The Business Year

Nicholas Jones

Associate Director, AgDevCo Tanzania

Aranyak Sanyal

Cluster Head—East Africa, Olam

With both public- and private-sector momentum in sustainable agriculture, the sector is poised for strategic development.

Where are the opportunities in Tanzania’s sustainable agriculture sector?

NICHOLAS JONES We have been part of trying to finance and develop the middle space between informal farming and large-scale commercial farming in Tanzania. This is a difficult area of the market; however, it can be seen that there is a clear catalyzing effect whereby one successful investment in a sector will encourage more entrants, provide markets for local producers, and have a positive ripple effect across the whole value chain. Since we have been investing here, we have also seen increasing interest from foreign investors to move into the agricultural space, and this can be seen in the growth of businesses in the Southern Corridor. However, the challenge of identifying adequate projects to meet financial and developmental returns remains, and this is likely the largest barrier to new investors looking at Tanzania’s agro-opportunities.

ARANYAK SANYAL Olam Tanzania fully supports the Southern Agricultural Growth Corridor of Tanzania (SAGCOT) policy framework. Once the government achieves its objectives to grow the corridor, this could revolutionize agricultural production in the country. We are supportive of this approach, and feel that if it is refined, bolstered, and enforced, it could have more of an impact than trying to prescribe yet another policy. Also, in terms of public sector investment in agriculture, there should be more focus on the supply side because Tanzania’s agricultural sector is more supply than demand driven. Therefore, the challenges and opportunities lie on the supply side. For example, the setting up of storage facilities that would reduce the cost of produce collection, the creation of aggregation points, and improvements in transport infrastructure from up-country to processing locations would be useful for making good use of the current budget earmarked for the sector.

The government’s Five Year Development Plan (FYDP) places emphasis on boosting the agriculture sector, aiming for a 7.6% real growth rate by 2020. Are enough practical measures being taken to achieve this goal?

NJ Both the public and private sectors have spoken about their support for the FYDP, and it is always at the top of the government’s list to push this agenda. However, the challenge is twofold: firstly, finding the implementers, and secondly, the financiers. There is also the question of enabling infrastructure. When we look at exporting crops and other agricultural products, it is not just production that needs to be considered, but also transport links. It is promising to see a huge amount of investment going into the Port of Dar es Salaam, as well as Bagamoyo, Mtwara, and Tanga Ports. Tanzania is not just a conduit for Tanzanian crops, but also other East African and Sub-Saharan countries, such as the DRC, Rwanda, Uganda, Zambia, and Malawi. As a transit space, Tanzania has to grapple with extra traffic, making speed and efficiency more of a challenge. But we are seeing the matching drive to boost efficiency in the transport network too, which is needed to help boost agricultural productivity further.

What is the outlook for Tanzania’s agriculture sector?

AS We prefer not to look at Africa as purely a sourcing base, which most commodity companies are prone to do, but rather as a destination or sales base as well. Of our total sales of around SGD20.5 billion (USD15.1 billion), some 15.9% of all sales in Africa, which is SGD3.25 billion (USD2.4 billion) worth of products being sold into Africa, primarily food staples and consumables. To compare that with Olam’s sourcing figures, some 18.6% of our total sourcing comes from Africa. So, we source about 19% of all our products and sell about 16% of all our products in Africa, meaning we have a healthy balance of trade inherent in our business model. This means our view on the outlook for the agricultural sector is also balanced between the import and export segments, rather than it being a typically export-oriented commodity market view. What Africa has going for it and what will help us unlock its value is resolving the fundamental issue of supply and demand imbalance. With increased urbanization, there is a definite increase in per capita food consumption, and this is driving a dietary shift toward protein and fats. This, in turn, is driving a multiplier effect on food and feed products. Therefore, my outlook for Tanzania is that growth lies in food and feed. These are the two segments that will thrive due to increased demand.



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