Agricultural Finance Market Scoping Tanzania 2011
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AgriculturalFinanceMarketScoping Tanzania 2011
Sample & methodology
Sample drawn by National Bureau of Statistics (NBS)
Data collected by Synovate Tanzania
Listing & screening exercise provided the sampling frame
Identified 2 015 742 agri-businesses of which 519 972 qualified
4 094 face-to-face interviews were conducted with agri-business 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
Land-size and income-based selection criteria
applied
$600 or 5 acres of land for producers
$1,500 for non-producers
?
Business types
The problem …
• Smallholder & agri-business finance perceived as risky
• There is lack of financial services suited for agriculture
• Limited penetration of financial services
AgFiMS Tanzania 2011 Business Owner Profile
Business owners demonstrate entrepreneurial characteristics …
Business owners manage their money wisely and are willing to take calculated risks
Business owners make sound financial decisions
AgFiMS Tanzania 2011 Business Environment
Is the environment conducive for these entrepreneurs to achieve business success?
‘Ownership’ of land is a perception for most producers
More than 90% producers claim land ownership although less than 10% have title deeds
Lack of access to irrigation systemsinhibits productivity
Level of access to infrastructure not conducive for business activities, butmobile phones provide connectivity
Limitations in the business environment results in distressed sales
Preferred Market?
Distressed sales?
12% sell on contract10% sell all products on
contract
Agri-businesses have virtually no coping mechanisms to rely onwhen faced with business risks
Income diversification offering protection?86.1% diversify their income sources
Lack of access to networks &information increases vulnerability
AgFiMS Tanzania 2011Financial Inclusion
Business operations – Financial management
Banked Business owners who have or use any product or service from any commercial bank for the purpose of the agri-business
Served by formal non-bank and/or semi-formal non-bank financial institutions
Business owners who have or use any product or service from any regulated or registered financial institution which is not a commercial bank (e.g. SACCOS, MFIs) for the purpose of the agri-business
Formally served Business owners who are banked AND/OR who are served by formal non-bank and/or semi-formal non-bank financial institutions for the purpose of the agri-business
Informally served Business owners who use informal mechanisms to manage the financial matters of the agri-business. This would include services offered by agricultural associations or groups, input providers, VICOBAs, VSLAs, ROSCAs etc.
Financially served Business owners who are either formally AND/OR informally served for the purpose of the agriibusiness
Financially unserved/excluded
Business owners who are neither formally OR informally served for the purpose of the agriibusiness
Sound financial decision-making does not result in high levels of financial inclusion for agri-businesses
Quantifying the amount of credit in the AgFiMS market
BanksBanks SACCOsMFIs
SACCOsMFIs InformalInformal Friends/
familyFriends/ family
4% business owners
7% business owners
27% business owners
14% business owners
USD 36m68.9% of credit
11.7% of borrowers
USD 6m12.2% of credit
21.3% of borrowers
USD 8m15.1% of credit
79.3% of borrowers
USD 2m3.8% of credit
40.2% of borrowers
ASSUMPTIONS• Once-off per source•Ts 3,1m Bank• Ts300k SACCO/MFI• Ts100k Informal• Ts50k Friends/fam
ASSUMPTIONS• Once-off per source•Ts 3,1m Bank• Ts300k SACCO/MFI• Ts100k Informal• Ts50k Friends/fam
USD 52mUSD 52m•USD 300 on average•20% of turnover of those who borrow
•USD 300 on average•20% of turnover of those who borrow
The role of the informal sector - Credit?
96% of all business owners who use
informal mechanisms use it for the purpose
of credit
96% of all business owners who use
informal mechanisms use it for the purpose
of credit
AgFiMS Tanzania 2011 Identifying Development Needs
Perceived obstacles to growth
AgFiMS identified capacities needed for formal financial services usage
•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
The Future of AgFIMS?
Tanzania - first country where AgFiMS was undertaken
The aim is that it will be adopted for other countries across Africa
Who are behind AgFiMS?
More information:
www.agfims.org
Financial Sector Deepening Trust (FSDT)
Mwallu Mwachan’ga
T: +255 22 260 2873/5/6
Gatsby Charitable Foundation (GCF)
Ian AndersonE:
[email protected]: 44 20 7410
0330
Thank you…
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