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PASS – Private Agricultural Sector Support Limited©Copyright PASS, Tanzania 2003
PRIVATE AGRICULTURAL SECTOR SUPPORT TRUST (PASS)
Paper Presented on 18th October 2012 During DP/PASS meeting held at
PASS Board Room
PASS – Private Agricultural Sector Support Limited©Copyright PASS, Tanzania 2003
Background
PASS was established in 2000 as a project by Govt of Tanzania under the Danish funded Agriculture Sector Programme Support (ASPS)
The goal of PASS is to stimulate investment and growth of private commercial farmers and agri-businesses by facilitating access to Financial services
PASS was registered as an autonomous legal Trust in May 2007
“PASS Trust” started under IPSAS financial regulations and management of the Trust on 1 November 2008 .
PASS – Private Agricultural Sector Support Limited©Copyright PASS, Tanzania 2003
PASS Trust 2008-2013 Program
New Program under BSPS-III
Aim: To facilitate agricultural loans worth
TZS 100 billion across the country
Budget : DKK 140million (TZS 35 billion)
Plan: To open new zonal offices –Mbeya, Moshi,
Mwanza & New head office in Dar
PASS – Private Agricultural Sector Support Limited©Copyright PASS, Tanzania 2003
PASS’s Products and Services:
1. Business Development Services (mainly Feasibility
studies & Business Plans)
2. Financial Service (mainly Financial Linkages)
with/out Credit Guarantee
3. Farmer development services: group formation,
outgrower schemes, contract farming
PASS – Private Agricultural Sector Support Limited©Copyright PASS, Tanzania 2003
PASS team & facilities 2012 Six Board Members Managing Director 1 Director: Finance & Administration Department, 1 Director : Business Development Department 1 Senior Accountant 5 Branch In Charges/ Senior Business Development Officers 5 Secretaries/Accounts-Assistants 7 Business Development Officers 6 Drivers 1 Technical Advisor 1 IT consultant (out sourced) Head Office at Patel Building, Dar es Salaam Branch offices in Mbeya, Morogoro and Mwanza & Moshi
(Total: 26 Full Time staff members )
PASS – Private Agricultural Sector Support Limited©Copyright PASS, Tanzania 2003
Achievements as of August 2012
One head office (Dar) & five Zonal offices (Morogoro,
Mbeya, Mwanza, Moshi, Mtwara) have been established
In the 10 years: 977 individuals and 1,770 groups have
received agricultural loans worth TZS 92 billion
facilitated by PASS Trust.
PASS is now working with 7 banks-CRDB, NMB, Exim,
FBME, TIB,KCBL and ABC.
PASS – Private Agricultural Sector Support Limited©Copyright PASS, Tanzania 2003
Who can apply for PASS Trust’s Products and Services?
Private Entrepreneurs – consisting of individuals, associations, companies and farmer groups within or linked to the agricultural and livestock sector.
Private Entrepreneurs – who have a vision and a viable investment idea above 7 million Tshs. (less for groups)
PASS – Private Agricultural Sector Support Limited©Copyright PASS, Tanzania 2003
Challenges
Collateral Crunch: Title Deed-Residential license??
Social Collateral??
Some branches refuses to support livestock projects such as
poultry, piggery and dairy
Changing in personnel dealing with PASS/CRDB projects
causes some delays and disqualify of potential projects for
agricultural investments
Number of applicants from CRDB declining day to day
PASS – Private Agricultural Sector Support Limited©Copyright PASS, Tanzania 2003
Costs of PASS Trust Services
Commitment fee: TZS 30,000- (non-refundable)
Business Plan Fee: 0.5% - 2 % of the requested loan amount depending on
complexity
Additional services e.g. as a medium/large feasibility
study are provided on cost sharing basis between PASS
Trust and the client at a favorable rate for the client
PASS – Private Agricultural Sector Support Limited©Copyright PASS, Tanzania 2003
Current Status
Outstanding loans amount TZS 43 billion.
Default claims and doubtful category TZS 1.9 billion
This equates to 4.4% which is within an acceptable scale of
below 5%
Major indicators included SME’s increased turnover,
returns to investor, tax to GOT, export earnings and
substantial increase of employment, more adoption of
improved practices and better productivity
PASS – Private Agricultural Sector Support Limited©Copyright PASS, Tanzania 2003
Who has PASS Trust Helped (31 December 2011)
Mobilized investment worth TZS 95 billion and supported over approximately 35,000 farmers About 190 tractors and equipments have been loaned to farmers worth about TZS 8 billion Enabled set up High quality speciality coffee exportsInitiated Horticulture Exports; Improved Poultry & Piggeries, Dairy Production & Beef Fattening.Food security: support to irrigation for foodAssist with investment in farm mechanisation on larger scaleAssist groups of farmers (SACCOS; Cooperatives; Irrigation Associations; Farmers Groups) link to banks. Assist commercial and government banks in linking up to high potential agri-business clients and to group lending opportunities /schemes with joint responsibility/ security of the loan.
