New directions for irrigation development in Tanzania and the context of PPPs


New directions for irrigation development in Tanzania and the context of PPPs

Irrigation can minimize frequent food shortages that are attributable to dependence on rainfall, and increase yields. Irrigation offers great potential for food and nutrition security, and climate resilience.

Irrigation is the application of controlled amounts of water to plants at needed intervals. Irrigation helps to grow agricultural crops, maintain landscapes, and revegetate disturbed soils in dry areas and during periods of less than average rainfall.  

Irrigation is important in Tanzania to deal with the erratic rainfall, especially in the context of climate change.

Irrigation can minimize frequent food shortages that are attributable to dependence on rainfall, and increase yields. Irrigation offers great potential for food and nutrition security, and climate resilience.

Development of irrigation gives unprecedented opportunity to transform agriculture from subsistence to commercial orientation. Tanzania’s irrigated area is far below the potential, and the government is committed to expanding irrigation.

However, to do this effectively requires a range of infrastructure that will provide for a wide range of crops and efficient water use. Recognizing this need, the government of Tanzania has made ambitious commitments to expand the area irrigated, and set up the National Irrigation Commission (NIC) to deliver on this potential. The NIC strategy currently being developed identifies Public-Private Partnerships (PPPs) as important, but seeks advice on appropriate models of PPP.

In an interview with Citizen, National Irrigation Commission shares its insights that are potential for irrigation sector development.

Public Private Partnerships (PPPs) for Irrigation

PPPs for irrigation becoming widely accepted model for financing irrigation, supported by the World Bank, IFC, ADB and directly by governments. PPPs in use for a long time in other sectors: energy (power plant), Transportation (toll roads), water supply (utilities), less in irrigation.

Objectives of PPPs

• Reduce Government budget outlays for irrigation O&M and sometimes investment (plays a role in all cases)

• By‐pass laws that do not allow the Government to charge for ISF (e.g. irrigation PPP in Morocco)

• Bring in technical know‐how on agro‐processing, increase national food security, develop agricultural export sector (e.g. irrigation + rice processing in SAGCOT area, Tanzania)

• Develop a new irrigation system (e.g. WB project in Ethiopia, French company, proposed ISF: US$150/ha)

• Expanding area, increasing efficiency and profitability, including smart water meters (e.g. Bangladesh, but here government, reimburses private operator)

However there is generally little knowledge of extent to which objectives are met, who wins and losses, and how to ensure that PPPs help local populations. It is useful to think of PPPP: Public, Private, and Producer Partnerships to recognize the role of (small-scale) producers who can be a potential source of investment.

Public Private Producers Partnerships (PPPP)

The research study conducted stakeholder net mapping of Kilombero Plantations Ltd, Madibira, and Kilombero Sugar Company, identified that there are many actors involved in PPPs, beyond the simple categories of government, private sector, and (smallholder) farmers.

The Assessing Models of Public-Private Partnership for Irrigation Development in Africa (AMPPPIDA project) has developed a framework for assessing the role of many different actors including various government agencies, private sector firms, NGOs, development partners, research organizations and smallholder farmer cooperatives or associations. This framework may be useful for planning and creating greater clarity in expectations on PPPs.

Kilombero Plantations Ltd (rice scheme)

• Fertile Kilombero valley, good for rice farming

• Redevelop Mngeta Farm, joint venture between

North Korea and Tanzania started mid‐1980s

• 2007 KPL PPP between Rufiji Basin Developments

Authority (RUBADA) and Africa (UK co, investors from Norfund, Capricorn Investment Group, and African

Agricultural Capital) + DfID, USAID, JICA support

• 5818 ha estate; 1430 ha irrigated, 3000 by 2016

• 3200 outgrower farmers not irrigated but get SRI advice, link to inputs and microfinance

Kilombero Plantations Ltd Findings

• Land tenure: Former state farm re‐occupied,

Compensation to vacate, tensions with

Community

• Price volatility: company and farmers losing

Out

• Taxation policy on imported equipment

• Multiple viewpoints, “realities”

Madibira Background

• 3000 ha rice irrigation farmer managed scheme established in the late 1990s

• Constructed through a loan from the African

Development Bank, and built on government land.

• Owned and operated by the Madibira

Agricultural Marketing Cooperative Society

(MAMCOS).

Madibira Findings

Scheme has managed to improve farmers’ living standard through increased farmers’ income, improved housing and social services like health centers as well as primary and secondary schools.

Challenges to be addressed include poor access roads, non‐operation of the rice milling plant due to unreliable energy, market unreliability, shortage of farming equipment such as tractors and power tillers, as well as noticed changes in decrease of water for irrigation.

