there is a high possibility of lack of raw material (sugar cane) to satisfy the domestic consumption of Tanzania. It is considered that there are possibilities of gaining foreign currencies, through controlling the import of raw sugar from other countries, expanding consumption of processed products (white sugar) at the domestic market and the export to surrounding countries, by promoting sugar-related industry.

⑧ Marine production According to the Annual Fisheries Statistics Report 2016, the main marine products caught in the outside sea are Carangidae, Lethrinidae, Haemulidae, Epinephelidae and Scombridae, and the inland products are Clupeidae, Cichlidae, Centropomidae, Clariidae, Mochokidae, Cyprinidae and Bagridae. The marine products made in Tanzania are exported to European countries as well as consumed

domestically, and the total export amount was USD 257 million in 2016. It is considered that there is a possibility of gaining foreign currencies through selling domestically and exporting to overseas, due to the improvement of marine product processing technology.

Table 3.5-8 Imports and exports of marine product industry in Tanzania Category 2012 2013 2014 2015 2016 Imports of fish/fish products for direct 4,886 6,642 6,792 16,744 13,918 human consumption(tons) National fisheries production(tons) 373,214 375,160 365,974 362,645 362,595 (capture production) Aquaculture production(tons) (Tilapia 3,629 2,978 3,809 3,633 5,677 &others) Export of fish/fish production (tons) 41,394 38,574 43,284 41,059 39,691 Aquaculture export (tons) (mainly 117 140 71 48 140 prawns) National fish consumption (tons) 340,217 346,066 333,221 341,914 342,358 Source: Annual Fisheries Statistics Report - 2016

(3) The situation of foreign companies of agricultural products processing that are expanding businesses in Tanzania and its surrounding countries

1） The situation of Japanese companies According to the survey done by a private company9, there are 448 Japanese companies which expanded their business into 54 countries in African Continent at the time of June, 2017. The country with the largest number of Japanese companies is South Africa, followed by Egypt, Kenya, Morocco and Nigeria. In Tanzania, there are 41 Japanese companies which have their local companies, branches and expatriate office or local investing places. Regarding agricultural, forestry and marine products, food and beverage, flowers, restaurants and logistics, textiles/clothing/leathers as industries related to agricultural product processing, Japanese companies with their local companies, branches, expatriate offices and local investing place in eastern and southern African areas including Tanzania, are listed below. According to the survey by JETRO10, Tanzania is ranked 6th as a country with big potential in the future (Top 3 countries have been Kenya Nigeria and South Africa in the last four years.) The

9"List of Japanese Companies in Africa Business 2017 Edition" Africa Business Partners 10“Survey on the current status of Japanese Companies expanding their business into Africa (2017)”, JETRO

listed reasons include rich resources like natural gas, stable economic development and the possibility of growth, expansion of infrastructure demand related to electric power, water management, mining and logistics, agricultural development and expansion of domestic demand accompanied by the population increase.

Table 3.5-9 Examples of Japanese companies with businesses in Eastern and Southern African Countries Location country Category Company name Business The East The South Agriculture, SAKATA SEED Uganda, Kenya, Zambia, Zimbabwe、 Production and sales of Forestry, CORPORATION Sudan, Tanzania, Swaziland, Nambia, seeds. Marine Tanzania, South Africa, Vegetable seedling Madagascar, Botswana, Malawi, company MayFord is Mauritius Mozanbique,Lesotho made a wholly-owned subsidiary, it conducts research, development and production of seeds as well as sales. Established a representative office in Morocco in 2009 and in 2011 in Kenya. Sales by using distributors in 21 countries in Africa. Selectea* Uganda, Kenya, S. Africa, Malawi Direct import of tea from Tanzania, Rwanda all African countries, selling in Japan Eight-One Africa Malawi Manufacture and sale of dried mango Kanedai Namibia Crab fishery, processing, import. Joint venture plant in Namibia Nidaf-Japan Kenya, S. Africa, Malawi Import and process of Tanzania cashew nuts and Macadamia in Japan Maruha-Nichiro S. Africa, Crab and octopus imports. Namibia Subsidiary Taiyo A & F Co., Ltd. is a subsidiary in South Africa and Namibia, a representative office in South Africa. Food & Ajinomoto Kenya, S.Africa, Production and sales of Beverage Tanzania Angola,Zambia, “umami” seasonings and Malawi processed foods. 2016 Capital and management participation in African food giant Promasidor and expanded production and sales base to South Africa,

Location country Category Company name Business The East The South Angola, Zambia, Malawi, Kenya, Tanzania, Nigeria, Ghana, Congolese people, Algeria and Libya. Suntory Beverage & Kenya S. Africa Beverage sales. Food By acquiring GlaxoSmithKline’s beverage business in 2013, it acquired a corporation based in Nigeria, Kenya and South Africa. Other sales through bottling in 10 African countries Nissin Foods Kenya Sale of instant noodles. Products Established a joint venture with the Jomo Kenyatta University of Agriculture and Technology in Kenya in 2013. It imports and sells instant noodles from an Indian subsidiary and are preparing to manufacture in Kenya. JAPAN Ethiopia, Sudan, South Africa, Procurement of tobacco TOBACCO. Tanzania, South Zambia, Malawi raw materials, manufacture Sudan of tobacco. It holds Tanzania's rolled-up cigarette manufacture Tanzania Cigarette company holds 75% stake. Five factories in four countries including Sudan, South Sudan, Egypt. Flowers Classic Japan * Ethiopia, Kenya, Roses, clematis etc. Plant Tanzania imports. Flower import trading company Eating out ZENSHO Holdings Uganda, Kenya, Malawi Import and sale of fair /Distribution Tanzania, Rwanda trade of coffee and tea. Imported from Tanzania, Kenya, Uganda, Rwanda, Burundi, Congolese people, Malawi. Established Representative Office in Tanzania 2012 Textiles · IKEUCHI Tanzania Import organic cotton Clothing · ORGANIC* from Tanzania, Leather manufacture and sell towels in Japan Striped International Ethiopia Production of T-shirts * etc.in t local factories in Ethiopia to sell in Japan.

Location country Category Company name Business The East The South Smiley Earth * Uganda Import organic cotton, cotton yarn from Uganda, manufacture and sell towels etc. in Japan Taisho Boseki * Uganda, Sudan, Zimbabwe Import organic cotton raw Madagascar cotton mainly from Egypt, Uganda, Sudan, Madagascar, Zimbabwe etc., spinning and selling Hiroki Ethiopia Manufacture and sale of leather garments, bags, etc. of Ethiopian sheep skin. Factory in the country and imports to Japan. A local subsidiary was established in 2013. United Arrows * Kenya Present "Teget" fashion brands made by African artisans. Sale of various articles from Kenya, jackets from Burkina Faso in all stores Andu Amet Ethiopia Production and sales of Ethiopian sheepskin bags. Factory in the country and it imports to Japan. Subsidiary established in 2015 Lee Japan Uganda Manufacture and sale of jeans using organic cotton from Uganda. RICCI Uganda Production and sale of EVERYDAY bags with Ugandan fabric. We have a factory in the country and import to Japan. Subsidiary established in 2016 Source: "List of Japanese Companies in Africa Business 2017 Edition" Africa Business Partners Note: * indicates the type of business with distributors, importers, and partners.

2） Situation of local and foreign companies Major companies related to food and agricultural processing in Tanzania are organized by JICA's survey in 201411, JETRO 's list of "Africa major companies" in the 2017 Africa partner company survey and local hearing, shown below.

Table 3.5-10 Examples of food-related companies in Tanzania Number Field Company name Location Brands · products etc. of employees General METL GROUP 100 thousand Agricultural / food processing (MOHAMED people industry / tractor / textile / ENTERPRISES TANZANIA) (goal of2018) drinking water / edible oil / soap / bicycle, etc. AZAM (BAKHRESA Flour, Maize Bran GROUP) Biscuits & Bakery Products Soft Drinks, Fruit Juices Ice Cream, Bottled Water Grains Wella Highland Mbeya N.A Rice Kimo Super Rice Mills Dodoma 4 名 Rice Mbeya rice mill cluster Mbeya - Rice AZANIA Wheat flour, Grains Muzizima flour mil DSM 120 people Flour Coast Millers DSM 100 people Flour Edible oil Nyemo Dodoma 10 people Sunflower oil Three Sisters Dodoma Dodoma 10 people Sunflower oil Mt. Meru Millers Moshi 400 Sunflower oil people Mbeya sunflower producers Mbeya - Sunflower oil association Murzah Oil DSM 874 people Edible oil Dairy Shambani Graduates Morogoro 27 people Milk, yogurt products Tan Diaries DSM 26 people Milk, yogurt, cheese TANGA FRESH Dairy Products ASAS Dairy Products Meat Tanzania Meat company Dodoma 120 people Beef, mutton Tandan DSM 33 people Pork, pork sausage Sugar TPC Moshi 1,900 people Sugar

11 JICA, Data Collection Survey on Promotion of Agro-industry and Industrial Human Resource Development in Tanzania, 2014

