Agricultural Growth Corridors Presentation by Sean de Cleene, Vice President Business Development, Yara International and Vice Chair Kilimo Kwanza Growth.

Agricultural Growth CorridorsPresentation by Sean de Cleene, Vice President Business Development, Yara International and Vice Chair Kilimo

Kwanza Growth Corridors Executive Committee, Tanzania

Mozambique Beira Agricultural Growth Corridor (BACG)

• SAGCOT aims to unlock the agricultural potential of the Southern corridor by providing improved access to infrastructure and finance in support of smallholder farmer commercial development

Southern Agricultural Growth Corridor of Tanzania (SAGCOT)

An innovative public-private partnership model to achieve transformative change in agricultural growth

Government of the Republic of Tanzania

Donors and development finance institutions

Local and international private

sector

Executive Committee

Investment blueprint findings

• Limited investment into either small or larger scale commercial agriculture

• Operating costs are much higher than international benchmarks [competitors]

• Investment in new commercial agribusinesses is especially weak given high start-up costs

• Challenging business environment

• Major constraints are lack of “last mile” infrastructure to the farm gate and a lack of access to affordable kick start finance that acts as a bridge to traditional financing

• But investment blueprints clearly show there are ways to overcome these constraints . . .

Agricultural potential along Beira Corridor by 2030 as presented in investment blueprint

2010 2030

• <20,000 ha irrigated commercial agriculture

• Smallholders almost exclusively subsistence production

• High production and marketing costs

• >210,000 ha irrigated commercial agriculture

• Smallholders have access to irrigation infrastructure and markets

• Economies of scale increased competitiveness

There are opportunities to develop “clusters” of profitable agribusinesses

• Agricultural clusters require simultaneous and properly coordinated investment by the public and private sectors

• Ag Growth Corridor promotes investment in “hub” farms with (irrigated) outgrower schemes

• Each hub provides access to inputs, finance, storage, processing and markets . . .

• . . . with benefits for thousands of smallholder farmers in the vicinity

Commercial farm hubs or block farms can provide major benefits for large numbers of smallholder farmers

Innovative finance is needed to “kick-start” private investment in agriculture

• Innovative finance is provided by governments and donor agencies at a low cost of capital

• Each $1 of innovative finance can leverage at least $10 of private investment into socially-responsible agriculture businesses

H.E Prime Minister Pinda: call for donors “to make the catalytic fund operational as soon as possible”

9

Catalytic funding

Social impact investors

Commercial debt and equity

To fund agribusiness start-ups

To help achieve profitability (e.g. AECF challenge fund)

To scale-up successful businesses

Next steps

For more information visit

www.africacorridors.com

• BAGC investment blueprint was launched in Jan 2010 at the World Economic Forum in Davos

• SAGCOT investment blueprint will be launched at the World Economic Forum in Davos in January 2011

A 20-year vision showing how government, donors and the private sector can work together to stimulate a green revolution in southern Tanzania

Highlight “fast track” investment opportunities that can have a transformative impact on rural communities and contribute to food security

• Aim is for the Catalytic Fund to be launched at Davos and for the first investments to be made by mid-2011