1. AgFiMS Tanzania 2011 Headline findings Irma Grundling 14 March 2012

2. The problem … Smallholder & agri-business finance perceived as risky There is lack of financial services suited for agriculture Limited penetration of financial services into agri/rural areas

3. Objective Land-size or turnover- based selection criteria applied ?

4. AgFiMS Tanzania 2011 sample  Representative sample of 626 EAs drawn by NBS  Listing & screening exercise provided the sampling frame  4 094 face-to-face interviews were conducted with agribusiness owners  3 734 interviews with producers  104 interviews with processors  256 interviews with service providers  The survey is representative at:  National, urban-rural, and agricultural zonal levels (including Zanzibar) for producers  National level for processors and service provide

5. Size & Scope of the AgFiMS Tanzania 2011 identified Agribusiness Market

6. AgFiMS Tanzania 2011 Agri-businessesTotal AgFiMS qualifiers Number of qualifiers % qualifying Producers - farmers selling more than they consume and earning an income from cash crop, food crop or livestock farming 1 932 222 492 980 earn at least $600 p.a. OR use at least 5acres 25.5% Processors21 017 8 199 earn at least $1500 p.a. 39.0% Service Providers62 502 18 793 earn at least $1500 p.a. 30.1% TOTAL 2 015 742 519 97225.8% +- 7m farming households +- 5m households with farming as main income source AgFiMS – 2 million agri-businesses

7. AgFiMS Tanzania 2011 Business Profile

8. Business Profile Most agribusinesses focus on crop farming as main source of income

9. Business Profile Most livestock businesses focus cattle as main source of income

10. Business Profile Service providers are mainly retailers

11. AgFiMS Tanzania 2011 Business Owner Profile

12. Business owners demonstrate entrepreneurial characteristics

13. Business owners manage their money wisely and are willing to take calculated risks

14. Business owners make sound financial decisions

15. AgFiMS Tanzania 2011 Business Environment Is the environment conducive for these entrepreneurs to achieve business success?

16. ‘Ownership’ of land is a perception for most producers More than 90% producers claim land ownership although less than 10% have title deeds

17. Lack of access to irrigation systems and reliance on natural water resources further inhibits productivity

18. Although the level of access to infrastructure is not conducive for business activities, mobile phone access provides connectivity

19. Limitations in the business environment seems to result in distressed sales Distressed sales? 12% sell on contract 10% sell all products on contract

20. Agribusinesses have virtually no coping mechanisms to rely on when faced with business risks

21. Income diversification offering protection? 86.1% diversify their income sources

22. Lack of access to networks and information support increases vulnerability

23. AgFiMS Tanzania 2011 Financial Business Operations

24. Sound financial decision-making does not result in high levels of financial inclusion for agribusinesses

25. Multiple financial strategies – A matter of choice or no options? BankedServed by non-bank formal and/or semi-formal institutions Unserved (55.6%) Informally served 43.5%

26. Landscape of access…

27. 147 000 banked … What do they use banks for?

28. 45 000 use non- bank formal products/services … What are they using?

29. 145 000 use the informal sector … What do they use it for?

30. Financial behaviour … 143 782 2 600 408 303

31. Financial needs.... ‘Capex’, ‘operational expenditure’, ‘business assurance’

32. 78.5% business owners save but most prefer to save at home rather than putting their money in a bank

33. Accessibility the key barrier to banking …. ? “Banks are too far away” – 37% of the unbanked “The business does not meet the requirements of the bank” – 26% of the unbanked “Banks do not want to lend money to a business like mine”/ “banks are not interested in a business like mine” - 16% of the unbanked

34. Status quo : Credit Bank SACCOs MFIs SACCOs MFIs Informal Friends/ family 4% business owners 7% business owners 27% business owners 14% business owners 68.9% of credit 11.7% of borrowers 12.2% of credit 21.3% of borrowers 15.1% of credit 79.3% of borrowers 3.8% of credit 40.2% of borrowers

35. AgFiMS Tanzania 2011 Identifying Development Needs

36. Perceived obstacles to growth

37. Relationship between obstacles to growth & financial status INCOME Less than 10 000 000 10 000 000 – 30 000 000 More than 30 000 000 Banked27.5%55.4%70.70% Bank credit 3.8%6.2%15.60% Insurance0.4%2.5%15.7% MFI/SACCO credit 7.2%6.4%6.40% Informal 26.7%30.1%26.60% Access to market Access to finance Access to market Access to finance Access to market Access to finance Lack of operational capital Lack of growth capital; regulations become prohibiting

38. Key capacities for Agri-businesses Access to infrastructure Access to markets Access to/usage of credible financial advisory resources Access to/usage of credible business advisory resources Access to/exposure to appropriate agricultural advice/support Social capital – Access to networks &support structures; coping mechanisms Formal inclusion

39. Financial inclusion development clusters ClusterSize Access to infra- structure Access to markets Financial advice Business advice Networks Intensive care (ICU) 133000 Development110000 Opportunity95000

40. AgFiMS Tanzania 2011 Evidence-led Intervention Approach?

41. Capacities needed for formal financial services usage Access to/usage of credible financial advisory resources Access to/usage of credible business advisory resources Access to/exposure to appropriate agricultural advice/support Access to/usage of credible financial advisory resources Access to/usage of credible business advisory resources Access to/exposure to appropriate agricultural advice/support Access to networks &support structures; coping mechanisms Information Structure/organisation Infrastructure & access to market CONNECTIVITY Weaknesses Strength

42. Info Hub BUSINESS ADVICE Financial management principles Record keeping; Debt management; Income diversification; Cash flow management Strategic business decisions Competitive edge; Pricing; Marketing; Contracting; Group/networking Risk management Price; Weather; etc. BUSINESS ADVICE Financial management principles Record keeping; Debt management; Income diversification; Cash flow management Strategic business decisions Competitive edge; Pricing; Marketing; Contracting; Group/networking Risk management Price; Weather; etc. AGRI RELEVANT INFO Inputs Sources, pricing, credit/advance, security., risks Process Preparation, prevention, remedial, labour, best practices Yield Storage, transportation, timing, surplus/demand & price AGRI RELEVANT INFO Inputs Sources, pricing, credit/advance, security., risks Process Preparation, prevention, remedial, labour, best practices Yield Storage, transportation, timing, surplus/demand & price FINANCIAL ADVICE Products, services & requirements Financial education Financial advice Investments; debt; insurance Long-term; short-term planning FINANCIAL ADVICE Products, services & requirements Financial education Financial advice Investments; debt; insurance Long-term; short-term planning STRUCTURING/FORMING GROUPS How Requirements; Obligations; Responsibilities Management Structure STRUCTURING/FORMING GROUPS How Requirements; Obligations; Responsibilities Management Structure Establishing info sharing platform …

43. INFORMATION HUB VALUE CHAIN PLAYERS GOVERN- MENT RESEARCH INST RESEARCH INST ACADEMIC INS NGOS FINANCIAL INST FINANCIAL INST BUSINESS INST BUSINESS INST PRICING AUTHORITY PRICING AUTHORITY DONORS/ INVESTORS DONORS/ INVESTORS AGRI BUSINESSES AGRI BUSINESSES OPPORTUNITY DEVELOPMENT OPPORTUNITY DEVELOPMENT Benefits for all role-players

44. INFORMATION PLATFORM -Payment solution -Save storage of money -Micro credit/credit bureau -Micro insurance OPPORTUNITY More than an info platform... CONNECTIVITY

45. Thank you www.agfims.org