SOUTHERN AGRICULTURAL GROWTH CORRIDOR OF TANZANIA A partnership for sustainable, profitable development in Tanzania’s agriculture

SAGCOT: The partnership SAGCOT Centre Ltd.

PARTNERSHIP & LEADERSHIP Government of the United Republic of Tanzania SAGCOT is supported by President Jakaya Kikwete, donor groups and many private sector actors. SAGCOT partners include major actors from all relevant stakeholder groups. Donors and development finance institutions Local and international private sector SAGCOT Centre Ltd.

SAGCOT VISION & CULTURE Partners in SAGCOT are bound by a common vision, culture and set of principles: Agreement on the overall SAGCOT objectives.  Agreement to work with other members to promote a harmonised approach and strategy.  Agreement to engage with the partnership, maintain communication and support the SAGCOT Centre.  Agreement to contribute to the resolution of policy and infrastructure constraints. Agreement to consider new and innovative financing mechanisms.  “I know there will be challenges, but I am optimistic that through our cooperative endeavours we will overcome them. In the end we will create a corridor of highly productive and competitive agriculture...” President Jakaya Kikwete SAGCOT Centre Ltd.

Overview of SAGCOT Institutions MAFC Task Forces e.g. Green Reference Group Working Group SAGCOT National Technical Committee

THE SAGCOT CENTRE The SAGCOT Centre has been establish to facilitate investment and manage the coordination of the partnership to ensure the successful achievement of its objectives. Its activities include: Managing and expanding the Partnership Information provision & Market intelligence Facilitating of introductions Facilitating access to finance Coordination of cluster and corridor development Identify enabling environment obstructions and help address these Monitor and evaluate progress SAGCOT Centre Ltd.

SAGCOT CATALYTIC FUND A ‘Catalytic Fund’ is under development to: Secure a critical mass of investments and investors. Develop and expand commercially sustainable agribusinesses. De-risk commercial investment. Support projects through their initial startup and development, and also throughout the supply chain. Social venture capital fund Target: development and expansion of younger and generally smaller agribusinesses with supply chain links with smallholders. Initial fund size: US$12.5m Investment size: US$200,000 to US$1.5m Matching grant facility Target: established commercial agribusinesses and companies, that want to develop and strengthen supply chains encompassing smallholder farmers. Initial fund size: $40m Matching grant size: $US250,000 to $1.5m SAGCOT Centre Ltd.

A leadership role in the international landscape Since the initiation of the SAGCOT partnership at in May 2010, 4 similar Public-Private platforms have emerged under the umbrella of WEF’s New Vision for Agriculture, representing over ten country led initiatives Under the leadership President Jakaya Kikwete of Tanzania and President Armando Emilio Guebuza of Mozambique a Pan-African platform, GrowAfrica was formed in May 2011, in an effort to replicate the partnership model of SAGCOT GrowAfrica is a coordinating platform to support African governments in increasing private-sector investment, partnership and collaboration to accelerate sustainable growth in agriculture. Countries involved are: Tanzania, Ethiopia, Kenya, Burkina Faso, Rwanda, Mozambique, Nigeria and Ghana GrowAfrica countries wil be presented as flagship initiatives to address Food Security during the G8 2012 Grow Africa Forum/November 2011 WEF Addis Jan 2012 Launch SAGCOT May 2010 Investment Blue Print Jan 2011 Launch Indonesia G8 2012 Launch GrowAfrica Launch Mexico WEF Davos Jan 2012 Launch Vietnam

SAGCOT: The corridor concept SAGCOT Centre Ltd.

THE CORRIDOR CONCEPT Aims to: Enhance Food Security Environmental Sustainability Reduce Rural Poverty Through a coordinated multistakeholder effort that Leverages Public and Private investments Addresses Enabling Environment Constraints Promotes Smallholder Engagement Models Improves Value chains Using Innovative Financing Value Chain approach Institutional leadership Long term commitment and focus Innovative public-private partnership between government, business, farmers, donor partners, international organizations and NGOs. Strategy to create an agricultural corridor in Tanzania 20-year plan to empower smallholder and larger scale farmers to make a commercial success of their farming. A project that encourages new ways of working – business as unusual

HUBS & CLUSTERS Clusters of agricultural projects are centred around logistical and infrastructure hubs, maximising efficiencies and promoting economies of scale. These projects will include: Production Storage Processing Research Associated service providers SAGCOT has identified six priority clusters for quick win opportunities SAGCOT Centre Ltd.