PASS – Private Agricultural Sector Support Limited©Copyright PASS, Tanzania 2003
PASS’s Results and ImpactsImproved access to advisory, financial and marketing services
Increased volume of production
Improved quality of the produce
Farmers broadened and enhanced access to markets
Strengthened bargaining power of farmers through formation of groupsIncreased employment along nodes of value chains, also in agro- processing
Increased income and demonstrable improved living standards
PASS – Private Agricultural Sector Support Limited©Copyright PASS, Tanzania 2003
Number of Submitted and Approved PASS Business Plans 2002-2010
PASS – Private Agricultural Sector Support Limited©Copyright PASS, Tanzania 2003
Regional Trends•Sunflower is one the major oilseeds in AfricaThe leading sun flower seed producers in Africa in 2003 (MT)
Production Trend in Tanzania•2006/2007 data by MAFSC Tanzania Produced 88,753 tones of sunflower•The SHF estimated at 160,000 households in the central corridor•Central Corridor produced 60% of sunflower seeds of the national production of 187,000 tons (2009)
Oil Seed Sub-Sector Overview
South Africa
Morocco Egypt Tanzania Sudan
708,000 55,600 45,000 28,000 19,000
PASS – Private Agricultural Sector Support Limited©Copyright PASS, Tanzania 2003
Overview cont….
135 processing machines installed in the central corridor with a total installed capacity of 853 tons/day
This capacity is enough to process approximately 170,600 tons (> 45% of installed capacity
Prices vary by region and within a season April/May and the end in November
Price variation reflect the phenomenon of dwindling supply as the season progresses, largely because of inadequate storage and working capital at both the household and oil mill levels
PASS – Private Agricultural Sector Support Limited©Copyright PASS, Tanzania 2003
Constraints of the Sub-sectorSmall Holder Farmers Lack of appropriate knowledge
o Inadequate Extension Serviceso Inadequate inputso Poor Infrastructureo Poor Market Informationo Insufficient and poor access to working capital
Processors Lack of proper processing
o refining, packaging, Preservation/storage Poor marketing
o Labelling/ branding Policies and Regulatory Framework Insufficient and poor access to working capital
PASS – Private Agricultural Sector Support Limited©Copyright PASS, Tanzania 2003
Opportunities
High Market demand in and outside the country
Government support Available actors to facilitate the sub sector Favorable production conditions Available processing technology Available labor
PASS – Private Agricultural Sector Support Limited©Copyright PASS, Tanzania 2003
Industry Analysis of Sunflower Oil in Tanzania
Suppliers Quite large number of
suppliers in the market (small & large scale processors)
Varied quality and processing technologies
Concentration of local suppliers in Central Corridor
Aggressive large scale suppliers (Murza and Mount Meru)
Substitutes: KORIE SAFI OK
Buyers: (To what extent can the buyers bargain?) Most buyers understand good
quality Price is not a major factor but
important Quality and consistence supply
are the pushing factors Branding could influence
buyers’ choice
New Entrants: (Are there entry barriers for new entrants in Domestic Market?) Presence of unregistered suppliers Tanzania is yet to have standard set for
double refined edible oil Consumers and Whole sellers buy from
SMEs Quality of sunflower not critical
Rivalry: Metro, Ivory, Msalali, Masoud, SMEs, Murza and Mount MeruI
PASS – Private Agricultural Sector Support Limited©Copyright PASS, Tanzania 2003
Constraints of Value Chain
Product: Low quality that has hindered provision of TBS
Market: Inadequate strategies to ensure sustainable market
Process: Lack of refining machine
PASS – Private Agricultural Sector Support Limited©Copyright PASS, Tanzania 2003
VCD and Programming
Product upgrading:
Quality and standard control.
Process upgrading:
Acquisition of efficient machines
Market upgrading:
Establish distribution centers and agents
PASS – Private Agricultural Sector Support Limited©Copyright PASS, Tanzania 2003
Suggested Business Model
Pool of organized producer groups
Processing, standardization and branding
Supermarkets
Distributors
Middle income Population
Promotion Strategies
PASS – Private Agricultural Sector Support Limited©Copyright PASS, Tanzania 2003
Opportunity for PASS
Facilitation on investment in efficient machines and equipments for sunflower production and processing
Facilitation on availability of working capital for sunflower production and processing
Facilitation of godowns construction
PASS – Private Agricultural Sector Support Limited©Copyright PASS, Tanzania 2003
Pass New Products
1. Lenders Option Guarantee(Portfolio guarantee)
2. Linkage Banking Guarantee( Institutional Guarantee)
3. Lease/Asset financing
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