Kilombero Sugar Background

Kilombero Sugar Company Limited ‐ a registered sugar miller, grower and producer

KSCL owns estates 2: Msolwa estate (5000 ha), established in 1960 and production began in 1962, Ruembe (5000 ha), developed in 1974 and came into operation in 1976.

Divested in 1998 to Illovo Sugar Ltd and ED&F

Man Ltd by selling 75 per cent of its shares the remaining 25 per cent is still held by GoT and will be sold, eventually, to Tanzanians, through the stock market.

Kilombero Sugar Findings

Important players linking the investors and smallholders are the producer organizations for cane growers.

The associations negotiate the terms of business between out‐growers and millers, and to provide essential agricultural services to their out‐growers. In recent years these services expanded in scope into areas like cane harvesting, loan brokerage and administration, and extension support.

Have enabled out‐growers to negotiate and transact collectively through CSA, reducing transaction costs to both parties. They also negotiate with CRDB Bank and National Microfinance Bank

Sugar production has increased from 61,688 tons in 2000/01 to over 125, 374 tons in 2014/15. Mill expansions have allowed Out Growers to increase their production area from 3,855 ha in 1998/99 to about 12,000 ha in 2014/15.

A cane supply agreement has been introduced incorporating a division of proceeds formula for

Outgrower cane payments.

Capable of exporting electricity to TANESCO

Maintains > 800 km of farm access roads

Challenges:

• Transparency on measurement of weight of sugarcane for each farmer

• Measurement of sucrose content which is done in closed laboratories of the nucleus farm

• Governance issues related to operations of the famer associations

Key Challenges Identified

•     Difficulty in aligning profit and development objectives

•     Information on water availability and use (competing uses, climate change)

•     Needs beyond irrigation infrastructure (technology, taxation, training, markets, inputs)

•     Land and water rights

•     Dominance by governments / limited involvement by farmers, communities & markets

•     Challenges to build trust (history matters)

•     Who bears cost of supporting smallholder development?

•     Who enforces and regulates that?

Implications

• Add finance to interdisciplinary mix for irrigation

• Is irrigation likely to be profitable for investors?

Logic for state investment, less for private sector.

• “Beyond panaceas”

– Need to engage with complexity

– Tools for understanding complex arrangements

– Range of options for “PPP” arrangements

• Time: Needed to build trust, but time/cost tradeoffs

Farmer-led Irrigation

Farmer-led’ irrigation development, understood as processes whereby farmers’ drive improvement in their water-use for agriculture by changes in technology use, investment patterns, or in the governance of land and water.

While farmers will commonly interact with a range of public and private sector agencies in pursuing their drive to develop irrigation.  Farmers exhibit entrepreneurial and risk taking behavior and interact with a range of other actors.

Main characteristics

·       Farmers invest substantially in irrigation;

·       Reactive to external drivers, especially markets

·       Irrigation development does not require formal land tenure

·       Irrigation is part of broader farming systems

·       Prompt social and economic change

Competing demands for irrigation water

In this area, two cases from Tanzania were used to examine the implications of scale in PPP and the need for a stronger strategic role to be taken by public agencies in the political process of resolving competing priorities in water use.

The 2000ha Dakawa paddy rice irrigation scheme near Dodoma has been the object of repeated rehabilitation since its inception.

Despite high levels of investment from international donors, the scheme suffers from high pumping costs and inadequate water supply from the Wami River.

In contrast, farmers who use very effective small-scale irrigation to grow a profitable strawberry crop in the Uluguru Mountains have been threatened with eviction by the Morogoro Municipal Council, who sees them as a threat to the city’s water supply.

2 case studies of irrigation:

Dakawa Rice Farm- a 2000 hectare former state rice farm. Now managed by a co-operative society for small farmers with large inputs from USAID – donor supported PPP for small scale farmers

Uluguru Mountains hosepipe irrigation for cultivation of high value fruit and vegetable crops. Latest evolution for small scale farming by indigenous Waluguru people. Private irrigation without public consent.

Assumptions in Irrigation Policy

Traditional irrigation is wasteful and inefficient suggests training the farmers on better water use and encouraging the private sector, NGOs etc. to contribute.

Improved' traditional irrigation- investment in upgrading traditional systems (can be seen in Pare Mountains- see paper by Mul) suggest gov. will oversee technical requirements and encourage PPP

Water conflicts can be avoided if all are organised properly in 'associations'.

Summing up

·       Small-scale irrigation is not a quick fix for agricultural growth without solving bigger issues of hydropolitics.

·       Insufficient attention is given to competing uses of water (e.g. agricultural use vs power generation).

·       Current policy frameworks and approaches are inadequate, contradictory and ineffective.

·       Inadequate capacity of RBOs to regulate water use- ‘we just sell water’.

·       Climate change, economic growth and increasing population make water supply a critical issue.

·       Negotiated solutions must account for water energy food nexus.