Priority regions for agriculture development The SAGCOT clusters Priority regions for agriculture development SAGCOT Centre Ltd.

Leveraging investments and partnerships through clusters Clusters are geographic concentrations of interconnected companies, specialised suppliers, service providers and associated institutiions SAGCOT Centre Ltd.

GREEN ECONOMIC VISION SAGCOT will pioneer a green growth model for agriculture. A Green Reference Group has been convened to develop and build consensus around a green growth programme and investment framework. Green growth for the agriculture sector involves increasing food security and good nutrition for all people, while conserving natural resources and limiting greenhouse gas emissions. The initiative will identify ways in which potential social and environmental risks an be addressed in the early phase SAGCOT Centre Ltd.

An Investment Framework for Green Growth Component investments that benefit or minimally compromise ecosystem health, that reduce or sequester greenhouse gas emissions, that provide social benefits and that help adapt to climate change, Spatial planning to realize synergies and reduce trade-offs by managing interactions between investments and land uses in different parts of the landscape, Democratic governance processes to negotiate development priorities and parameters, recognizing legitimate local, regional, national and business interests, Public policies and market mechanisms that shift incentives toward realizing elements 1-3 above. SAGCOT Centre Ltd.

Creating Access to Finance Challenge Funds (e.g. AECF) Development Finance institutions (e.g. Norfund) Commercial lenders Project Funding Catalytic Fund Social Impact Investors (e.g. Transfarm) Commercial investors (e.g. equity funds) Last mile infrastructure (e.g. Patient Capital Support to smallholder farmers World Food Programme (Purchase for Progress) SAGCOT Centre acts as coordinator (information flows) NGO Programmes (e.g. through grants) African Policy Programmes(e.g. through AGRA, CAADP) Lesson learning and the policy environment Investment Climate Facility window The Catalytic Fund Addresses the current critical lack of early stage and patient capital for emerging agribusiness investors Fund is in design stage and likely to be USD 50 -100 mln in size. Several Partners have already pledged their commitment. Likely to have two windows a social capital fund and a matching grant fund Research institutions’ programmes Removing trade barriers programmes (e.g. Trade Mark East Africa) Public infrastructure development Government Programmes (e.g. ASDP) Indicative Timeline (10 years)

FOSTERING AN enabling environment SAGCOT Centre Ltd.

The landscape of local stakeholders TNBC TIC ACT FARMERS PRIVATE SECTOR MINISTRIES DONORS MEDIA RUBADA FSDT TPSF LOCAL GOVERNMENT Tanzania Agriculture Development Bank

GOVERNMENT COMMITMENT The Government of Tanzania is an active partner in SAGCOT through a number of key institutions: President of Tanzania Prime Minister’s Office Bank of Tanzania Ministry of Agriculture, Food Security and Cooperatives RUBADA, TIC, TPA, TAZARA Local Government Authorities Key Government commitments: Promotion of global and intra-African trade. Establishment of a fast, efficient and transparent system of securing titled land. Building on current infrastructure development. Promotion of innovative finance. Increasing access to agricultural inputs. SAGCOT Centre Ltd.

Government engagement in SAGCOT President of Tanzania Prime Minister’s office Bank of Tanzania Ministry of Agriculture, Food Security and Cooperatives Related ministries RUBADA, TIC, TPA, TAZARA, Local Government Authorithy Kilimo Kwanza, home-grown private sector-led initiative. Its ‘Ten Pillars” propose activities to reinvigorate market-driven agricultural growth. ASDP is implemented by the five Agricultural Sector Lead Ministries and is mandated to empower farmers and to increase private sector investment in agriculture

SAGCOT: Investment & Project opportunities SAGCOT Centre Ltd.

CASE STUDY: KILOMBERO PLANTATION LTD. Kilombero Plantation Limited (KPL), a public-private partnership between RUBADA (8.7%) and Agrica (91.3%), was established in July 2008 to redevelop Mngeta Farm. Over US $ 30 million invested on irrigation over 215 hectares When fully irrigated, Mngeta Farm will produce annually: • 33,000 tons of milled rice • 5,000 tons of rotation crops—beans and pulses • 1.5 MW of surplus biomass power for rural electrification System for Rice Intensification (SRI) Demonstrated potential with Kilombero smallholders to lift yields from 3 tons/ha to over 5 tons/ha 20kgs of seed needed instead of 60kg 250 families 1350 new farmers are being added - Targeting 5,000 famer families by 2016 SAGCOT Centre Ltd.

