2. PASS – Private Agricultural Sector Support Limited ©Copyright PASS, Tanzania 2003 PRIVATE AGRICULTURAL SECTOR SUPPORT TRUST (PASS) Paper Presented on 18 th October 2012 During DP/PASS meeting held at PASS Board Room

3. PASS – Private Agricultural Sector Support Limited ©Copyright PASS, Tanzania 2003 Background  PASS was established in 2000 as a project by Govt of Tanzania under the Danish funded Agriculture Sector Programme Support (ASPS)  The goal of PASS is to stimulate investment and growth of private commercial farmers and agri-businesses by facilitating access to Financial services  PASS was registered as an autonomous legal Trust in May 2007  “PASS Trust” started under IPSAS financial regulations and management of the Trust on 1 November 2008.

4. PASS – Private Agricultural Sector Support Limited ©Copyright PASS, Tanzania 2003 PASS Trust 2008-2013 Program New Program under BSPS-III  Aim: To facilitate agricultural loans worth TZS 100 billion across the country  Budget : DKK 140million (TZS 35 billion)  Plan: To open new zonal offices –Mbeya, Moshi, Mwanza & New head office in Dar

5. PASS – Private Agricultural Sector Support Limited ©Copyright PASS, Tanzania 2003 PASS’s Products and Services: 1. Business Development Services (mainly Feasibility studies & Business Plans) 2. Financial Service (mainly Financial Linkages) with/out Credit Guarantee 3. Farmer development services: group formation, outgrower schemes, contract farming

6. PASS – Private Agricultural Sector Support Limited ©Copyright PASS, Tanzania 2003 PASS team & facilities 2012  Six Board Members  Managing Director  1 Director: Finance & Administration Department,  1 Director : Business Development Department  1 Senior Accountant  5 Branch In Charges/ Senior Business Development Officers  5 Secretaries/Accounts-Assistants  7 Business Development Officers  6 Drivers  1 Technical Advisor  1 IT consultant (out sourced)  Head Office at Patel Building, Dar es Salaam  Branch offices in Mbeya, Morogoro and Mwanza & Moshi (Total: 26 Full Time staff members )

7. PASS – Private Agricultural Sector Support Limited ©Copyright PASS, Tanzania 2003 The PASS Model

8. PASS – Private Agricultural Sector Support Limited ©Copyright PASS, Tanzania 2003 Achievements as of August 2012  One head office (Dar) & five Zonal offices (Morogoro, Mbeya, Mwanza, Moshi, Mtwara) have been established  In the 10 years: 977 individuals and 1,770 groups have received agricultural loans worth TZS 92 billion facilitated by PASS Trust.  PASS is now working with 7 banks-CRDB, NMB, Exim, FBME, TIB,KCBL and ABC.

9. PASS – Private Agricultural Sector Support Limited ©Copyright PASS, Tanzania 2003 Who can apply for PASS Trust’s Products and Services?  Private Entrepreneurs  Private Entrepreneurs – consisting of individuals, associations, companies and farmer groups within or linked to the agricultural and livestock sector.  Private Entrepreneurs  Private Entrepreneurs – who have a vision and a viable investment idea above 7 million Tshs. (less for groups)

10. PASS – Private Agricultural Sector Support Limited ©Copyright PASS, Tanzania 2003 Challenges  Collateral Crunch: Title Deed-Residential license?? Social Collateral??  Some branches refuses to support livestock projects such as poultry, piggery and dairy  Changing in personnel dealing with PASS/CRDB projects causes some delays and disqualify of potential projects for agricultural investments  Number of applicants from CRDB declining day to day

11. PASS – Private Agricultural Sector Support Limited ©Copyright PASS, Tanzania 2003 Costs of PASS Trust Services Costs of PASS Trust Services  Commitment fee: TZS 30,000- (non-refundable)  Business Plan Fee: 0.5% - 2 % of the requested loan amount depending on complexity  Additional services e.g. as a medium/large feasibility study are provided on cost sharing basis between PASS Trust and the client at a favorable rate for the client

12. PASS – Private Agricultural Sector Support Limited ©Copyright PASS, Tanzania 2003 Current Status  Outstanding loans amount TZS 43 billion.  Default claims and doubtful category TZS 1.9 billion This equates to 4.4% which is within an acceptable scale of below 5%  Major indicators included SME’s increased turnover, returns to investor, tax to GOT, export earnings and substantial increase of employment, more adoption of improved practices and better productivity

13. PASS – Private Agricultural Sector Support Limited ©Copyright PASS, Tanzania 2003 Who has PASS Trust Helped (31 December 2011)  Mobilized investment worth TZS 95 billion and supported over approximately 35,000 farmers  About 190 tractors and equipments have been loaned to farmers worth about TZS 8 billion  Enabled set up High quality speciality coffee exports  Initiated Horticulture Exports; Improved Poultry & Piggeries, Dairy Production & Beef Fattening.  Food security: support to irrigation for food  Assist with investment in farm mechanisation on larger scale  Assist groups of farmers (SACCOS; Cooperatives; Irrigation Associations; Farmers Groups) link to banks.  Assist commercial and government banks in linking up to high potential agri-business clients and to group lending opportunities /schemes with joint responsibility/ security of the loan.

