WASHINGTON D.C., March 10, 2016 – The World Bank Board of Executive Directors today approved $70 million in new financing to support Tanzania’s agriculture sector and strengthen it by linking smallholder farmers to agribusinesses for boosting incomes and job-led growth.
As part of its national development strategy the Government of Tanzania is currently implementing the Southern Agricultural Growth Corridor of Tanzania (SAGCOT) Program which seeks to promote agribusiness partnerships to tackle low farm productivity and limited market access that are impeding development of the country’s agricultural sector.
The newly-approved SAGCOT Investment Project is financed by the International Development Association* (IDA) and seeks to develop income opportunities for 100,000 smallholder farming households by providing them new technologies and marketing practices and expanding partnerships with lucrative agribusinesses in the Southern Corridor of Tanzania. Once implemented, the project will directly benefit over half a million people and engage 40 agribusiness operators, with emphasis on including women in successful commercial value chains.
“Smallholder farmers play a central role in Tanzania’s agricultural sector” says Bella Bird, World Bank Country Director for Tanzania, Burundi, Malawi and Somalia. “The SAGCOT Investment Project has the potential to be transformational as it will provide them with crucial access to capital and new technology needed to invest in higher value production, promote their livelihoods and meet their nutritional needs.”
Over 80 percent of the poor and extreme poor live in the rural areas with limited opportunities to establish links with productive value chains and higher value crops. As a result, Tanzania’s otherwise remarkable economic growth rate of 7 percent over the past decade has left behind most of the poor in the rural areas. The SAGCOT Investment Project will link them by encouraging greater investments by agribusiness firms partnering with smallholder farmers through providing matching grants that they can use for capital and operational costs directly related to expanding smallholder participation in competitive agricultural supply chains.
The Government of Tanzania has created two new public-private-partnership institutions to lead sound implementation of the SAGCOT Program – the SAGCOT Centre as a focal point for planning and advertising the wider SAGCOT Program; and the SAGCOT Catalytic Trust Fund, which supports early stage investment in the corridor by providing matching grants. The World Bank-financed project will achieve its objectives by channeling support through those two entities as well as improving the operations of the Tanzania Investment Center (TIC) which is tasked with preparing and promoting investment projects and attracting private sector investments.
“Tanzania has achieved demonstrable successes in boosting productivity in the horticulture, rice, sugar and tea sectors,” says Mark Cackler, World Bank’s Manager for the Agriculture Global Practice. “The challenge is to extend the reach of existing efforts and expand poor farmers’ access to lucrative market opportunities, which are the goals of the project.”
The SAGCOT Investment Project is aligned with the World Bank’s Country Assistance Strategy and the National Strategy for Growth and Reduction of Poverty (Mkukuta II); specifically Cluster I: Growth and Reduction of Income Poverty, which calls for the modernization and commercialization of private sector-based agricultural activities through accelerating productivity growth and removing bottlenecks in agribusiness value chains.
* The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 77 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change to the 1.3 billion people who live in IDA countries. Since 1960, IDA has supported development work in 112 countries. Annual commitments have averaged about $19 billion over the last three years, with about 50 percent going to Africa.