New Partnership for Food and Agriculture Organization Africa’s Development (NEPAD) of the United Nations Comprehensive Africa Agriculture Investment Centre Division Development Programme (CAADP) GOVERNMENT OF THE UNITED REPUBLIC OF TANZANIA SUPPORT TO NEPAD–CAADP IMPLEMENTATION TCP/URT/2908 (I) (NEPAD Ref. 05/28 E) Volume IV of VII BANKABLE INVESTMENT PROFILE Crop and Livestock Private Sector Development (Mainland) April 2005 UNITED REPUBLIC OF TANZANIA: Support to NEPAD–CAADP Implementation Volume I: National Medium–Term Investment Programme (NMTIP) Bankable Investment Profiles (BIPs) Volume II: Phase II of Madibira Rural Development (Mainland) Volume III: District Irrigation and Water Harvesting Support (Mainland) Volume IV: Crop and Livestock Private Sector Development (Mainland) Volume V: Small and Medium Enterprises in support of Participatory Forest Management (Mainland) Volume VI: Land Management and Development of Irrigation Schemes (Zanzibar) Volume VII: Private Sector Development for Agriculture, Forestry and Fisheries (Zanzibar) NEPAD–CAADP BANKABLE INVESTMENT PROFILE Country: Tanzania – Mainland Sector of Activities: Private Sector Development Proposed Name: Crop and Livestock Private Sector Development Project Area: National – with four selected zonal foci Duration: 4 years Estimated Cost: Foreign Exchange ...............US$1.74 million Local Cost...........................US$6.79 million Total ...................................US$8.53 million Suggested Financing: Source US$ million % of total Government 0.80 9 Financing institution(s) 4.93 58 Beneficiaries 0.80 9 Private Sector 2.00 23 UNITED REPUBLIC OF TANZANIA: NEPAD–CAADP Bankable Investment Profile “Crop and Livestock Private Sector Development” Table of Contents Abbreviations........................................................................................................................................ iii I. PROGRAMME BACKGROUND..............................................................................................1 A. Programme Origin.............................................................................................................1 B. General Information..........................................................................................................2 C. Agriculture and the Economy...........................................................................................3 D. Constraints and Opportunities for Private Sector Crop and Livestock Development.......................................................................................................................5 II. PROGRAMME AREA................................................................................................................7 III. PROGRAMME RATIONALE...................................................................................................8 IV. PROGRAMME OBJECTIVES................................................................................................10 V. PROGRAMME DESCRIPTION .............................................................................................10 VI. INDICATIVE COSTS...............................................................................................................12 VII. PROPOSED SOURCES OF FINANCING .............................................................................13 VIII. PROGRAMME BENEFITS .....................................................................................................13 IX. IMPLEMENTATION ARRANGEMENTS............................................................................14 X. TECHNICAL ASSISTANCE REQUIREMENTS .................................................................15 XI. ISSUES AND PROPOSED ACTIONS ....................................................................................15 XII. POSSIBLE RISKS.....................................................................................................................16 Appendix 1: Map of Project Area.......................................................................................................19 Appendix 2: List of References ...........................................................................................................21 NEPAD – Comprehensive Africa Agriculture Development Programme United Republic of Tanzania: Investment Profile “Crop and Livestock Private Sector Development” Abbreviations ASDP Agricultural Sector Development Programme ASDS Agricultural Sector Development Strategy ASLM Agricultural Sector Lead Ministries ASP Agricultural Service Providers ASPS Agriculture Sector Programme Support ASSP Agricultural Sector Support Programme BDS Business Development Services BDSP Business Development Service Providers BIP Bankable Investment Profile CAADP Comprehensive Africa Agriculture Development Programme CORMA Client–oriented Research Management Approach DADPs District Agricultural Development Plans EAC East African Community EU European Union FAO Food and Agriculture Organization of the United Nations GDP Gross Domestic Product GoT Government of Tanzania MAFS Ministry of Agriculture and Food Security MCM Ministry of Cooperatives and Marketing MFI Micro Finance Institution MNRT Ministry of Natural Resources and Tourism MSEDA Mtwara Small–scale Entrepreneurs Development Association MVIWATA Mtandao wa vikundi vya wakulima Tanzania MWLD Ministry of Water and Livestock Development NIGP National Income Generation Programme NMTIP National Medium–Term Investment Programme PASS Private Agricultural Sector Support PATTEC Pan African Tsetse and Trypanosomosis Eradication Campaign PRSP Poverty Reduction Strategy Paper RDS Rural Development Strategy ROSCAs Rotational Savings and Credit Associations SADC Southern Africa Development Community SME Small and Micro Enterprise SWAp Sector–wide Approach TDV Tanzania Development Vision TIC Tanzania Investment Centre TMPA Tanzania Milk Processors Association UNCDF United Nations Capital Development Fund WTO World Trade Organisation URT United Republic of Tanzania iii NEPAD – Comprehensive Africa Agriculture Development Programme United Republic of Tanzania: Investment Profile “Crop and Livestock Private Sector Development” I. PROGRAMME BACKGROUND A. Programme Origin I.1. Over 80 percent of Tanzanians live in rural areas and depend on agriculture for all or part of their livelihood. Agriculture contributes 50 percent of the GDP and 54 percent of the nation’s foreign exchange earnings. The vast majority of Tanzanians living below the poverty line live in rural areas, and the incidence of poverty in rural areas may be increasing. Agricultural development is crucial to both national economic development and poverty reduction. I.2. The Agricultural Sector Development Programme (ASDP) provides the government with a sector–wide framework for overseeing the institutional, expenditure and investment development of the agricultural sector. At the heart of ASDP is changing the function of central government from an executive role to a normative one, empowering local government and communities to control their planning processes, and establishing an enabling environment which encourages private sector investment in all aspects of agriculture. ASDP does not replace existing national and local planning and implementation mechanisms. Rather it facilitates the process, highlights priorities and tracks overall progress. The ASDP is a long–term process, and the outcome of recent initiatives to re– orientate and re–invigorate the national economy. It is the implementation framework for the Agricultural Sector Development Strategy (ASDS). I.3. The ASDS was published by the government in August 2001. It originated from the Agricultural and Livestock Policy and the Cooperatives Development Policy, both of 1997. It is guided by the principles of the Poverty Reduction Strategy Paper (PRSP), the Rural Development Strategy (RDS) and Tanzania Development Vision 2025 (TDV). The ASDS identified five strategic issues for agricultural development: (i) strengthening the institutional framework, (ii) creating a favourable environment for commercial activities, (iii) clarifying public and private roles in improving supporting services, (iv) strengthening marketing efficiency for inputs and outputs, and (v) mainstreaming planning for agricultural development in other sectors. It is within this strategic framework that a proposed programme for increasing private sector investment in crop and livestock production is proposed. I.4. The importance of the private sector is recognised in the ASDP which states that: “Agriculture primarily takes place in the private sector, which the ASDP is essentially designed to strengthen and support. Both the ASDS and the Rural Development Strategy recognise that weak public administrative institutions are a major reason why private sector response has been slow to follow reforms aimed at boosting agriculture. It is clear that public sector performance impacts on private sector productivity. However, the private sector, both small and large–scale operators need to be more effective in communicating its concerns to the government.” I.5. The investment programme for the Agricultural Sector Lead Ministries (ASLM1) includes operations specifically aimed at facilitating private sector oriented investments (see Table 1 of the National Medium–Term Investment Programme, NMTIP). For this to be effective — and to establish the basis for attracting commercial, private sector investment — a great deal more needs to be done to identify and establish