1. PRIVATE AGRICULTURAL SECTOR SUPPORT TRUST (PASS) Current Status of Agricultural Projects Financing in Tanzania- Challenges and Opportunities Livestock Expo & National Milk Week, Arusha - 1st June 2018

2. About PASS
Established in 2000 as a project by Government of Tanzania under the Danish funded Agriculture Sector Programme Support (ASPS)
2002 Started its operation
2007: Registered as an autonomous legal Trust under the laws of Tanzania
Not for profit- charitable institution
Sector Specific: Agriculture, livestock, fisheries (forestry – e.g. bee keeping)

3. PASS Founders Committee
Government of
Denmark
Tanzanian Private
Commercial Farmer
Government of
Tanzania
PASS Funders

4. PASS Outreach PASS Branch Network Arusha
KIGOMA
6 zonal branches; Morogoro, Mbeya, Arusha, Mwanza, Mtwara and Kigoma

5. Reduced Poverty Levels (income and employment)
PASS GOALS
Outcome:
Increased level of productive investments among agribusiness entrepreneur s
Impact:
Reduced Poverty Levels (income and employment)
Goals:
Small and medium Agribusiness entrepreneurs’ capacity to access financial products and services increases
Financial Service Providers capacity to better serve agribusiness entrepreneurs increases
Relationship between agribusiness and financial service providers strengthens
PASS operates efficiently and sustainably

6. Targeted sector and Beneficiaries
Who can apply for PASS Services?
PRIVATE ENTREPRENEURS
Individuals
Associations,
Companies,
AMCOS,
SACCOS linked to the agricultural sector.
Agribusiness
All agricultural value chain actors with viable investments and needs access to credit for capital
Any individual credit needs will be guaranteed subject to acceptance of partner bank, or else will be facilitated through a wholesale lending – e.g. farmer groups.
MFIs, Community Banks
Access loan funds; Linkage banking guarantee between Tier 1 and Tier 2 banks for on lending to agricultural value chain

7. PASS Products and Services
Business Development Services:
Feasibility studies,
Business Plans Preparation,
Capacity Building to Farmers,
Farmer development services-group formation,
out-grower schemes & contract farming
AIC services
PASS Guarantee Products

8. PASS Blended Finance Model
Re-guarantee
Equity
Risk sharing fees
BANKs
Commercial/ DFIs
Credit Guarantees
Equity
Leasing Finance Company
NON-BANK FINANCIAL INSTITUTIONS
(e.g. Microfinance)
Medium/Large Agribusiness private companies
Quasi Equity/Mezzanine Finance
Commercial debt instruments
BDS
Finance Lease
FARMERS
micro, small and medium enterprises (MSMEs)
Sector: Agriculture, Livestock & Fisheries

9. FARMERS: micro, small and medium enterprises (MSMEs)
Banks & Private Equity Investors
Equity $ €
EXIT
Debt & Equity
Mentorship & Coaching
Agribusiness Incubator
Quasi Equity
BDS
Business Growth
FARMERS: micro, small and medium enterprises (MSMEs)

10. Our Achievements
A total of 729,920 agricultural entrepreneurs benefited from PASS Guarantee between the years 2013 to 2017 with total loan amounts of TZS billion (US$ 177 million).
In 2017 alone, PASS Trust supported a total of 170,974 individuals of which 80,358 (47%) were women.
The percentage of women has continued to increase compared from 45.3% in 2016 due to efforts made by PASS to make access to credit more inclusive.
The guarantee cover of up to 80% for women owned agricultural business compared to 60% ceiling for other businesses

11. Called Up Guarantees Status as at 31st December 2017
Historical Trend of Claims Paid (TZS Billions)
Year
Guaranteed Loan Portfolio
Guarantee Committed
Guarantee Claims Paid %
2015
89.8
41.1
0.34
0.8%
2016
122.2
58.8
1.6
2.7%
2017
184.1
78.9
1.79
2.3%
Reasons for Defaults
Drought – e.g. barley farmers in west Kilimanjaro
Floods – some rice farmers
Disease – e.g. poultry farming in Maswa
Government policy – e.g. maize export ban – farmer groups in Ruvuma region
Character and business failure

12. Collaborating Banks
PASS has already signed Credit Guarantee Agreements with:

13. Other partners

14. Tanzanian Banks: Lending to Agriculture vs Other Economic Sectors
Banking Industry (All Figures in TZS Millions)
2009
2010
2011
2012
2013
2014
2015
2016
Total Banking Industry Loans (All Sectors)
4,534,091
5,485,269
7,156,999
8,464,923
9,914,044
11,914,931
14,865,800
15,432,176
Total Banking Industry Loans (Agriculture)
468,825
711,439
979,793
940,453
976,533
1,069,961
1,196,697
1,120,376
% of Banking Industry Lending to Agricuture
10.34%
12.97%
13.69%
11.11%
9.85%
8.98%
8.05%
7.26%
% Growth of Banking Industry Lending to Agriculture
51.75%
37.72%
-4.02%
3.84%
9.57%
11.84%
-6.38%
Source: Bank of Tanzania; Directorate of Banking Supervision Annual Report,

15. Tanzanian Banks: Lending to Agriculture vs Other Economic Sectors
Source: Bank of Tanzania; Directorate of Banking Supervision Annual Report,

16. Tanzanian Banks: Lending to Agriculture vs Other Economic Sectors
Source: Bank of Tanzania; Directorate of Banking Supervision Annual Report,

17. PASS Impacts on Agriculture sector Financing in Tanzania
Total Agriculture related projects banks financing in 2016 was TZS 1,120 billion
% PASS Guaranteed Agriculture Loans in Various banks in 2016 was TZS 122 billion, equivalent to 11% in the industry.
Source: Bank of Tanzania; Directorate of Banking Supervision Annual Report, ; and PASS Analysis

18. Trend of Agriculture Sector Financing Under PASS Support

19. Our Story of Farmers Transformation from Poverty
The Story of Ms Napir Mukare of Monduli, Arusha on her cattle fattening business
Napir’s house BEFORE PASS support
Napir’s house AFTER PASS support

20. Our Story of Farmers Transformation from Poverty

21. Agriculture Financing Challenges
Banks delay loan disbursement
Lack of collateral for farmers as per Banks requirement.
High Interest Rates
Climate change – drought, excessive rains
Diseases (livestock), pests
Policy constraints: export bans, permits, levies, taxes
Knowledge gap to structure agricultural credit for some banking professionals
banking regulations in loan provisioning

22. Opportunities Irrigation financing – higher appetite from lenders
Enhancing lease financing for agricultural mechanization
Value chain financing – with offtake contracts and extension services…e.g. crops (maize), livestock (cattle fattening, dairy farming, poultry farming)
Policy reforms opportunities: approval of blue print, more incentive given to some agricultural sub-sectors, etc

23. Discussion Questions and Answers
End
“Improving quality of life through agribusiness transformation”
Discussion Questions and Answers