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The Board of Directors of the African Development Fund (ADF), the concessional window of the AfDB Group, on 29 June, approved a USD 64 million (40 million Units of Account) loan to Tanzania. The amount will be disbursed under the Marketing Infrastructure Value Addition and Rural Finance Programme (MIVARFP), which will be implemented over five fiscal years, 2011 – 2016.
The programme comprises three major components, namely: (i) Marketing Infrastructure and Systems Development; (ii) Rural Finance; and (iii) Programme Coordination. Activities to be funded by the Bank include the construction/rehabilitation of markets which will become centers of commercial and social interactions, and growth centers around which other ancillary activities and enterprises will emerge.
Improved markets and additional/rehabilitated rural feeder roads will create more opportunities for small-scale farmers to sell their produce at competitive prices, thereby benefitting consumers. Moreover, the producer empowerment and rural finance activities (supported by IFAD & AGRA) will facilitate access to credit by beneficiaries, creating a synergy between the different programme activities.
The MIVARFP is a follow-up to AfDB and IFAD financed Agricultural Marketing Systems Development Programme (AMSDP). In July 2009, Tanzania’s government formally expressed satisfaction with the benefits derived by the rural poor from AMSDP, and requested the Bank Group and IFAD’s support for up-scaling these benefits to cover the entire country, including Zanzibar.
Tanzania runs the risk of falling behind its poverty reduction goals because of poor infrastructure. Such poor infrastructure significantly account for the high proportion (83%) of marketing costs attributable to transport charges for agricultural commodities like maize. The incentive to invest in MIVARF is therefore to improve farmer profit margins mainly through reduction in operational costs and value addition.