Number Field Company name Location Brands · products etc. of employees Other Gardeners Morogoro 14 people Fruit juice Beverages Banana Investment Arusha 181 people Alcohol beverage Tanzania Distillers DSM 180 people Wine, spirits SAYONA Tanzania Beverages Afritea and coffee blenders 480 people Afritea(tea),Africafe （ Instant (1963) ltd coffee）Simba tea（tea）Clover (milk) /Vegeta (seasoning) DABAGA 200 people Chai Bora/ tea/coffee /DABAGA/sauce / Chutney / Ketchup / Jam / Vinegar Mek One General Traders 24 people Fruit juice (Ceres - South (Group:2,500 Africa) / Fuel, lubricant (Shell 名) Global Gas - Kenya) / others

Source: JICA "Data Collection Survey on Promotion of Agro-industry and Industrial Human Resource Development in Tanzania" 2014, JETRO "List of Major Companies in Africa - East Africa Edition - (Uganda, Ethiopia, Tanzania)" Provisioned by EBS Associates in April 2018

(4) Consideration for implementation of AIP project

In order to implement the AIP pilot project, we evaluated 11 products that Tanzania’s Government has positioned as a priority for the development of the industrial sector. Within these selection, food oil and fruit processing were selected as the most viable options. In the first field survey, Tanzania requested that the agricultural products in AIP should not be limited to one. Based on the results of the study, in the second survey, we suggested cooking oil, fruit processing and cashew nuts. In the 3rd field survey, further consultation with relevant organizations was carried out and the results of the evaluation are shown below.

Chart 3.5-11 ：Result of the evaluation on potential agriculture and fishery sector for the project Evaluation index General a b c D e Candidate sector evaluation Cotton and Clothing; ㇾㇾ Milk and Dairy Products; ㇾ Cooking Oil; ㇾㇾㇾㇾ ◎ Meat processing; ㇾ Fruit Processing ㇾㇾㇾㇾ ◎ Cashew; ㇾㇾㇾ〇 Sugar; ㇾㇾㇾ Integrated paddy processing ㇾㇾ Maize processing ㇾㇾ Marine production ㇾㇾㇾ Horticulture production ㇾㇾ Where: a makes reference to the products included in Tanzanian government policy. b makes reference to those products with a stable production and distribution volume. c means Tanzania domestic market is large / this product is produced in Tanzania but also imported. d makes reference to those products that are expected to expand sales to Tanzania's foreign markets (including Japan) e. makes reference to those products expected to utilize Japanese companies' technologies. Source: Study Team

Among the seven areas related to food processing which the government of Tanzania has positioned as a priority industrialization field, fruit and vegetable processing has high potential to be conducted in Bagamoyo area which is a candidate site for the pilot project. Bagamoyo is a place of fruit production, including pineapple, which is expected to lead to greater market value domestically and abroad by adding value of raw materials. It is considered that there is a high possibility of management with the proposed AIP, given that

local companies are also more than 50 companies in scale. In addition, the amount of sunflower production, as raw material and edible oil is increasing every year. There is also a local company of a certain size, which, by improving and concentrating processing technology, reduces palm oil that is currently highly imported and supplies it to the national market. As for cashew nuts, it is considered the most important cash crop in Tanzania. Currently raw materials are exported to India and Vietnam, processed and re-exported here, but it is possible to further improve the value of export through primary processing in Tanzania.

3.6 Study on project size and basic design

(1) Premises of the study of the business scale

In the above-mentioned BAGAMOYO SEZ MASTER PLAN, Bagamoyo SEZ maintenance scale is set based on the economic growth rate of Tanzania based on the following three scenarios (basic case, safety case, ambitious case). This estimation is based on the economic situation as of 2008, and the economic growth rate is 10%, 8%, 12%, respectively. Is considered that this estimation is reasonable because the real economic growth rate is stable, around 7% and the population growth rate is 3%. Therefore, according to this survey, considering the intention of the government of Tanzania, we will proceed to the examination based on the calculation of the basic case and the security (corresponding to the fifth year). In other words, it is assumed that the AIP maintenance area is from 100 to 200 ha, the number of companies is from 50 to 100, and the number of workers is from 6,000 to 13,000. Table 3.6-1： 3 cases of Bagamoyo SEZ maintenance scenario

Table 3.6-2：Bagamoyo SEZ scenario project scale

(2) Review of maintenance equipment in AIP

1） Basic Concept The AIP project consists of developing a set of basic facilities necessary for the manufacture of processed food products that can be sold not only in Tanzania but also in other countries, including the neighbouring countries of Tanzania. Its main components are roughly classified into the agricultural processing complex and the photovoltaic power generation equipment (solar panels and battery system) that supply the electricity used in the housing complex. In addition, after the construction of the AIP, the economic activities in the AIP area are assumed by the personnel and the neighbouring residents employed in the factory. Therefore, with the concept of "creating attractive AIP gathered by people", we will also consider complex facilities such as restaurants and modern facilities such as electric buses in the region (Figure 3-10). The scheme of each installation is organized as follows.

Figure 3-4 Image of facilities structured for AIP project

2） General outline of facility maintenance We will maintain the following facilities related to agricultural product processing park

① General description of facilities development ・ Basic : Electricity, water, gas, access roads, etc. infrastructure facilities ・ Waste management : Waste disposal facilities from each factory facilities ・ Technology : Facilities to provide training to improve abilities for tenant training center companies ・ Marketing services : Facilities to provide marketing information and ability improvement for tenant companies ・ Food hygiene : Facilities equipped with food laboratories to support obtaining management facilities authentications of TFDA and TBS ・ Storage facilities : Sharing facilities to store unprocessed agricultural products and processed products ・ Model food ：Food factory with most-advanced Japanese machineries processing factories

② Solar power generation equipment

・ Solar panel : Solar panels to make possible of long-term power generation with durability ・ Electric accumulator : E lectric accumulator system to realize reliable electric power system supply ・ Energy Management : System to realize electric power supply with stable quality System (EMS) through effective control of solar panels and electric accumulators

③ Other sites facilities

・ Complex facilities : Facilities with shopping areas for AIP workers and neighbor (Farm Gate Mall) residents, restaurants, exhibition areas of products manufactured within AIP ・ Others : EV buses for moving within the AIP , electronic money system capable to use within AIP

(3) Consideration of AIP Basic design

As mentioned above, based on the project scale that is expected on BAGAMOYO SEZ MASTER PLAN, as AIP project scale, we considered three scenarios of 140ha、180ha、220ha. The details of AIP maintenance are described in the following chart. The facilities related to agricultural processing included in each scenario and other site facilities share the same contents, but as the area is larger, the scale of solar power generating facility is bigger. Details of financial review on each scenario are described in Chapter 5.

Table 3.6-3 Proposed ideas of maintenance general outline in different scale of AIP projects Scenario 1 Scenario 2 Scenario 3 Total area 220ha 180ha 140ha Detailed maintenance contents Roads including storm water 12km 10km 8km Water supply 3km 3km 2km ①－1 Waste water/sewerage line 3km 3km 2km Basic Effluent system 155ha 126ha 98ha infrastructure Power supply 155ha 126ha 98ha facilities Street lighting 155ha 126ha 98ha Telecommunication 155ha 126ha 98ha Waste treatment plant aprx.3ha aprx.3ha aprx.3ha Administration/Multi-purpose aprx.2,0000m2 aprx.16,000m2 aprx.13,000m2 ①－2 Hall/ Farm Gage Mall Labor & Training + Small Office Other aprx.5,000m2 aprx.4,000m2 aprx.3,200m2 Complex facilities Advanced Model Factory 3 2 1 ②Solar Solar Panel 30 MW 25 MW 19 MW power Storage battery system 5 MWh 4 MWh 3 MWh generation system EMS System Structure ③ Other site facilities EV-bus system aprx.5 buses approx. 4 buses approx. 3 buses

The image of AIP project is shown in Figure 3-5.

Figure 3-5 Image of facilities structured for AIP project

(4) Solar power generation system

The proposed facilities are planned to have a polar power generation system, battery system and Energy Management System (EMS), as solar power generation plants to connect to the existing electric wires. Regarding the procured materials and systems, it is planned as below:

1） System design conditions ① Weather conditions The following weather conditions for the planning and design of this solar power generation system are: ・ Temperature Annual average temperature ： 26℃ Max. temperature in the past ： 32.1℃ Min. temperature in the past ： 18.1℃ Outside design air ： 0℃～50℃ temperature

・ Relative Humidity: RH 55-100%

② Overall system performance The performance of the whole system was planned expecting to continue operation for more than 25 years through conducting appropriate maintenance.

・ The system holds the function that can stop the system safely, in case that serious problems happen during normal operation ・ The system meets necessary international standards such as IEC standard. ・ Equipment and materials installed outdoors are planned to be anti-salt damage, dust-proof and sand-proof.

2） System contents ① Solar power generation system ⅰSolar Battery modules Types of solar cells constituting the solar cell module are crystal type (single crystal, polycrystalline), thin film amorphous type silicon, cells using compounds, or composite type. Each one has a different power generation efficiency, current-voltage characteristics, and temperature-maximum output characteristics. In order to ensure long-term performance and operation, the solar cell module adopted in this project is a product conforming to the international IEC standards, also certified by international certification body.

