Agricultural Mechanization Initiative in Tanzania (KILIMO KWANZA)

Tanzania is a country often referred to as a sleeping giant richly endowed with natural
resources, ranging from gold, minerals and gemstones to abundant wildlife, fisheries forests
and fertile land where crops of all varieties can be growth with minimal inputs and irrigation.

Agricultural production and activities surrounding crop handling and distribution contribute
nearly 40% to GDP, employing more than 80% of the work force. Cash crops such as coffee,
tea, tobacco, cashews, sisal, cloves account for a majority of agricultural exports; and
processed oils, spices, and horticulture products such as dried/cut flowers have gained new
market share in recent years. Seaweed export from Zanzibar Island (mainly being cultivated by
women) has growth substantially; and organic spice trade is slowly being formalized with buyers
in European market.

Due to varying ecological zones and soil types, there is a spectrum of agricultural/horticultural
crop varieties that can be developed. Yet less than 20% of arable land is cultivated and even
less (7%) is under irrigation. Potential crop output can be realized through efficient
mechanization strategies, planned irrigation, improved extension services and incentives for
agro-processing. Given the sheer size (945,087 sq. km) and population (40 million +) of
Tanzania implementing these strategies pose challenges as well as opportunities.

Several companies have successfully grown roses, exotic flowers, essential oils, spices
(powder and raw form) and a number of other horticultural products for local and export
markets.

Since agriculture plays a dominant role in the economy, the United Republic of Tanzania
Government is committed to revitalizing the sector through crop mechanization, better extension
services, a more conducive business environment and input subsidies. In 2007-2008 a new
Crop Mechanization Department was created within the Ministry of Agriculture and Food
Security (MOAFS) to foster new investment in agri-business and crop diversification.

This new initiative to empower farmers/SME is called Kilimo Kwanza (Swahili word) meaning

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Agricultural Mechanization Initiative in Tanzania (KILIMO KWANZA)

Agriculture comes First. This initiative invites private companies to work with government to
unleash huge potential for growing cash and food crops, including crops for green fuel that
encourage farmers not to use charcoal briquettes which leave a major carbon footprint,
including vast levels of deforestation.

In late 2007 the Morogoro region was officially designated the Grain Basket of the Nation by
President Jakaya Kikwete, under a special initiative called FAMOGATA.

Morogoro, the 2nd largest region in Tanzania, is endowed with fertile soils, numerous river
beds, large tracts of uncultivated land and huge production potential. The region is near Dar es
Salaam where goods can be exported to regional and international destinations.
What does all this mean? In a Country that is so well endowed there are unique investment and
trade opportunities. The Tanzanian Investment Centre (TIC) has created incentives to attract
investors to work with Tanzanians in building a strong agro-industrial sector from fork to farm.
One should look closely at establishing joint-venture partnerships. Banks will gain confidence if
they see increased investment in the agricultural sector.

Recently Government devolved fiscal responsibility for agricultural finance to local District
Agricultural finance to local District Agriculture Officers (DALDOS) and farmers are free to
present business proposals for financing and technical assistance. To date 90% of farming in
Tanzania is conducted by small-holder farmers using hand held hoes, animal traction and
ox-ploughs. The National Poverty Reduction Strategy known as Mkukuta acknowledges
agricultural modernization is primordial to poverty alleviation; and small scale subsistence
farming must be transformed into a large scale value added industry that includes contract
farming, agro-processing and farm gate to market linkages.

Land ownership issues need to be clarified before farmers are truly empowered to run
sustainable businesses. In addition more attention needs to be focused on value chain
management within sub-sectors, including prevention of post harvest losses. During harvest
season there are abundant crops that simply perish due to lack of cold storage and/or
distribution channels to market.

Therefore opportunities are abound for the private sector to fill gaps in the supply chain.
Moreover the Tanzanian Investment Centre is welling to provide attractive incentives to
companies wanting to invest.

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Agricultural Mechanization Initiative in Tanzania (KILIMO KWANZA)

Written by Kathleen Charles

FBME Strategic Planning Innovative
Finance and International Trade Advisor

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