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

E: mwallu@fsdt.or.tz

E: info@fsdt.or.tz

T: +255 22 260 2873/5/6

Gatsby Charitable Foundation (GCF)

Ian AndersonE:

ian.anderson@gatsby.org.ukT: 44 20 7410

0330

Thank you…