ⅱ Supporting frame There are supporting frames of fixed type and movable type which can track solar light. However, if we use the movable type, the amount of power generation increases, but the building cost gets high and the unit cost of power generation increases. Also, since it needs larger area to install than the fixed type, we are planning to use a fixed-typed frame in this project.

ⅲ Connection box / current collecting box The connection box / current collecting box shall consist of input/output terminals, disconnecting switch, circuit breaker, reverse current preventing diode, lightning arrestor etc. Considering that the installation site is close to the coastal area and also locates at a savannah area, the connection box / current collecting box installed outdoors should be made of salt-tolerant materials just as the gantry, with the carefully made structure which has feature of

waterproof and prevention of small sand intrusion.

ⅳ Power conditioning system for solar cell module (PCS) This PCS applies Japan's grid interconnection rules and shall have the following functions  Automatic operation / stop function  Maximum power follow-up control function  Single operation prevention function  Voltage increase suppression function  DC ground fault detection function  Grid interconnection protection function  Operation continuation function (FRT function)  Harmonic current suppression function  Communication with EMS function  Condition monitoring function

As PCS incorporates many electronic components as a control device, it is necessary to sufficiently consider the management of temperature and humidity. In addition, as for the box body of PCS installed outdoors, it is made of a material with salt resistance similarly to the cradle, and it is structured in consideration of countermeasures against ingress of sand to the inside and waterproof measures

② Electric management system This solar power plant is planned to be connected to the existing distribution system, and measures against system voltage and frequency fluctuations (countermeasures for short cycle variation) and power peak shift countermeasures due to sudden change in generated power due to change in solar radiation amount (Countermeasure for long cycle fluctuation). This electric accumulator system consists of rechargeable batteries, PCS, Battery Monitoring Unit (referred to as "BMU" below), etc.

ⅰRechargeable battery As a storage battery, in recent years, many kinds (lead battery, lithium ion battery, sodium sulfate (NAS) battery, redox flow batteries, etc.) have been developed and operated as storage batteries. Since each storage battery has different characteristics, the type of storage battery is not specified in this project in particular. However, since disposal of the replaced storage batteries is accompanied by a large environmental burden, we choose those that have established the disposal method or can guarantee the take-off disposal by the manufacturer.

When installing storage batteries (including PCS for storage battery and BMU), it is necessary to carefully control the temperature, humidity, dust, etc., so it is installed in the building (or within the container)

ⅱStorage battery PCS PCS has a function of charging and discharging the storage battery according to a command from the EMS and having a response speed sufficient for quickly canceling solar power generation output and short cycle fluctuation of the system.

ⅲ Battery Monitoring Unit (BMU) The BMU was planned as an object to monitor the charge / discharge state of the storage battery, PCS for storage battery, conditions such as voltage, current, temperature, etc, to efficiently operate the storage battery system and to support maintenance management such as display of abnormal parts

③ EMS (Energy Management System) EMS has a communication function with PCS for solar cell module, PCS for storage battery, and BMU, and has a system design that can realize integrated control of solar power generation system and storage battery system. In addition, as a maintenance support function, it was planned to detect failure or abnormality of each system and to provide a maintenance function of the storage battery based on information from the BMU.

④ Weather observation equipment Solar power generation changes its power generation amount depending on weather conditions. We planned weather observation equipment necessary for collecting weather data necessary for verifying the correlation between weather conditions and power generation.

⑤ Grid interconnection protection function If abnormality occurs in this solar power generation system and system side, it must detect this and stop the operation of the system promptly. In addition, it is necessary to reliably detect independent operation in any driving situation and immediately stop the operation of the system. For this reason, the grid interconnection protection device in the photovoltaic power generation system is to be established according to Japan's "grid interconnection technology requirement guidelines for ensuring electric power quality" and "grid interconnection rules".

⑥ Measures against lightning Measures against lightening are aimed at protecting facilities and equipment of this solar power generation plant from lightning surge due to direct lightning strikes

Chapter4. Environmental and social aspects

4.1 Policies, laws, and regulations related to environmental and social considerations

(1) Overview of policies, laws, and regulations related to environmental and social considerations

The policies, laws, and regulations related to environmental and social considerations that are prescribed in Tanzania are shown in Table 4.1-1. An overview of the particularly important laws and regulations is described below.

Table 4.1-1 Policies, laws, and regulations related to environmental and social considerations

Category Name Year of establishment

National Environmental Policy 1997 National Forest Policy 1998 National Water Policy 2002 Wildlife and Wetland Policy 2007 Agriculture and Livestock Policy 1997

National Land Policy 1995 (revised in 1997) Policy National Tourism Policy 1998 National Human Settlements 2000 Development Policy Construction Industry Policy 2003 National Gender Policy 2002 Women and Gender Development 2000 Policy Environment Management Act 2004 The Environmental (Registration of 2005 Environmental Experts) Regulations Strategic Environmental Laws and regulations 2008 Assessment Regulations The Environmental Impact 2005 Assessment and Audit Regulations National Environmental Standards 2005

Category Name Year of establishment

Forestry Act 2002 Wildlife Conservation Act No.5 2009 The Land Act 1999 Village Land Act 1999 The Land Regulations 2001 The Land Use Planning Act 2007 The Land Acquisition Act 2002 The Graves Removal Act 1969 Water Resources Management Act 2009 The Urban Planning Act 2007 The Road Act 2007 The Occupational Health and Safety Act 2003 Fisheries Act 2003 Source: "Tanzania Environmental and Social Consideration Profile" Prepared by JICA Study Team on 2011

(2) Environmental laws and regulations related to this project in particular

① Environment Management Act The Environment Management Act was enacted in 2004 as a revision of the National Environmental Management Act, 1983 as the basic law for environmental conservation in Tanzania. This law comprehensively prescribes legal systems and implementation systems for purposes including pollution prevention, waste management, establishment of environmental standards, and citizen participation in environmental conservation in an aim for sustainable environmental management. Environmental impact assessments are prescribed in this law, and all businesses have an obligation to conduct an environmental impact assessment if they are conducting a development project before the start of the project.

② The Environmental Impact Assessment and Audit Regulations This law prescribes the procedures for the implementation of environmental impact assessments (EIA) as an important policy aimed at appropriate environmental management and the sustainable use of the natural environment in Tanzania. Specifically, it indicates matters including the procedures for approval applications, projects that require an EIA, and the assessment items and matters that

should be included in an EIA. Note that both the energy and food and beverage industry categories in this AIP business fall under Type A under this law, so an EIA needs to be conducted for this project.

③ The Land Act This is a basic law on land that prescribes matters such as land management and arbitration for land disputes for land other than village land. This law comprehensively prescribes matters related to land use and land ownership including land use classifications, land management procedures, land occupancy rights, and land lease agreements. Although land expropriation has been completed in the candidate sites for the implementation of this project, it could be necessary to conduct procedures in accordance with this law in some cases.

4.2 Practical procedures in environmental impact assessments

(1) Environmental management related organizations

The Environment Management Act prescribes the following related organizations that are responsible for environmental management in Tanzania.

Table 4.2-1 Environmental management related organizations Name Role Minister Responsible for Responsible for issues related to the environment and policy Environment guidelines overall that are enacted for sustainable environmental management in Tanzania. National Environmental Provides advice related to environmental conservation management Advisory Committee to Minister Responsible for Environment and other related ministries and institutions. It is formed of experts with experience in diverse environmental conservation fields in the private and public sector and civic organizations. Director of Environment Makes arrangements for various environment-related activities, provides advice to the government related to international agreements, and issues reports related to the environment in Tanzania.

National Environnent Responsible for the implementation of environmental impact Management Council assessment (EIA) screening and monitoring, promotion of private (NEMC) sector participation in decision-making related to the environment, and supervision of and adjustments for environmental related matters prescribed as the role of the council. Sector Ministries Sector Ministries fulfill environment-related functions and responsibilities in each ministry based on the Environment Management Act and other related laws through the Sector Environmental Section established in each ministry. Regional Secretariat A Regional Environmental Management Expert assigned by the Minister Responsible for Environment is assigned to local governments and provides advice on matters related to the implementation of the Environment Management Act. Local Government Authorities Environment Management Officer is assigned to each prefecture, city, and town, and provides advice on the environment to the Environmental Conservation Committee. Source: Environmental Management Act (2004)

(2) Procedures relating to EIA implementation

It is necessary to take the following 9 steps for the EIA.

Table 4.2-2 Procedures relating to EIA implementation Contents of Details Time required procedures 1. Registration Submit the application for EIA certificate issuance and the Preliminary Environmental Assessment Registration Form to NEMC. The ‐ application fee is TZS 70,000 (approximately USD 35). 2. Screening Submit three copies of the application form and Approved by the Council ten copies of the project brief to NEMC. The within 45 days from the contents of the project brief must comply with the date of submission. EIA and Audit Regulations of 2005.

