Bagamoyo Integrated Rural Infrastructure Development Sugar Project (BIRIDESP)
- Reference: P-TZ-AAG-004
- Appraisal Date: 15/03/2014
- Board Presentation: 09/07/2014
- Status: LendingLEND
- Implementing Agency: OFFICE OF THE PRIME MINISTER
- Location: Bagamoyo
1. Outgrowers Infrastructure Development
1.1 Bulk Infrastructure
The main infrastructure for sprinkler irrigation of 3000 ha would be developed at three sites (Kiwangwa, Matipwili and Gama) as follows:
A.Main water ly and drainage systems: 5 main weirs and pump stations (63 pumps) to pump water into the irrigation system, water conveyance pipes (53km of various diameters), a 1.4 million m3 storage dam/reservoir to store surface runoff to supplement supply from the Wami River; flood protection dykes (28km); main and secondary drains (94km); 33kV power supply lines (94km); access and haulage roads (64km) and famer group office/stores and sanitary facilities (3 sets - one per site);
B. Land clearing and levelling of 3,000 Ha of fields;
C.Capacity Building: for district council staff and beneficiary communities in scheme design and implementation including supply of office equipment, a vehicle and motorcycles to the district for construction supervision;
D.Design: Technical Assistance for detailed design and construction supervision of the main irrigation and drainage system with support from district engineers.
1.2 Agricultural Infrastructure
A.Infieldsprinkler irrigation equipment, drainage and road works, and land preparation/crop husbandry equipment for 3000 ha, through credit to be obtained by about 30 farmer groups (companies).
2. Outgrowers and Community Capacity Development
2.1 Outgrowers Capacity Development
A. Development of capacity building modules (6) through Technical Assistance B. Farmer Group formation (about 30 companies) and Training of Trainers (150 farmers) and District Extension/Technical staff (15) C. TA to facilitate linkage between farmers and credit providers D. Preparation of bankable proposals
2.2 Community Capacity
A. Provision of smallscale farming, processing and income generation demonstration equipment and training of farmers B. Provision of matching start-up grant (UA 355,000) for income generation activities (about 500)
3. Project Coordination APlanning, management, coordination and implementation of project activities; B.Monitoring and Evaluation including various studies, progress and supervision reports; C.Procurement of relevant office equipment, vehicles.
9.1 The agriculture sector is a key driver of social and economic development in Tanzania and has a huge potential for fostering broad based growth and poverty reduction in the Country. At present, the sector employs 77.5% of the population, generates 23.7% of GDP and 24% of export earnings, and also contributes about 95% of the national food requirements. In highlighting the importance of the agriculture sector and to address the challenges facing it, the Tanzania Development Vision 2025 (TDV 2025) emphasizes the following three as national priority goals:
(i) ensuring basic food security;
(ii) improving income levels; and
(ii) increasing export earnings. The National Strategy for Growth and Reduction of Poverty (MKUKUTA II - 2011 -2015) also identifies the agriculture sector as a priority for the country. The specific agriculture sector policies and strategies, including the ASDS, the ASDP, the Kilimo Kwanza initiative and the Southern Agricultural Growth Corridor of Tanzania (SAGCOT) initiatives all call for increased commercialization of agriculture. The latest national development initiative called the Big Results Now identifies three priority crops for the agriculture which are maize, rice and sugarcane as they contribute to food security and import substitution. The Bank's Country Strategy Paper (CSP, 2011 -2015) for Tanzania has two pillars:
(i) Infrastructure Development; and
(ii) Building an Enabling Institutional and Business Environment. It is expected that the BASOGS Project will address the objectives of the national development strategies and the Bank's objectives in Tanzania by commercializing the agriculture sector through assisting target communities to increase sugarcane production and other food crops through infrastructure development and improved and modern agricultural practices thereby boosting local household incomes and ensuring food security.
9.2 Between 2001 and 2011, the production of sugar in Tanzania increased from 130,000 tonnes per year to 270,000 tonnes per year. This was principally due to the refurbishment of the four existing sugarcane estates (Kilombero, TPC, Mtibwa and Kagera) and the rejuvenation of sugarcane farms. Sugar consumption in Tanzania is estimated at about 475 ,000 tonnes per year with annual production ranging from 250,000-300,000 tonnes over the past five years. This therefore results in an annual deficit of approximately 200,000 tonnes. It is predicted that sugar consumption in Tanzania will increase in the coming few years due to population growth and increasing incomes and it is expected that the supply shortfall will continue to grow in the near future. This situation therefore calls for an increase in domestic sugar production and the Government is actively seeking investors for the sugar sector, in particular within the SAGCOT. It is in this context that the Bagamoyo Sugarcane Plantation and Outgrower Scheme are being developed as a flagship project within the SAGCOT.
9.3 The Bank, through its Private Sector Department (OPSM), is considering providing up to USD 50 million as a non-concessional loan to fund the Bagamoyo Eco-Energy (BEE) Sugar Estate. The Bank is the mandated lead arranger for the commercial project, currently estimated to have a project cost of USD 578 million. The commercial project will produce approximately 800,000 tonnes of sugarcane annually on 7,800 ha under irrigation and will consist of a sugar mill with an annual production of 132,000 tonnes of sugar, 10 million litres of ethanol and 32 MW of electricity (with the surplus being supplied to the national grid). Most sugarcane operations consist of a commercial/industrial estate and an outgrower scheme.
9.4 The outgrower scheme (BASOGS) is the focus of this concept note, which will commercialize smallholder farmers on 3,000 ha of land surrounding the industrial estate. At full capacity, the outgrowers are expected to produce 300,000 tonnes of sugarcane per year that they will sell to the estate to be crushed for sugar and energy production. This will benefit the surrounding community and incentivize commercial out-growers by guaranteeing the off-take of farm production. In addition, the Project is expected to substantially alter the agricultural and economic landscape of the Bagamoyo District and will present a number of off-farm opportunities for local communities and entrepreneurs. The public sector financing for the outgrower scheme will complement the industrial estate being financed by the Bank's private sector to develop the first Public Private Partnership (PPP) project in the agriculture sector in the Bank. The additional production of sugar will address the unmet demand in the country and result in import substitution (both of which will promote food security).
Epected/designed cross-cutting focus/benefits: The proposed project provides significant social and economic development benefits for outgrowers including comprehensive technical and business capacity building and enhanced food security. The outgrowers are expected to produce annually 300,000 tonnes of sugarcane generating approximately USD 4,500 per ha with direct employment for about 1,500 farmers who will be the direct beneficiaries. The increase in local income from direct employment may have the indirect benefit of attracting people away from unsustainable means of income generation such as charcoal making (which is currently prevalent in this area) and hunting thereby alleviating the strain on natural resources. The project will also benefit the local economy through the direct provision of goods and services to the workers in the commercial estate (approximately 2,300) and outgrower scheme from the local community and businesses. The indirect beneficiaries include the population of the seven villages within the project area with a population of 28,000 people who will be reached through the multiplier effects of the project benefits. Agricultural and business techniques imparted to farmers will assist them to cultivate their present food plots more efficiently, ensure a balanced production of food and cash crops and support food security strategies. Sugar production will also help alleviate the sugar shortage in the country (shortage of about 150,000-200,000 tonnes per year) resulting in import substitution thereby reducing the foreign exchange currently used to import sugar. The project will also benefit the 84% of rural women engaged in agriculture and more so the 23% of women-headed households. Specifically the programme will target women by ensuring that at least 50% of the beneficiaries of the income generating activities are women.
MPYISI Edson Rurangwa - OSAN1