Why private sector has failed to fund key agriculture plan

Dar es Salaam. The private sector explained that it has failed to participate fully in funding projects under the second phase of the Agricultural Sector Development Programme (ASDP II), because the country was lacking development financing systems.

The executive director of the Tanzania Private Sector Foundation (TPSF), Mr Godfrey Simbeye, said that - working through ASDP II launched in June last year - the private sector was expected to fund the project by at least 60 percent.

“However, we are facing a huge challenge in the form of our development financing institutions which include only two banks - TADB and TIB Bank - which are also undercapitalised,” he said.

He noted that the African Development Bank (AfDB) was now ready to finance the private sector, but the challenge is that the bank only financed projects that were not less than $20 million (Sh45 billion).

This is very high for many of our projects.

He said the government needs to offer incentives in the sector especially as the private sector expects a return on investment.

Responding to the private sector concerns, Agriculture minister Japhet Hasunga said that, since the programme’s launch, the government has accomplished some targets like irrigation, markets and value-addition. But the private sector has not been able to meet the financing mechanisms that were set.

A total of Sh2.84 trillion was required for the implementation of various projects under the second phase of the ASDP, which is envisioned to revolutionise Tanzania’s agriculture in ways more than one, and link it with the industrialisation drive.

The 10-year programme, which will cost a total of Sh13 trillion, is being implemented in two five-year phases.

The government was expected to allocate a total of Sh948 billion to the programme in the 2018/19 financial year – with another Sh1.2 trillion coming from the country’s development partners.

Mr Hasunga said the project is to be implemented by five ministries including the Agriculture and Livestock and Fisheries.

Other ministries are Regional Administration and Local Government; Industry, Trade and Investment; Land and Human Settlements; Water and Irrigation.