3. Scoping Contract an environmental expert/EIA consultant to prepare a Scoping Report and Terms of TORs are approved by Reference (TORs) for conducting the the Council within 14 Environmental Impact Assessment (EIA), and days from the date of submit them to NEMC for review and approval submission. before the commencement of the EIA study. 4. Environmental Conduct EIA study (by the consultant) according assessment to the approved TOR and adhere to the Environmental Management Act and The ‐ Environmental Impact Assessment and Audit Regulations. 5. Review Submit an Environmental Impact Statement (EIS) The Council shall, within to NEMC for review by a Cross-sectoral 60 days following Technical Advisory Committee (TAC). submission of EIS carry out its review. 6. Recommendations of The consultant will make improvements of the the TAC EIS by incorporating all comments and ‐ recommendations raised by the TAC. 7. Submission to the The consultant will submit the improved (final) Minister for version of the EIS to NEMC for final scrutiny. ‐ Environment The NEMC will forward recommendations to the Minister for Environment for final approval. 8. Approval of the EIS Upon approval by the Minister, it will be returned The Minister will to NEMC. approve or disapprove the EIS within 30 days of submission. 9. Issuance of EIS The EIS Certificate will be issued with the Certificate general and specific conditions that must be adhered to.

Source: NEMC, Procedures for Carrying out Environmental Impact Assessment and Environmental Audit

(3) Procedures relating to SEA implementation

In Tanzania, a Strategic Environmental Assessment (SEA) is conducted in advanced of the EIA as prescribed in Article 104 and 105 of the Environmental Management Act. A SEA is conducted in the following seven steps according to the SEA Guidelines that were enacted in 2017 by the Director

of Environment.

① Screening: Verification of the necessity for a SEA ② Scoping and TOR creation: Verification of the scope covered by SEA, creation of detailed TOR, submission to and approval by the Director of Environment ③ SEA report draft creation: Assess environmental impact and create an SEA report draft. ④ Public consultation: Gather opinions on the SEA results through a stakeholder’s workshop, and submit a SEA report draft that has been revised based on these opinions to the Director of Environment. ⑤ Revision of SEA report draft: Submit the final SEA report that has been revised based on comments from the Technical Assessment Committee to the Director of Environment. ⑥ Approval of the SEA report: The SEA report is approved by the Minister Responsible for Environment. ⑦ Monitoring: Conduct monitoring so that there is no major environmental damaged in the approved policy, plan, project, etc.

4.3 Analysis of current environmental and social conditions

(1) Current state of natural environment in the Bagamoyo SEZ studied by this project

The grounds of the Bagamoyo SEZ are covered with herbaceous plants and a sparse distribution of shrubs. Tree species that residents find useful include coconut (Cocos nucifera), mango (Magnifera Indica), cashew nut (Anacardium occidentale), neem (Azadirachta indica), and ebony (Diospyros crassiflor). In addition, there is a wide variety of vegetation in the valley along the river, and mangrove forests cover the coastline for 100 km. It is inhabited by animals including birds, deer, monkeys, dogs, livestock, and snakes Marine organisms can also be seen in coastal areas around the mangrove forests, where local residents fish for and sell shrimp (Penaeus monodon, P. indicus), crab (Scylla serrata), and fish. The Bagamoyo SEZ contains a total of 1,200ha of land that has not been developed because it is not suitable for building houses, and this land includes swamps, ponds, saltpans, mangrove forests, lowland, and small rivers. While there is also a small forest reserve, there have been no reports that it is inhabited by endangered species.

Mangrove forests next to the sea

Vegetation in the Bagamoyo SEZ

(2) Current state of the social environment in the Bagamoyo SEZ studied by this project

The land use conditions (as of 2013) in the Bagamoyo SEZ are displayed in Figure 4-1. There are five main villages, Zinga and Kiromo that are located along the main road to Bagamoyo Town, and Pande, Kondo, and Mlingotini that are located along the seaside. Although commercial activities are not very active in the area, at least 80% of the residents living in area are involved in agriculture. They grow maize and cassava as subsistence crops and coconuts, cashew nuts, and mango as cash

crops. Resettlement from the Bagamoyo SEZ grounds has been gradually underway, and resettlement is already completed at the AIP project planned site. While there is still land that seems to be being used as agricultural land, because this is only a very small part of the land scheduled for development, it is not likely that problems with residents will occur in the future.

AIP project candidate site

Source: BAGAMOYO SEZ MASTER PLAN Figure 4-1 Land use conditions in the Bagamoyo SEZ (as of 2013)

Source: BAGAMOYO SEZ MASTER PLAN Figure 4-2 Bagamoyo SEZ infrastructure development plan

AIP project planned site

4.4 Expected impact from P4F project implementation

The Tanzanian Government already conducted the preliminary environmental and social assessment and strategic environmental assessment (SEA) when the BAGAMOYO SEZ MASTER PLAN was created and revised. In addition, expected impact from project implementation was also considered in light of the details of the project being proposed. The environmental checklist based on the JICA Guidelines for Environmental and Social Considerations is shown in the appendix.

(1) Pollution control measures and impact on the natural environment

1） During the construction of AIP

① Air pollution There is a possibility of air pollution from the operation of construction machinery and the conveyance of materials through construction vehicles, etc. at the time of AIP construction. Because the project site is located away from housing areas, air pollution could mainly have an impact on construction workers, and sufficient countermeasures are necessary.

② Noises and vibrations There is a possibility of noises and vibrations from the operation of construction machinery and the conveyance of materials through construction vehicles, etc. at the time of AIP construction. Because the project site is located away from housing areas, noises and vibrations could mainly have an impact on construction workers, and sufficient countermeasures are necessary.

③ Water pollution There is a possibility that during the excavation of soil, the occurrence of turbid water from water erosion to embankments, fuel leaks during the operation of construction machinery, etc. happens at the time of AIP construction causing pollutants to flow out into rivers and coastal areas. Appropriate treatment of the turbid water that occurs is necessary.

④ Soil degradation Excavation and soil preparation will be conducted to improve roads and canals, and at that time, soil degradation could be caused by fuel leaks from construction machinery. In addition, soil degradation could advance from alterations to the ground surface.

⑤ Protected areas The 9,800 ha covered by BAGAMOYO SEZ MASTER PLAN are located along the coast and include mangrove forests. In addition, there is a small forest reserve located in Mbegami in the northeastern part of Bagamoyo SEZ. Although the AIP candidate site in this proposal is located away from this protected area, it is necessary to take sufficient care while taking into consideration the impact development of existing green areas can have on the local ecosystem.

⑥ Fauna & flora The presence of the endangered species in the area covered by this project has not been reported. However, the removal of shrubs and bushes and alterations to existing vegetation due to soil preparation could have an impact on fauna & flora.

2） After implementation of the project

① Air pollution There is a possibility of air pollution from an increase in transport vehicles from the start of the AIP project. Because the project site is located away from housing areas, air pollution could mainly have an impact on AIP workers, and sufficient countermeasures are necessary.

② Noises and vibrations There is a possibility of noises and vibrations from an increase in transport vehicles and plant operation from the start of the AIP project. Because the project site is located away from housing areas, noises and vibrations could mainly have an impact on AIP workers, and sufficient countermeasures are necessary.

③ Water pollution Although wastewater will be generated from the operation of plants from the start of the AIP project, because each plant is obligated to conduct appropriate treatment and centralized treatment will be conducted by the AIP before discharge to rivers, etc., the impact will be limited.

④ Climate change and transboundary pollution Greenery that absorbs CO2 will be reduced as a result of AIP construction. In addition, CO2 emissions from fuel consumption will occur when plants are operated as a result of the start of the AIP project. On the other hand, it is expected that it will be possible to control CO2 emissions from energy use through the introduction of solar power and battery system, particularly during the day. The details are described in 4.5.

(2) Impact on the social environment

① Resettlement The AIP site has been acquired by EPZA, so there will be no new resettlement.

② Employment The employment of construction workers can be expected from AIP construction. The revitalization of the regional economy can be expected from the start of the AIP project.

③ Land use The authorization of the Tanzanian Government has already been received for use of the AIP site as an SEZ site, and the development master plan has also been formulated. The current greenery and uncultivated land will be converted into land for industrial and commercial use along with AIP construction.

④ Water resources A certain amount of industrial water supply will be required along with AIP construction and the start of the project. In the area surrounding the project site, a pipeline that supplies water from the Ruvu River basin that is managed by DAWASA to the northern part of Dar Es Salaam has been developed up to the Bagamoyo SEZ site. The future plan is to use the water from the current pipeline combined with ground water to supply the water according to demand at the SEZ site, and appropriate management and use of water resources is necessary.

⑤ Historical and heritage sites The Bagamoyo SEZ is an area with high historical cultural values including the Kaole archaeological site in the northeastern part, and use as a tourism resource can be expected. Meanwhile, differing tribes at towns including Zinga, Kiromo, Pande, Kondo, and Mlingotini in the SEZ have their own cultures and customers and it is necessary to make efforts to safeguard their holy sites. Because their holy sites including burial grounds are not clearly displayed, sufficient care is required at the time of development.

⑥ Gender recognition As described above, new employment in the region can be expected from the AIP project. Opportunities for employment and capacity building for women are particularly emphasized in the BAGAMOYO SEZ MASTER PLAN. Women will be able to work not only at plants in the AIP, but also at small businesses (restaurants, retail stores, etc.) during the AIP construction project period, as well as businesses for AIP employees after the start of AIP operations (restaurants, retail stores, washing, cleaning, etc.), and it is expected that they will be able to increase their income and skills in

this manner.

