PASS Managing Director, Mr. Nicomed Bohay makes a presentation on Irrigation Financing during SUA Agriculture & Agribusiness Conference 2018.
Acting Managing Director for TADB, Mr. Augustino Matutu Chacha (centre) laments on modus operandi of the proposed Irrigation Financing during SUA Agriculture & Agribusiness Conference 2018. Others in picture are FSDT’s Head of Agriculture and Rural Finance, Mr. Mwombeki Baregu (left) and PASS Managing Director, Mr. Nicomed Bohay (right).
FSDT’s Head of Agriculture and Rural Finance, Mr. Mwombeki Baregu (left) contributing during the meeting. Others in picture are PASS Managing Director, Mr. Nicomed Bohay (right) and TADB Acting Managing Director, Mr. Augustino Matutu Chacha (centre).
The trio Irrigation Financing collaborators attentively taking contributions from the floor.
By Our Reporter – Morogoro
Tanzania Agricultural Development Bank (TADB), The Private Agricultural Sector Support Trust (PASS) and Financial Sector Deepening Trust (FSDT) are in the process to find initial fund amounting TZS 100 billion to supporting irrigation infrastructure development in the country.
Speaking during the meeting to discuss collaboration on irrigation financing, Acting Managing Director for TADB, Mr. Augustino Matutu Chacha said lending for agriculture infrastructure is a challenge in Tanzania as a result has been retrograding sector growth in the country.
He added that this is caused due to high cost of borrowing and limited payback period for the loans associated with the limited use of irrigation.
“A consequence of this challenging lending environment to agricultural infrastructure, which requires long-term payback period, is limited investment in agriculture productivity, particularly in irrigation infrastructure,” he said.
On his part, PASS Managing Director, Mr. Nicomed Bohay said that the intervention in irrigation development has verified worldwide that it boosts crop production 3-4 times than that of rain fed agriculture.
He added that the effective irrigation also needs to be combined with increased use of farm inputs (high quality seeds, fertilizers, agrochemicals etc) to reach maximum yield increase as well as improving productivity and reduce dependence on hoe / ox plough for land cultivation.
According to Mr. Bohay the investment will stimulate investments and promote growth of commercial agriculture and agri-businesses in Tanzania due to its capacity in boosting crop production.
“We all know with developed/improved irrigation infrastructure and water management, paddy yields on an average can increase from 1.8 tones per hectare to 5 tones per hectare,” Mr. Bohay said.
Contributing during the meeting, FSDT’s Head of Agriculture and Rural Finance, Mr. Mwombeki Baregu mentioned that the need to have in place strong irrigation financing is associated with efforts made by the National Irrigation Commission and 2030 Water RG to assist the financial sector to develop a solution to financing the investment needs in agriculture infrastructure, particularly irrigation infrastructure.
He added that the partnership facilitated studies on the demand for irrigation financing in Tanzania, engaged partners on the possible solutions, and developed a model that would be able to support a solution.
According to Mr. Baregu this model will be implemented by TADB and PASS.
Noting FSDT’s role, Mr. Baregu said, “FSDT seeks to facilitate “more and better financial services” to where a vast majority of Tanzanians are employed and located. This includes diagnosis of the barriers to agriculture and rural finance transactions and working with a broad range of partners to implement interventions that address the constraints and unlock access, usage, quality, and welfare of financial services.”
History shows the modern irrigation was introduced in Tanganyika in 1930 through the establishment of the Tanganyika Planting Company Ltd and other commercial farms and estates. Since Independence a large potential for irrigation has been identified, partly as commercial irrigation schemes, partly for smallholders organized in water users associations.
Only part of that potential has so far been realized. According to National irrigation Policy 2009 Tanzania has the identified irrigation potential area of 29.4 million hectares for sustainable irrigation development, of which 2.3 million ha are classified as high potential; 4.8 million ha as medium potential; and 22.3 million ha as low potential. Out of 2.3 million ha with high potential for irrigation development, only 461,326 hectares (1.6%) has been put under irrigation.
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