Paper Presented on 18 th October 2012 During DPPASS meeting held at PASS Board Room Background PASS was established in 2000 as a project by Govt of Tanzania under the Danish funded Agriculture Sector Programme Support ASPS ID: 581196
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PRIVATE AGRICULTURAL SECTOR SUPPORT TRUST (PASS) Paper Presented on 18th October 2012 During DP/PASS meeting held at PASS Board RoomSlide2
BackgroundPASS 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 servicesPASS 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 .Slide3
PASS Trust 2008-2013 ProgramNew Program under BSPS-III Aim: To facilitate agricultural loans worth TZS 100 billion across the countryBudget : DKK 140million (TZS 35 billion)Plan: To open new zonal offices –Mbeya, Moshi, Mwanza & New head office in DarSlide4
PASS’s Products and Services:Business Development Services (mainly Feasibility studies & Business Plans)Financial Service (mainly Financial Linkages) with/out Credit GuaranteeFarmer development services: group formation, outgrower schemes, contract farmingSlide5
PASS team & facilities 2012Six Board Members Managing Director 1 Director: Finance & Administration Department, 1 Director : Business Development Department1 Senior Accountant 5 Branch In Charges/ Senior Business Development Officers5 Secretaries/Accounts-Assistants7 Business Development Officers
6 Drivers1 Technical Advisor1 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 )Slide6
The PASS ModelSlide7
Achievements as of August 2012One head office (Dar) & five Zonal offices (Morogoro, Mbeya, Mwanza, Moshi, Mtwara) have been establishedIn 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.Slide8
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) Slide9
ChallengesCollateral Crunch: Title Deed-Residential license?? Social Collateral??Some branches refuses to support livestock projects such as poultry, piggery and dairyChanging in personnel dealing with PASS/CRDB projects causes some delays and disqualify of potential projects for agricultural investmentsNumber of applicants from CRDB declining day to daySlide10
Costs of PASS Trust ServicesCommitment fee: TZS 30,000- (non-refundable)Business Plan Fee: 0.5% - 2 % of the requested loan amount depending on complexityAdditional 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 clientSlide11
Current StatusOutstanding 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 productivitySlide12
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 exports
Initiated
Horticulture
Exports; Improved
Poultry & Piggeries
,
Dairy
Production &
Beef
Fattening.
Food security
: support to
irrigation
for food
Assist with investment in
farm mechanisation
on larger scale
Assist
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.
Slide13
PASS’s Results and ImpactsImproved access to advisory, financial and marketing servicesIncreased volume of production
Improved quality of the produce
Farmers broadened and enhanced access to markets
Strengthened bargaining power of farmers through formation of
groups
Increased employment along nodes of value chains, also in agro-
processing
Increased income and demonstrable improved living standardsSlide14
Number of Submitted and Approved PASS Business Plans 2002-2010 Slide15
Regional TrendsSunflower is one the major oilseeds in AfricaThe leading sun flower seed producers in Africa in 2003 (MT)Production Trend in Tanzania2006/2007 data by MAFSC Tanzania Produced 88,753 tones of sunflower
The SHF estimated at 160,000 households in the central corridorCentral 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
19,000Slide16
Overview cont….135 processing machines installed in the central corridor with a total installed capacity of 853 tons/dayThis capacity is enough to process approximately 170,600 tons (> 45% of installed capacityPrices 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 levelsSlide17
Constraints of the Sub-sectorSmall Holder FarmersLack of appropriate knowledgeInadequate Extension Services
Inadequate inputsPoor Infrastructure
Poor Market Information
Insufficient and poor access to working capital
Processors
Lack of proper processing
refining, packaging,
Preservation/storage
Poor marketing
Labelling/ branding
Policies and Regulatory Framework
Insufficient and poor access to working capitalSlide18
OpportunitiesHigh Market demand in and outside the countryGovernment supportAvailable actors to facilitate the sub sectorFavorable production conditionsAvailable processing technologyAvailable laborSlide19
Industry Analysis of Sunflower Oil in TanzaniaSlide20
Constraints of Value ChainProduct: Low quality that has hindered provision of TBSMarket: Inadequate strategies to ensure sustainable marketProcess: Lack of refining machineSlide21
VCD and ProgrammingProduct upgrading: Quality and standard control.Process upgrading: Acquisition of efficient machinesMarket upgrading: Establish distribution centers and agentsSlide22
Suggested Business Model Pool of organized producer groupsProcessing, standardization and branding
SupermarketsDistributors
Middle income Population
Promotion StrategiesSlide23
Opportunity for PASSFacilitation on investment in efficient machines and equipments for sunflower production and processingFacilitation on availability of working capital for sunflower production and processingFacilitation of godowns construction Slide24
Pass New ProductsLenders Option Guarantee(Portfolio guarantee)Linkage Banking Guarantee( Institutional Guarantee)Lease/Asset financingSlide25
Thank youWe facilitate investments in Agriculturewww.pass.ac.tz