⑦ Infectious diseases, etc. (HIV/AIDS) With the influx of workers from other regions at the time of AIP construction and the start of the project, there will be a possibility of the outbreak of infectious diseases. During the construction period, the appropriate health management of construction workers will be necessary, and after the start of the AIP project, appropriate pest control activities will be necessary, including encouraging businesses to implement health management for plant workers.

4.5 Environmental Benefit from the project implementation

Because it is assumed that power generated from a solar power system will be used in this project as a substitute to grid power from fossil fuels, a reduction in greenhouse gas emissions can be expected. On the other hand, it is also necessary to take into consideration the impact from the reduction in existing green areas from AIP development.

[Calculation of reduction in greenhouse gas emissions] Baseline annual emissions (BEY) is that amount of greenhouse gas emissions generated from grid power from fossil fuels in Tanzania. The scale of the solar power generation system that introduction is being considered for through the AIP is about 20 to 30MW. Based on the calculation formula for the annual expected electricity output indicated in the Solar Power Generation System Introduction Guidebook from the New Energy and Industrial Technology Development Organization (NEDO), electricity output of approximately 28,000MWh from a 20MW solar power generation system is expected in Tanzania (reference formula 1). In addition, a reduction of greenhouse gas emissions by approximately 14,000tCO2/year can be expected from the use of power gained through solar power generation.

[Reference formula 1] Ep ＝H×K×P×365÷1

Ep : annual expected electricity output (kWh/year) H : average amount of solar radiation per day on installed surface (kwh/m2/day)

K : loss coefficient (approximately 73%) P : system capacity (kW) 365 : number of days per year 1 : solar radiation intensity in standard state (kW/m2)

Accordingly, the annual electricity output (Ep) that can be gained from a 20MW solar power generation system in Tanzania is calculated as follows.

Ep ＝5.22* (kWh/m2/day)×73% ×20,000(kW) ×365 ÷1 ≒28,000 (MWh) *Refer to “Surface Meteorology and Solar Energy” (NASA)

Because power generated from a solar power system will be able to substitute for grid power from fossil fuels, the amount of reduction in greenhouse gas emissions can be calculated through [reference formula 2]

[Reference formula 2]

BEEN,y ＝BE elec,y＝EGｙ×EFelec

BE elec,y : baseline annual emissions from power generation (tCO2/year)

EGy : annual electricity output from solar power generation (MWh)

EFelec : power emission factor (tCO2/MWh)

BEEN,y ＝BEelec,y ＝28,000(MWh)×0.502※(tCO2/MWh) ≒14,000(tCO2) *Refer to “J-MRV Guidelines July 2016” (JBIC)

Meanwhile, the impact from the reduction in existing green areas at the time of construction can be estimated from the change in the carbon accumulation, and calculated according to [formula 3].

[Reference formula 3]

CLB = BTotal × A × CF × 44/12

BTotal = BAG + BBG

BBG = BAG × R

CLB : carbon accumulation per unit area for green areas, etc. (tCO2/year) A : area of green areas, etc. (ha) CF : carbon content of trees in green areas, etc. (t-C/t-dm)

(Default value: 0.5, from IPCC GPG-LULUCF)

BTotal : total biomass in green areas, etc. (t-dm/ha)

BAG : above-ground biomass in green areas, etc. (t-dm/ha)

BBG : below-ground biomass in green areas, etc. (t-dm/ha) R : ratio of below-ground biomass to above-ground biomass (below-ground/above-ground)

CLB = BTotal × A × CF × 44/12 = 6.2(t-dm/ha) × (1+0.5*) × 180(ha) × 0.5* × 44/12 ≒3,069 (tCO2/year)

*Refer to "LULUCF Good Practice” (IPCC)

Based on the above, if the impact from the reduction in existing green areas at the time of construction is subtracted from the effect of the substitution of grid power from fossil fuels with solar power generation, the reduction in greenhouse gas emissions for the final proposed project is as follows.

PEEN,y ＝BEEN,y ―CLB

＝10,987 (tCO2/year)

Parameter Description Value Unit Source A Land area of organic soils 120 ha Study team

BAG Above ground biomass Tropical moist & 6.2 t-dm/ha Table 3.4.2, IPCC wet GPG-LULUCF R Root-to-shoot ratio Woodland/savanna 0.5 Table 3.4.3, IPCC GPG-LULUCF CF Carbon fraction of dry matter Default value 0.5 t-C/t-dm IPCC GPG-LULUCF

Chapter5. Financial Viability

5.1 Project cost estimation

Table 5.1-1 Breakdown of project development costs (180ha) Cost Facility overview (Million USD) (1) Critical infrastructure development 51.5 (Roads, drainage facilities, water supply and sewerage systems, power supply, streetlights, communication lines, and sewage treatment facilities in the AIP) (2) Solar power generation system (25MW) 29.2 (3) Others facilities in the AIP 15.5 (Model food plant, EV buses, security systems, etc.) Contingency - ((1) + (2) + (3) × 5%) and facility supervision costs ((1) + (2) 12.5 + (3) × 8%) Total 108.7

5.2 Preliminary financial analysis

(1) Initial Conditions

The financial analysis considered the following conditions: ① Land expropriation/resettlement Expropriation by the Tanzanian Government is a condition for the AIP development land, and this project does not include any costs for land expropriation or resettlement. ② Industrial park lease/sales price The assumed lease/sales price indicated in the BAGAMOYO SEZ MASTER PLAN of USD 115/m2 was used. ③ Power supply from solar power generation system No power sales will be conducted using the power generated from the solar power generating

system, and it will be used for in-house consumption in the AIP. Note that while the amount of power generated is as described above, it has been assumed that power generation efficiency will decline by 1%. ④ AIP occupancy rate An occupancy rate of 100% by business tenants is expected by year five.

(2) Calculation of financial internal rate of return (FIRR)

As a preliminary financial analysis, the financial internal rate of return (FIRR) was calculated for the purpose of assessing the profitability of the project itself, regardless of the business scheme and funding scheme. It is possible to consider the efficiency of the capital invested in the project based on the results of FIRR calculation. The results of FIRR calculation are indicated in the Table below.

Table 5.2-1 FIRR calculation results (development of 180ha) (mil USD) Year Costs Benefits Net Invest O/M Total sale solar Total Cash Flow

2018 2019 0.0 1 2020 21.8 21.8 -21.8 2 2021 27.2 27.2 0.0 -27.2 3 2022 43.5 43.5 0.0 -43.5 4 2023 16.3 1.1 17.4 42.9 2.8 45.7 28.3 5 2024 1.1 1.1 28.6 2.8 31.4 30.3 6 2025 1.1 1.1 28.6 2.7 31.4 30.3 7 2026 1.1 1.1 28.6 2.7 31.3 30.2 8 2027 1.1 1.1 14.3 2.7 17.0 15.9 9 2028 1.1 1.1 2.7 2.7 1.6 10 2029 1.1 1.1 2.6 2.6 1.6 11 2030 1.1 1.1 2.6 2.6 1.5 12 2031 1.1 1.1 2.6 2.6 1.5 13 2032 1.1 1.1 2.6 2.6 1.5 14 2033 1.1 1.1 2.5 2.5 1.4 15 2034 1.1 1.1 2.5 2.5 1.4 16 2035 1.1 1.1 2.5 2.5 1.4 17 2036 1.1 1.1 2.5 2.5 1.4 18 2037 1.1 1.1 2.4 2.4 1.3 19 2038 1.1 1.1 2.4 2.4 1.3 20 2039 1.1 1.1 2.4 2.4 1.3 21 2040 1.1 1.1 2.4 2.4 1.3 22 2041 1.1 1.1 2.3 2.3 1.3

23 2042 1.1 1.1 2.3 2.3 1.2 24 2043 1.1 1.1 2.3 2.3 1.2 25 2044 1.1 1.1 2.3 2.3 1.2

26 2045 1.1 1.1 2.2 2.2 1.2 27 2046 1.1 1.1 2.2 2.2 1.1 28 2047 1.1 1.1 2.2 2.2 1.1

29 2048 1.1 1.1 2.2 2.2 1.1 30 2049 1.1 1.1 2.2 2.2 1.1

108.8 29.4 138.2 143.0 209.7 71.5 FIRR = 13.1%

(3) Results of the financial analysis

An overview of the results of the financial analysis for this project is shown below. Note that the discount rate of 6% indicated in the BAGAMOYO SEZ MASTER PLAN will be used and future inflation rates will not be taken into consideration.

Table 5.2-2 Results of financial analysis (180ha) Analysis items Results IRR 13.1% NPV USD 25,559,000 B/C 1.2 Year of recovery of Year 7 investment

The results of financial analysis for this project show that the IRR and NPV are positive, and the B/C is at least 1. In addition, because the recovery of investment period is within 10 years, the project can be correctly eligible as a target for investment. However, taking into consideration the geographical distance from Japan and Tanzania’s country risk, it is not likely that this project would be viewed as a project for private sector investment based on this financial assessment.

