How Tanzania can use AGRF 2023 to bridge agricultural funding gap

Dar es Salaam. The upcoming Africa Food Systems Forum (AGRF) 2023 raises Tanzania’s hope to close the funding gap facing the agriculture sector that has impeded the country’s ambition to revolutionise the sector.

Read: Tanzania to host Africa's food system forum 2023

Since its inception, the government has increased the sector’s budget from Sh294.162 billion in 2021/22 to Sh751.123 billion in the 2022/23 fiscal year, equivalent to 155.3 percent.

The budget was further increased from Sh751.123 billion in the 2022/23 to Sh970.786 billion in the 2023–24 financial year, equivalent to 29.24 percent.

The increase aims to develop irrigation infrastructure, revolutionize modern seed multiplication, and improve extension services.

Other targets include increasing uptake of agricultural inputs, promoting agricultural research, improving storage, reducing post-harvest losses, and securing reliable markets inside and outside the country.

However, despite these efforts, the country lags behind targets set by the Malabo declaration in 2014, which required African Union (AU) member states to enhance investment financing in agriculture by upholding 10 percent of the public spending target to ensure food security.

AGRF 2023 is expected to gather international and regional financial institutions, providing room for participants, including the host country Tanzania, to strike different funding deals for the sector’s development.

Tanzania needs to strive to access enough funds to close the funding gap in different areas, including the recently launched ambitious programme dubbed Building Better Tomorrow (BBT).

The programme focuses on building the capacity of the youth to engage in block farming, increase crop production, and improve the quality of livestock and fish.

“It is imperative that funds attracted for crop production be balanced with the amount invested for value-added purposes. This is because recently, more funds have been pumped into agribusiness and processing promotion, forgetting production,” said the sector’s stakeholder, Mr. Audax Rukonge.

Mr Rukonge, who once served as the Non-State Actors Forum (Ansaf) executive director, said agriculture stakeholders in the country should grab opportunities from the meeting slated for September 5th and 8th, 2023.

The meeting will take place in Tanzania for the first time after being rebranded as Africa’s Food Systems Forum in 2022, attracting different investors in the sector.

“At least $50 billion is used for food importation in Africa, but the amount could be $20 billion if governments decide to significantly invest in food production in the next three to five years,” he said.

Mr. Rukonge blamed most African countries for making major plans but putting little effort into implementation and taking no accountability measures.

According to him, conditions given by financial institutions in order to provide loans to the sector, including high interest rates, title deeds, and multiple documents, were another challenge to farmers.

Associate Professor of Development Economics at the University of Dar es Salaam (UDSM), Abel Kinyondo, said there was no political will to implement the Malaba declaration, adding that without political will, dreams to revolutionise the sector will remain an optical illusion despite hosting the key conference.

“It is important to empower farmers through the provision of improved seed and irrigation infrastructure, among others, in order to increase productivity and ultimately improve other sectors that will create jobs for Tanzanians,” he said.

The University of Dodoma (Udom) economist, Dr. Lutengano Mwinuka, said the lack of insurance in the sector remains a challenge to the country despite the provision of financial empowerment through the Tanzania Agriculture Development Bank (TADB).

“The sector faces other challenges, including the impacts of climate change and shocks caused by price fluctuations caused by different global factors. Insuring agriculture is the only way investors can be attracted to direct their resources into the country’s agriculture,” he said.

He was of the view that directing more resources in the area of value addition would stimulate production because farmers would be assured of a reliable market for their produce.

Speaking to The Citizen, the Agriculture Ministry’s Permanent Secretary, Mr. Gerald Mweli, said the government targeted attracting major investments in the sector that would enable the country to increase production, achieve food sufficiency, and export the surplus.

“The country’s purpose is to strengthen commercial farming and discourage subsistence crop production through expansion of cultivated land,” he said.

Regarding the AGRF 2023, the PS said Tanzania secured the opportunity to host the conference after highlighting plans to drive the world’s food agenda.

“Other factors that supported us were the enormous increase in the budget allocated for the sector from Sh298 billion in 2021/22 to Sh970 billion in 2023/24,” he said.

He said Tanzania also highlighted its focus on improving irrigation, research, and improved seeds, as well as youth and women’s engagement in the sector.

According to him, some 3300 people had registered for forum participation by August 29, noting that five presidents had confirmed attendance. He said during the event that Tanzania would be ready to strike deals with foreign companies and different institutions. TADB director for policy, research, and planning, Mr. Waziri Mkani, said over Sh809 billion had been disbursed to farmers in loans, benefiting 1.675 million farmers.

“TADB has partnered with commercial banks and financial institutions such as NMB, CRDB, TPB, Stanbic Bank, Azania Bank, and Finca Microfinance, among others, in the disbursement of loans to fund agricultural production in Tanzania,” he said.

CRDB Bank PLC’s head of agribusiness, Maregesi Shaban, said the bank has issued over Sh1.3 trillion to farmers and people engaging in fishing activities and livestock keeping.

“This is because we recognize the importance of agriculture as the country’s economic backbone and the primary source of employment and livelihood,” he said.

Mr. Shaban said the bank’s strategy was to enhance access to credit for all actors in the agriculture value chain, with a special focus on smallholder farmers.

“We have a diverse range of financing solutions targeting farmers for both production-related activities and post-harvest management,” he said.

As part of the bank’s sustainability strategy, he said CRDB Bank PLC provides credit to other value chain actors, including traders and processors, to ensure there is sustained value.

NMB PLC head of advisory Isaac Msasu said the bank has issued loans to actors in the sector to the tune of Sh1.6 trillion.

He said for Tanzania to produce sufficient food, it was imperative to tackle challenges facing the sector, including capital, climate change, and land, among others.

“NMB PLC has developed a unique lending approach to agribusiness and gathered a wealth of experience that makes the bank more competitive in agriculture value chain financing,” he said.

He said the bank offers tailor-made financing solutions to the sector under various products like warehouse receipt system (WRS) out-growers loan schemes, working capital, and overdraft credit facilities, among others.