14. PASS – Private Agricultural Sector Support Limited ©Copyright PASS, Tanzania 2003 PASS’s Results and Impacts  Improved access to advisory, financial and marketing services  Increased volume of production  Improved quality of the produce  Farmers broadened and enhanced access to markets  Strengthened bargaining power of farmers through formation of groups  Increased employment along nodes of value chains, also in agro- processing  Increased income and demonstrable improved living standards

15. PASS – Private Agricultural Sector Support Limited ©Copyright PASS, Tanzania 2003 Number of Submitted and Approved PASS Business Plans 2002-2010

16. PASS – Private Agricultural Sector Support Limited ©Copyright PASS, Tanzania 2003 Regional Trends Sunflower is one the major oilseeds in Africa The leading sun flower seed producers in Africa in 2003 (MT) Production Trend in Tanzania 2006/2007 data by MAFSC Tanzania Produced 88,753 tones of sunflower The SHF estimated at 160,000 households in the central corridor Central Corridor produced 60% of sunflower seeds of the national production of 187,000 tons (2009) Oil Seed Sub-Sector Overview South Africa MoroccoEgyptTanzaniaSudan 708,00055,60045,00028,00019,000

17. PASS – Private Agricultural Sector Support Limited ©Copyright PASS, Tanzania 2003 Overview cont….  135 processing machines installed in the central corridor with a total installed capacity of 853 tons/day  This capacity is enough to process approximately 170,600 tons (> 45% of installed capacity  Prices vary by region and within a season April/May and the end in November  Price variation reflect the phenomenon of dwindling supply as the season progresses, largely because of inadequate storage and working capital at both the household and oil mill levels

18. PASS – Private Agricultural Sector Support Limited ©Copyright PASS, Tanzania 2003 Constraints of the Sub-sector Small Holder Farmers  Lack of appropriate knowledge o Inadequate Extension Services o Inadequate inputs o Poor Infrastructure o Poor Market Information o Insufficient and poor access to working capital Processors  Lack of proper processing o refining, packaging, Preservation/storage  Poor marketing o Labelling/ branding  Policies and Regulatory Framework  Insufficient and poor access to working capital

19. PASS – Private Agricultural Sector Support Limited ©Copyright PASS, Tanzania 2003 Opportunities  High Market demand in and outside the country  Government support  Available actors to facilitate the sub sector  Favorable production conditions  Available processing technology  Available labor

20. PASS – Private Agricultural Sector Support Limited ©Copyright PASS, Tanzania 2003 Industry Analysis of Sunflower Oil in Tanzania

21. PASS – Private Agricultural Sector Support Limited ©Copyright PASS, Tanzania 2003 Constraints of Value Chain Product: Low quality that has hindered provision of TBS Market: Inadequate strategies to ensure sustainable market Process: Lack of refining machine

22. PASS – Private Agricultural Sector Support Limited ©Copyright PASS, Tanzania 2003 VCD and Programming Product upgrading: Quality and standard control. Process upgrading: Acquisition of efficient machines Market upgrading: Establish distribution centers and agents

23. PASS – Private Agricultural Sector Support Limited ©Copyright PASS, Tanzania 2003 Suggested Business Model Pool of organized producer groups Processin g, standardi zation and branding Supermarkets Distributors Middle income Populati on Promotion Strategies

24. PASS – Private Agricultural Sector Support Limited ©Copyright PASS, Tanzania 2003 Opportunity for PASS  Facilitation on investment in efficient machines and equipments for sunflower production and processing  Facilitation on availability of working capital for sunflower production and processing  Facilitation of godowns construction

25. PASS – Private Agricultural Sector Support Limited ©Copyright PASS, Tanzania 2003 Pass New Products 1. Lenders Option Guarantee(Portfolio guarantee) 2. Linkage Banking Guarantee( Institutional Guarantee) 3. Lease/Asset financing

26. PASS – Private Agricultural Sector Support Limited ©Copyright PASS, Tanzania 2003 Thank you We facilitate investments in Agriculture www.pass.ac.tz