The African Development Bank (AfDB) has approved a significant grant and partial credit guarantee to support the African Fertilizer and Agribusiness Partnership (AFAP) in Tanzania. The project, known as the AFFM Partial Credit Guarantee Provisioning Project, aims to improve access to quality fertilizer and promote sustainable agricultural practices among smallholder farmers. With the grant covering 94% of the project’s recurrent costs, this initiative seeks to enhance productivity and food security in Tanzania while strengthening the fertilizer supply chain.
Objective and Implementation Strategy: The primary objective of the project is to facilitate timely access to appropriate fertilizers for smallholder farmers, thereby increasing their productivity. The implementation strategy encompasses three main components: supporting hub agro-dealers in accessing the credit guarantee facility, increasing fertilizer availability, and ensuring effective project management and coordination. The project is scheduled to be implemented from 1 July 2023 to 31 July 2026.
Target Area and Population: Building on the success of a previous credit guarantee project, the AFAP plans to expand its activities to additional regions in Tanzania. The target areas for this project include Ruvuma, Manyara, Rukwa, Kagera, and Mwanza, in addition to the 14 regions covered by the previous initiative. The ultimate beneficiaries of this project are estimated to be around 550,000 smallholder farmers, with direct beneficiaries being five suppliers and 35 hub agro-dealers, and 1,000 retailers as indirect beneficiaries.
Expected Outcomes and Impact: By improving fertilizer access and utilization, the project aims to increase agricultural productivity and food security in Tanzania. It aligns with the Bank’s Feed Africa Strategy, which seeks to transform agriculture into a sustainable and inclusive sector. The credit guarantee is expected to facilitate the distribution of at least 60,000 tonnes of fertilizer, worth $36.5 million. The ultimate goal is to enhance the overall fertilizer supply chain and enable smallholder farmers to optimize their crop yields, contributing to economic growth and poverty reduction in the country.
Context and Challenges: Tanzania’s agricultural sector plays a significant role in the country’s economy, contributing 29% to its GDP and employing 65% of the population. However, despite the majority of agricultural labor being female, the fertilizer consumption rate remains below the continental target of 50 kg per hectare. Tanzania heavily relies on fertilizer imports, with the current demand estimated at 698,262 tonnes. To bridge the financing gap and meet the nutrient consumption target, appropriate financial products and services need to be provided.
Conclusion: The AfDB’s allocation of funds for the AFFM Partial Credit Guarantee Provisioning Project represents a significant step towards addressing the challenges faced by smallholder farmers in Tanzania. By improving access to quality fertilizers, the project aims to enhance agricultural productivity, alleviate poverty, and improve food security in the country. It builds upon the successes of previous initiatives and highlights the importance of strategic partnerships to drive sustainable development in the agriculture sector.