(4) Sensitive analysis

As described above, it has been confirmed that the project can be considered as an investment project based on general conditions (this will be the base case). However, because of the existence of the risk of an increase in development costs for the project, a sensitivity analysis to fluctuations in the development cost was conducted. In this analysis multiple scenarios were considered taking into consideration different development scale and AIP occupancy rate.

① Analysis based on differences in development costs The FIRR was analyzed for cases in which development costs are decreased by 10%, increased by 10%, and increased by 20%.

Table 5.2-3 Analysis based on differences in development costs Differences in FIRR development costs 10% decrease 16.7% Base case 13.1% 10% increase 10.1% 20% increase 7.6%

As a result of the analysis, it was found that if project development cost increase by 10%, the FIRR would increase by 10%, but if development costs increase by 20%, the FIRR would fall below 8%, making it not appropriate as an investment project.

② Analysis based on differences in scale of development In terms of development scale, FIRR was analyzed for scenarios in which the scale is 40ha larger (220ha) and 40ha smaller (140ha) than in the base case of 180ha.

Table 5.2-4 Analysis based on differences in scale of development Differences in scale of FIRR development 140ha (-22%) 12.8% 180ha (base case) 13.1% 220ha (+22%) 13.5%

As a result of the analysis, it was found that while the FIRR will increase as the scale of development is larger, the scale of development does not contribute significantly to the rate of return.

③ Analysis based on differences in the occupancy timing. The FIRR was analyzed for scenarios assuming that the occupancy rate would reach 100% in 5 years (base case), 7 years, and 10 years.

Table 5.2-5 Analysis based on differences in the occupancy timing. Differences in development timing FIRR 100% occupancy in year 3 26.8% 100% occupancy in year 5 13.1% (Base case) 100% occupancy in year 7 10.6% 100% occupancy in year 10 9.2%

As a result of the analysis, it was found that because the impact of the AIP occupancy timing on profitability is relatively high, promptly improving the AIP occupancy rate is important for improving the profitability of the project.

Chapter6. Project implementation schedule

Figure 6-1 Project implementation schedule (planned)

Table 6.1-1 Overview of assumed activities and time frame Activity Activity details Time frame Financing ・ Study of different funding sources by local Less than 1 year government institutions such as MoFP and MIT ・Adjustments with donor countries or international cooperation organizations, etc. ・Preparation of inspection documents for financing ・Assistance request Design and ・Implementation of F/S 2 to 3 years construction ・Selection of consultants ・ Creation of bid documents for selection of construction vendor, implementation of bidding ・Construction ・ Establishment of AIP operations structure and technical cooperation Start of AIP ・Start of operations Semi-permanent operations

Because the financing phase includes a series of processes from the completion of the survey project to the start of the project such as consensus building among the relevant agencies, preparation of documents and assistance request for funding, inspections by International Cooperation Agencies, Development Bank, etc., and the signing of loan contracts, at least approximately one year would be necessary.

Chapter7. Implementation capacity of the executing agency by

Tanzania

7.1 Outline of the operation agencies in Tanzania

The following 11 Tanzanian organizations have potential to be executing agencies for this project.

① Ministry of Industry and Trade (MIT) MIT mission is to promote industrial development and promote commerce and investment. The agency aims to establish a vision of "creating a strong and competitive industrial base that contributes to integral and sustainable economic growth". The Export Processing Zone of Tanzania (EPZA), the Tanzanian Investment Center (TIC), the National Development Corporation (NDC), the Industrial Research and Development Organization, Tanzania (TIRDO) and also the Small Industry Development Organization (SIDO) are under MIT jurisdiction.

② Tanzania Export Processing Zone Agency (EPZA) EPZA is a government agency established in 2007, under Section 12 of the Export Processing Areas Act, with the purpose of promoting investment in the Special Economic Zone (SEZ) and Export Processing Zones (EPZ) in the mainland of Tanzania. Within the SEZ, investments towards the development of industrial parks, free trade zones, export processing zones, technology parks, etc. are expected. Around 20 EPZ/SEZ development sites including Bagamoyo SEZ and Morogoro SEZ are insured throughout Tanzania. In order to attract monetary investments to the EPZ/SEZ, various incentives are offered to investors, such as reduction of corporate taxes, taxes on imports and more.

③ Ministry of Agriculture (MoA) MoA is an administrative agency that provides quality services to the agricultural sector, strengthening the capacity of local governments and contributes to sustainable agricultural production by the private sector.

④ Ministry of Livestock and Fishery Development (MLFD) MLFD is an administrative agency responsible for the general activities of the fisheries and livestock sector, such as the formulation of policies, the monitoring of livestock and fishing

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producers, infrastructure development, research activities, etc. The agency has a vision towards the "Development of jobs, the lives of people, national income, food security and the sustainable commercialization of the livestock and fisheries industry". In addition, work is being done to strengthen the capacity of local governments to use sustainable livestock and fisheries resources.

⑤ Tanzania Investment Center (TIC) TIC is a Government agency established under the Investment Law of Tanzania in 1997. Its objective is to improve the regional competitiveness of Tanzania as an investment destination for foreign and domestic investors interested in Africa. TIC established a one-stop service in order to assist investors and provide registration support for companies and assist with the process of obtaining various business permits and licenses. In addition, promotional activities for investments are being implemented and carried out by the board of related policies of the government of Tanzania.

⑥ National Development Corporation (NDC) Founded in 1962, NDC originally called the Tanganyika Development Corporation (TDC), is an institution established to take over businesses under the jurisdiction of the Colonial Development Cooperation (CDC) founded in 1950. NCD is the only government-affiliated organization in the world where Tanzania can establish joint ventures with private companies, and the mission is to contribute to Tanzanian industrial development through a partnership with private sectors.

⑦ Tanzania Industrial Research and Development Organization (TIRDO) TIRDO is an organization affiliated with Tanzanian Government in 1979 with the aim of strengthening the industrial competitiveness of Tanzania. Under the association of the national manufacturing industries, research, development and technical training of industrial products carried out using local materials. In addition, are listed as "previous research topics" such as agricultural product processing technology and "renewable energy".

⑧ Small Industries Development Organization (SIDO) SIDO is a Government affiliated organization established in 1973 to promote SMEs. The organization provides technical training, management guidance and financial services necessary for business management of small and medium enterprises in Tanzania. In addition, SIDO has created and is operating industrial parks for small and medium enterprises within small districts of each region. The organization focuses on improving the business

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environment using commercial site loans that are cheaper than market price and is also working on the development of industrial groups.

⑨ Tanzania Food and Drug Administration (TFDA) TFDA is a Government agency under the jurisdiction of the Ministry of Health, Village development, Gender, Elderly and Children. Based on the "Tanzania Food, Drugs, and Cosmetics Act" enacted in 2003, it manages the safety and quality of foods, medicines, cosmetics and medical equipment. The agency is tasked with the supervision of food handlers to take appropriate measures to ensure safe food production and high quality. This also includes ensuring the safety of facilities used for the manufacturing, storage, and sales distribution of food in order to protect the safety of consumers.

⑩ Tanzania Bureau of Standards (TBS) TBS is a Government affiliated organization that reports to the Ministry of Industry and Commerce (MIT). In accordance with the standard law established in 1975, the agency was established as one of the Tanzanian government’s efforts to strengthen the economic industry, trade and industrial sectors in Tanzania. In particular, the agency’s objective is to control the quality of all industrial products and promote the standardization of product safety standards.

⑪ Vocational Education and Training Authority (VETA) VETA is a public agency established in 1994 under the law of education and professional training. The history of VETA dates back to the learning regulations established in 1940, to carry out vocational training for industrialization. There are 29 education and vocational training centers throughout Tanzania, with professional training focused on developing high quality human resources that can solve industrial technology issues and adapt to the needs of the demanding labor market.

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7.2 Organizational structure for project implementation in Tanzania

(1) Outline of the Organizational Structure

Figure 7-1 Implementation plan for the AIP project (made according to consultations with the government of Tanzania)

MIT and EPZA play a key role in this AIP project. When this project is implemented with loans from Japanese government or international organizations, although MOFP will be responsible of international issues, MIT will oversee the entire project. Meanwhile, EPZA, which is a subsidiary of MIT, will be responsible for the actual operation of the project. EPZA owns the lands of Bagamoyo SEZ and is responsible for the entire project process, from financing, development of AIP, operational management, and project maintenance using the funds acquired for the project. Cooperation between governments will be handled by MoFP and MIT, but the cooperation with third parties involved in the project, such as engineers and investors involved in the development and operation of AIP, land acquisition, infrastructure improvement outside of AIP, etc. will be carried out by EPZA. Along with attracting tenants and contracts, EPZA will provide a comprehensive service to domestic and foreign investors so that businesses within AIP can be implemented without problems. For the parties related to the development and operation of the infrastructure, EPZA will conduct respectively based on the contract between the commercial operator of EPC and the operator.

