In a significant move to boost Tanzania's agricultural sector, the African Development Bank (AfDB) has approved a $2 million partial credit guarantee and a $528,600 grant. This financial package aims to facilitate easier access to fertilisers for smallholder farmers across the country.
A Strategic Financial Mechanism The Africa Fertilizer Financing Mechanism (AFFM), managed by the AfDB, will provide the African Fertilizer and Agribusiness Partnership (AFAP) in Tanzania with the partial credit guarantee. This will assist suppliers and importers in purchasing fertilisers for Tanzanian hub agro-dealers. The grant will cover 94% of the project's recurrent costs, with AFAP contributing the remaining 6%.
Objectives and Implementation The project, slated for implementation from July 2023 to July 2026, aims to increase agricultural productivity by enabling timely and appropriate fertiliser use by smallholder farmers. It seeks to improve access to quality inputs through a functional, efficient, and sustainable fertiliser supply chain in Tanzania. Additionally, the project aims to enhance access to finance for large fertiliser distributors.
Expanding Reach and Impact
Building on the success of a 2019 credit guarantee project, AFAP plans to extend its current activities to at least five additional regions: Ruvuma, Manyara, Rukwa, Kagera, and Mwanza. The project is expected to increase agricultural productivity and food security in Tanzania, in line with the Bank's Feed Africa Strategy.
Beneficiaries and Expected Outcomes
The project targets five suppliers and 35 hub agro-dealers as direct beneficiaries. Additionally, 1,000 retailers and 550,000 smallholder farmers stand to benefit indirectly. The credit guarantee is expected to be used 15 times, enabling the distribution of at least 60,000 tonnes of fertiliser worth $36.5 million.
The Agricultural Landscape in Tanzania
Agriculture accounts for 29% of Tanzania's GDP and employs 65% of the workforce. Despite an increase in fertiliser consumption from 15.858 kg per hectare in 2018 to 19 kg per hectare in 2023, Tanzania still falls short of the continental target of 50 kg per hectare. The country is heavily reliant on fertiliser imports, with a financing gap of approximately $150 million needed to meet the Abuja Declaration target.
Final Thoughts
This initiative builds on the successes of the Bank’s previous Tanzania Agricultural Inputs Support Project and is expected to significantly impact Tanzania's agricultural sector. It represents a critical step in closing the financing gap and boosting agricultural productivity, thereby contributing to food security in the region.