CASE STUDY: ECOENERGY BAGAMOYO EcoEnergy is developing a modern agro-industry, producing 125,000 tons of sugar, 100,000 MWh power and 8,000 – 15,000 m3 ethanol from sugarcane on an abandoned state cattle ranch in Bagamoyo, Tanzania. The Government of Tanzania will have a long term shareholding of 25% in the company. The Bagamoyo Project will establish a sugar mill and approximately 11,000 ha of sugarcane plantations. EcoEnergy will grow 7,800 ha of sugarcane on their own land and out-growers will farm approximately 3,000 ha on village land (outside the EcoEnergy farm). The out-grower project will be developed with the village communities that are surrounding the EcoEnergy farm over a six-year time period. The out-grower development program The out-grower program is a comprehensive “people development” process. Local communities are empowered to engage in commercial sugarcane farming. Smallholder farmers will join together and own and operate commercial sugarcane farms of ca. 100 ha, achieving economies of scale. Approximately 30 farms, benefitting 1,500 out-growers, will be developed. The out-growers will supply approximately 300,000 tons of sugarcane per annum. SAGCOT Centre Ltd.

INVESTMENT OPPORTUNITIES Seed production and livestock Beef production and processing Beef production and processing Seed Production Banana, Macademia, Mango, Citrus Soya Extrusion / Wheat Mill Agro-dealer / Extension Sao Hill Industrial Park Sugar Outgrower Consolidation Rice Value Chain Enhancement Mbozi Farm Centre Rungwe Avocados Seed Potatoes SAGCOT Centre Ltd.

CLUSTER COMMODITY OPPORTUNITIES SAGCOT Centre Ltd.

Challenges to Cluster Development

INFRASTRUCTURE PRIOTIES Investments needed to compliment the following infrastructure priorities: ROAD: Tanzania-Zambia Highway 1,762km paved highway linking Dar to Kapiri Mposhi RAIL: Tanzania-Zambia Railway Authority (Tazara) US$39m interest free loan from China for upgrade Links Dar to Zambia, DRC and Southern African rail networks POWER: TANESCO electricity grid Multiple funded and planned electricity upgrade projects, totaling US$100s of millions SEA: Port of Dar es Salaam Tanzania Port Authority has invested US$18m in upgrades, with a further US$80m planned. Yara plan a US$20m dedicated fertiliser facility AIR: Julius Nyerere International Airport US$300 million upgrade underway Songwe International Airport Construction underway SAGCOT Centre Ltd.

THANK YOU SAGCOT Centre Limited P.O.Box 14130 Dar es Salaam Contact Us Dan Mrutu Chief Executive Officer Email: dan.mrutu@sagcot.com Mobile: (+255)754781078 Jennifer Baarn Deputy Chief Executive Officer Email: jennifer.baarn@sagcot.com Mobile:(+255)786839665   SAGCOT Centre Limited P.O.Box 14130 Dar es Salaam Visit our webpage on www.sagcot.com SAGCOT Centre Ltd.

Appendix SAGCOT Centre Ltd.

SAGCOT Management Dunstan Mrutu – CEO, SAGCOT Centre Dunstan Mrutu holds 30 years experience in private sector development in Tanzania. With a strong understanding of the role of agriculture in furthering economic growth and development, Dunstan co-authored Tanzania’s Kilimo Kwanza (‘Agriculture First’) and serves as a Trustee of the Private Sector Agriculture Support Scheme Trust (PASS). Before joining the SAGCOT Centre, Dunstan was Executive Secretary of the Tanzania National Business Council (TNBC). He further holds several key posts including Vice Chairman of the Tanzania Ports Authority Board, Member of the Export Processing Zone Authority and once Ministerial Advisory Board member of the National College of Tourism. Danmrutu@gmail.com Jennifer Baarn – Deputy CEO, SAGCOT Centre Jennifer Baarn is an experienced professional in the development and facilitation of international public-private partnerships (PPPs), with a particular focus on the role of partnerships in agriculture as drivers of economic growth. Prior to joining the SAGCOT Centre, Jennifer was an Associate Director at the World Economic Forum (WEF) where she helped develop the WEF’s New Vision for Agriculture initiative. Jennifer spent a number of years in financial services at Rabobank International, identifying growth opportunities in food and agribusiness and developing key insights into the agricultural sector. A South American who has lived in Europe and holds a passion for Africa, Jennifer brings knowledge and experience from around the globe to apply in furthering the objectives of SAGCOT. Jennifer.Baarn@sagcot.oom SAGCOT Centre Ltd.