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Local government agencies related to the AIP project will support EPZA in accordance with the specialized field of each agency. MoA and MLFD will provide advice regarding technology on food processing in AIP as a special agency for agriculture, livestock and fisheries sector. Both agencies have accumulated information on food processing technology and have established networks with national processing companies. Based on these experiences, it participates by attracting investors to AIP, providing information on the products that will be processed in AIP, technical support, development of human resources, etc. TFDA and TBS will provide investors with professional guidance and support to obtain licenses and certifications smoothly without problems including preparation of facilities that can produce high quality products. VETA will carry out the professional training of workers programmed to work in accordance with the needs of the companies that invest in AIP and will develop the human resources responsible for manufacturing high quality products and goods for export. Based on current research results, TIRDO will provide technical advice and guidance on agricultural product processing technology, etc. to companies within AIP. TIC and NDC will support the AIP project by providing support to national and foreign investors together with EPZA based on experiences acquired abroad. SIDO will provide information using its network of SMEs that will make up the majority of manufacturing industries in Tanzania, including information regarding companies related to agricultural processing that have achieved good results in industrial estates, SIDO properties, companies that will be interested in joining the AIP, and the methods for the development of human resources in Tanzania

(2) Industrial management experience of EPZA

EPZA is divided into three departments, "Department of Planning and Development," "Department of Investment Promotion," "Department of Accounting and Administration." These 3 departments are very important for the present project.

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Figure 7-2 Organization structure of EPZA Source: EPZA website

The following table shows six ZPE / ZES whose operations have already started on EPZA properties.

Table 7.2-1 Operation started by EPZ / SEZ EPZ/SEZ names Managers Kamal Industrial Park SEZ Private business operator Global Industrial Park SEZ Private business operator Millienium Business Park Uncertain Hifadhi EPZ Government of Tanzania Kisongo EPZ Private business operator Benjamin William Mkapa SEZ Government of Tanzania

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Among them, Hifadhi EPZ and Benjamin William Mkapa SEZ are developed by the Tanzanian government, EPZA manages and operates plants such as clothing factories and food processing factories which are in operation.

Image of management plants Source：INVESTMENT OPPORTUNITIES IN EPZ AND SEZ – TANZANIA, EPZA

The management of EPZA has completely started in 2008. The results that have been achieved until 2015 are as follows12.  Active operating companies in EPZA: 118 companies  Total export value: $ 981 million (7 years total)  Direct employment: 31,923 people  Total investment: 1 trillion 291 billion dollars (7 years total)

12 INVESTMENT OPPORTUNITIES IN EPZ AND SEZ – TANZANIA, EPZA

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Chapter8.Technology advantage of Japanese companies

8.1 Expected participation of Japanese companies

The proposed Agro-Industrial Park (AIP) project must be implemented by EPZA as the executing agency of the project, and it will receive ODA loan projects from the Government of Japan and loans from the AfDB and other international cooperation agencies / development banks, etc. In this project, Bagamoyo SEZ was selected as the target area for the pilot project. However, in addition to Bagamoyo SEZ, Tanzania has designated 20 SEZ / EPZ places where EPZA is proceeding in the acquisition of land. The development of Special crop processing zones (SCPZ) with partnership of the AfDB is also expected. The participation of Japanese companies can be expected for the construction of infrastructure related to AIP by EPC contracts with EPZA, for the supply of equipment and materials and for equipment maintenance work under contract with EPZA. In addition, in response to EPZA requests, it may be possible to support the administration of AIP and new business development by supporting the supply chain. . For the infrastructure related to the AIP, it is necessary to prepare basic infrastructure (electricity, gas, roads, water supply, communication, sanitation equipment). With regard to the power supply, it is proposed to introduce a "solar power generation system + battery storage system" in consideration with the accessibility to the electrical network and to ensure a stable power supply. The superiority of the alleged installation and introduction technology is described in detail in "8.2 Advantages of Japanese companies in the implementation of the project". As already mentioned in Chapter 3, 41 Japanese companies are established in Tanzania. In addition to simply moving Japanese companies with locally proven results to AIP and operating plants, the possibility of participation in each stage of "AIP construction" and "AIP management" has a big potential.

Table 8.1-1 Companies and organizations belonging to the Tanzania Japanese Association Commerce and Industry Committee (2018, December) Company / organization name Companies and organizations belonging to the Tanzania Japanese Association Commerce and Industry Committee (December 2018) JAPAN TANZANIA TOURS LTD Nishizawa Tanzania Co., Ltd. Mitsubishi Corporation East Africa Sales Promotion Sumitomo Corporation

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Company / organization name NIPPO Corporation Sumitomo Chemical East Africa Company Toshiba Plant System Co., Ltd. Mitsui Sumitomo Corporation Trickster lyd. WASSHA CORPORATION Allwan Trust Co. Ltd RETRUS TANZANIA LIMITED ITOCHU Corporation

Japan External Trade Organization (JETRO) Nairobi Office

Tone Engineer, Inc.

Toyota Tsusho East Africa Ltd.

Marubeni Corporation Nairobi Branch

Europe Mitsui & Co., Ltd. Nairobi Branch

Angelo Sec Co., Ltd.

Nippon Koei Corporation

Japan International Cooperation Center

ROHTO Pharmaceutical Co., Ltd.

Yachiyo Engineering Co., Ltd. INTRASPEED ARCPRO (KENYA) LIMITED

Source: Embassy of Japan in Tanzania website

8.2 Advantages of Japanese companies in implementing projects

(1) Technological superiority of the solar energy system + storage battery system manufactured in Japan

Regarding to the fields related to the use of renewable energies in the proposed project, it will be used the superior technology that Japanese operators possess. However, taking into account the latest market trends, solar panels are in a tendency to reduce prices worldwide, and the dominance of Japanese technology is decreasing. On the other hand, the storage batteries, the energy conditioning systems (PCS) and the energy management systems (EMS) required for the stabilization of the system, are important along with the increase of the photovoltaic generation capacity. Japanese

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technology can demonstrate superiority for this items. ① Storage battery The size of the global storage battery market was of less than 8 trillion yen from 2016, and it is expected to grow to about 14 trillion yen by 2025. It is expected to develop a demand for versatile use in the future. The market growth rate per application is the highest for next-generation cars, but it is expected to continue growing in electricity storage. The market is expected to expand to 1.2585 billion yen, 6.6 times than 2017 in 2030.

14000

12000

10000

8000

6000

4000

100 Million Japanese Yen JapaneseMillion 100 2000

0 2016 2017 2018 2019 2020 2025 2030 Year

Grid Other uses than household Household

Source: Fuji Economic Press Release (May 7, 2018)

Chart 8-1 The global market for rechargeable batteries for power storage system

In the last years, many battery types were developed and operated (lead batteries, lithium ion batteries, sodium sulphate batteries (NAS), redox flow batteries, etc.). In Japan, on August 25 of 2013, "Battery Strategy Project Team" (Department of Economy, Trade and Industry, Battery Strategy Project Team, July 2012) was formulated and promulgated, as well as the "Secondary Battery Technology Roadmap 2013 (Battery RM2013) by the New Energy and Industrial Technology Development Organization (NEDO), and is promoting the expansion of the participation of Japanese products in the international market as a government. The lithium-ion batteries were attracting most of the attention in the recent years. Korean and Chinese manufacturers are increasing but the market prices have decreased considerably so the adoption rate is increasing according to each application. In particular in the field of energy storage, the adoption of large-scale projects (from tens to hundreds of MWh), which until

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now had not been foreseen, and the long-term performance (approximately 4-5 hours), has accelerated the diffusion of as lithium ion batteries. The market for lead-acid battery prices is expected to exceed by 2020 and represents about 70% of the total electricity storage market by 2025.

Table 8.2-1 Main characteristics of storage batteries Energy Major Japanese Types Characteristics density manufacturers 40Wh/L Low cost Lead battery 10Wh/kg Many results GS Yuasa 30W/kg Since the energy density is low, as it Furukawa Battery increases its capacity becomes heavier. Panasonic Hitachi Group 200Wh/L Panasonic Lithium ion 80Wh/kg The high energy density makes high Sony battery 100W/kg capacity possible even in small GS Yuasa quantities and the generating power Hitachi Group is large, Toshiba NEC Corporation NiMH battery 84Wh/L Panasonic 20Wh/kg High safety Kawasaki Heavy 100W/kg Industries FDK Sodium sulfate 160 Wh/L Low cost NGK Insulators (NAS) battery Compact and long life Tokyo Electric High temperature maintenance (300 ℃) Power Company required for operation High sodium flammability Redox flow 8.5 Wh/L It has low energy density but its structure Sumitomo Electric battery is simple and easy to scale up Industries Source: Fuji Economy "Future prospect of energy, large secondary batteries and materials of 2017, Section of energy, storage of electricity, household appliances" and others, However、with respect to energy density, the roadmap of technology development of secondary batteries is from NEDO 2013.

Toshiba manufactures cells of lithium-ion batteries "SCiB" that uses sodium titanate, and develops mainly as a "container-type portable storage battery system" as network products. It will also expand in the field of electricity storage, the introduction of NAS batteries, redox flow batteries, etc., mainly in long-term countermeasure applications that exceed 4 hours of production, due to the growing need for system stabilization. NGK has successfully produced unique NAS batteries in the world, and is implementing the same batteries in the Japanese market, Europe, the United States, the Middle East and others. Sumitomo Electric Industries is also conducting research and demonstration of redox flow batteries, and in December 2013 an automatic production line was built.

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② Power conditioning system (PCS)

PCS is required to have the following functions.  Control of generated power (inverter function to convert direct current to alternating current, control output power according to generated power).  Operation control function (operation start / stop according to power generation situation)  Grid interconnection protection function (stops operation by detecting system abnormality)

The following is an example of a PCS supplier in recent case of installing photovoltaic power generation system in Japan (10 MW or more)

Battery Battery output capacity Place of installation SIer PCS type manufacturer （kW） (kWh) Kushiro mega solar LiB GS YUASA OBAYASHI TMEIC 10,000 6,750

Shin- Hidaka Solar Park LiB SDI ABB 14,000 9,000

Shin- Chitose Kashiwadai LiB SDI ABB 17,000 11,400 Solar Power Station Hokkaido Tomakomai mega LiB LG Chemical Fuji Fuji 20,000 10,000 solar Electric Electric Source: Fuji Economy "Future Perspective of Energy, Large Secondary Batteries, and Materials 2017 Power,

Electricity Storage, Home Appliances Section"

Toshiba Mitsubishi Electric Industrial Systems Co., Ltd.'s (TMEIC) PV-PCS features high conversion efficiency and high reliability. A lineup of models with a single unit capacity of 100 kW or more can be widely used, ranging from high-voltage interconnections with power plant capacity of less than 2000 kW to high-voltage interconnection systems with 2000 kW or more. In 1985, the world's largest 1195 kW PV-PCS was delivered to the United States, including abundant achievements in Japan and abroad. Fuji Electric's PV-PCS also features high efficiency, convenient size, and large capacity. In August 2018, it developed a multi-PCS equipped with a storage battery that achieved the cost reduction of photovoltaic power generation facilities. The product is planned to be developed in the global market, mainly in Southeast Asia, which is promoting the introduction of distributed power sources utilizing renewable energy. Conventional solar power plants equipped with battery storage systems require PCS for solar panels and the battery, respectively, but with this product, it became unnecessary to install multiple PCS by integrating functions. Compared to conventional equipment, cost reduction of about 20% can be achieved, and the power loss is reduced by 4 to 5% by reducing the number of power conversion. Other major Japanese companies are Nissin Electric and

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Meidensha.

③ Energy management system (EMS) This project will introduce EMS for the solar power generation system and battery storage system. The technology installed in the EMS aims to control the solar power generation and the storage battery in a timely manner so that the power system status is grasped in real time (second order) and the index of power quality such as voltage and frequency is within an acceptable range. Advanced technical know-how is required to develop EMS. Japan, possesses these advanced technologies and know-how, and we can utilize these technologies and know-how in this project.

(2) Measures to strengthen cost competitiveness to be taken when Japanese companies participate in the project

Recently, in large scale solar projects, Korean battery makers have reduced cost. When Japanese companies participate in this project, they have adjust their costs to be competitive ensuring the highest quality as possible. Regarding power equipment such as PV and batteries, local support system is necessary. However, by remote monitoring of local information from Japan through EMS, in case trouble occurs, quick understanding of the current situation and initial response will be possible. This will reduce the influence of damage caused by fault. It is necessary to encourage the Tanzania to consider these advantages besides the initial cost of the battery.

8.3 Measures necessary to promote orders from Japanese companies

Even when this proposal project becomes a yen loan project, it is not possible to apply the Japanese technology application conditions (STEP) because Tanzania is part of the Least Developed Country. The measures to promote participation from Japanese companies in this project are shown below.

[VIPs invited] There is no advanced large-scale agricultural processing complex in Tanzania. By observing the environmentally conscious smart industrial park and individual agricultural processing factory in Japan and experiencing its high quality and maintenance effect, it is necessary to introduce "solar power + storage battery system" proposed in this survey and It is possible to deepen the understanding of the introduction image.

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[Specification decision support and specification in] EPZA, who is the implementing party of the proposed project, lacks human resources to prepare bidding documents, etc. for selecting suppliers in order to advance infrastructure development related to AIP. In the case that the proposed project is established as a yen loan project, Japanese companies will support the creation of bidding documents and bidding for EPZA's selection of contractors as consultants, but at such opportunities various specs will be advantageous for Japanese companies to induce.

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Chapter9.Action Plan and issues toward realizing the project

9.1 The current progress toward realizing the project

This project is a project to supply stable electric power to agricultural product processing parks in Tanzania, where there are concerns about future shortage of electric power, while raising added value by processing agricultural products led by the government. The success of this project can be referred to as a model case in other areas, and therefore it is expected from the local government. It is necessary to confirm with the business operators and related organizations about 1) the continued consultation for the project implementation, and 2) the business invitation. The structure of cooperation for the project implementation and the efforts for the business invitation are as follows.

(1) Continuous consultation with related organizations of Tanzania

With regard to the implementation of the agricultural processing complex (AIP) project, with the consultation with related organizations of Tanzania, there is no objection to the importance of agricultural processing complex (AIP) in Tanzania, and we could confirm the direction toward the implementation of the project led by the government. However, issues relating to the implementation capacity of related organizations, such as the uncertainty of the decision process towards implementation, are highlighted. Since MIT and EPZA asked us to share the survey report in order to proceed consultation within the government of Tanzania using the results of this survey, we will continue consultation toward the implementation using MIT and EPZA as windows.

(2) Interview potential companies (Japanese and local companies)

[Confidential]

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9.2 Status of efforts by related government and implementing agencies in Tanzania for the project implementation

This project is supposed to proceed as part of SEZs / EPZs development under the jurisdiction of EPZA. EPZA considers securing lands important for SEZs / EPZs development, and in examining pilot project implementation, it is decided to consider the land that is secured. In carrying out projects including potential spread to more areas in the future, it is necessary to consider cooperation of concerned ministries and agencies, and to proceed with consultation, while also considering accumulation of agricultural products and securing of labour power. Also, as mentioned in Chapter 1, in Tanzania, AfDB is considering the Special Crops Processing Zones (SCPZ), and the concept of AfDB is being examined mainly by the MOA of Tanzania.

9.3 Envisioned Financial Scheme

Regarding the fund procurement for the project implementation, it is necessary to consider the details of the funding plan with a view to taking advantage of loans of Japanese currency yen, co-financing with other international cooperation agencies such as AfDB, utilization of international funds, and so forth.

(1) Possibility of Yen Loan and Japan's ODA Utilization

[Confidential]

(2) Possibility of cooperative support with other international cooperation agencies

In Tanzania, AfDB is under consideration of the concept of agricultural processing park development named "Staple Crops Processing Zones (SCPZs)". In this survey, we visited AfDB and exchanged opinions. We received suggestion from AfDB about the possibility of cooperative support with other international cooperation agencies including the expansion of the project scale, for effective project implementation depending on the content.

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(3) Possibility of utilization of the international fund

Regarding solar power generation + storage battery system, its also possible to utilize Green Climate Fund, the international fund that supports developing countries to implement efforts to reduce and absorb (mitigate) of greenhouse gas emissions, and cope with the effects of climate change (adaptation). To the Green Climate Fund, developing countries themselves are proposing, implementing and managing projects that are followed by the priority of development plans and climate change policies, and this is a scheme that secures project ownership of developing countries.

Figure 9-1 Overall conceptual diagram of Green Climate Fund Source: Ministry of the Environment (website on green climate fund)

9.4 Future Initiatives and Issues towards the project implementation

This survey considers that the following issues are important for the realization of this Project.

Selection of pilot project area Based on the 1st and 2nd field surveys, we considered that the first pilot project should be close to Dar es Salaam, which is the largest consumption area in Tanzania. Bagamoyo SEZ, is the best option not only because its geographical location, but also because its master plan has already been prepared, and there are plans for further developments. The selection of Bagamoyo SEZ was

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discussed with MIT. However, due to the reduction of cashew nuts price (one of the most important export crops of Tanzania), there were many changes at the upper level of the MIT ministers and following President Maafuli influence, we were suggested by MIT than other areas must also be considered. The strong influence of Tanzanian government for the selection of the project candidate site should also be considered in the future.

Funding If Tanzanian government wants to a request a yen loan, it will be necessary for MIT Ministers to explain this to the MOFP, which oversees MIT major funding. Furthermore, AfDB needs to be able to summarize the consensus within the Tanzanian government towards raising funds, as indicated by the possibility of co-financing with Japan.

Operational ability of EPZA Although EPZA has experience to operate industrial estates, it is considered that it does not have enough experience for implementing the management capacity for industrial estates such as AIP. This is the reason why this project will be implemented utilizing yen loans. In some cases, it may be possible to dispatch experts from Japan to carry out a capacity development program, etc., in order to strengthen the capacity of EPZA. Based on the above issues, the Study Team has requested MIT and EPZA to explain the project to MOFP, which is in charge of fundraising. This survey report will also be used to advance discussions within the Tanzanian government. In order to implement this project, it is necessary to secure a budget for implementation, in which MIT and EPZA need to discuss with MoFP. It is also required to share this research report with Tanzania in order to continue and expanding a good relation with Tanzanian government in the future. From this fact as well, it is thought that the results of this survey will help to realize the AIP. However, there is much uncertainty about the policy-making process for the implementation of the project within the Tanzanian government, so it is important to lead to the implementation of this project by continuously discussing with METI and EPZA.

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