The move is aimed at improving irrigation efficiency while also expanding the amount of land under irrigation.
The consortium, included the Financial Sector Deepening Trust (FSDT), National Irrigation Commission (NIrC), Private Agricultural Support Trust (PASS), Rikolto, Tanzania Agricultural Development Bank (TADB), Tanzania Horticulture Association (TAHA), and Tanzania 2030 Water Resources Group (2030 WRG).
A public-private-civil society partnership hosted by the World Bank Group – aimed at establishing a partnership that leverages their combined networks to link smallholder farmers with appropriate financing for irrigation investments.
The collaboration supports the mandate of NIrC to strengthen private sector engagement in irrigation through financing, equipment-supply, and co- investment.
Eliakim Chitutu, NIrC’s managing director said: “If Tanzania is to achieve its agriculture and food security targets, expanding irrigation is critical, but we must do so in a way that is both financially and environmentally sustainable.”.
In its first phase, the consortium plans to unlock a portfolio of irrigation projects by enhancing existing financing options that remain out of reach for most smallholder farmers or enabling new financing options entirely.
He said once at scale, the initiative will see a substantial increase in smallholder farmer’s access to irrigation solutions.
Currently, smallholder and emerging farmers account for over 80 percent of the nation’s agriculturalists and they struggle to access credit and loan mechanisms that would enable them to purchase modern, water-efficient irrigation systems.
As a result, although Tanzania is endowed with nearly 30 million hectares of irrigable land, less than 500,000 hectares is currently under irrigation, equivalent to less than 2 percent of the potential.
He added that despite the limited amount of land under irrigation, the agriculture sector remains the country’s largest water user, accounting for over 80 percent of water consumed nationally. Gravity, open canal and flooding or basin irrigation methods commonly in use are very water-inefficient, with up to 45 percent water losses.
Despite a relative abundance of water resources, critical parts of Tanzania, the Pangani River Basin in particular, were considered water-stressed.
Freshwater availability per capita in the latter is 1,200 cubic meters, compared to 1,608 cubic meters for Tanzania as a whole. The water-efficiency of irrigation solutions is therefore critical to safeguard Tanzania’s future water security.
TAHA chief executive officer Jacqueline Mkindi said “Tanzania’s smallholder farmers produce the majority of agricultural output, but they also struggle to access affordable credits and related services,”.
“The challenge is not only about lack of financial products in the market but also weak support system to guide farmers on how to access available credit in a smart manner ” she added.
A market study carried out in 2016 by TADB, Tanzania 2030 WRG, and FSDT showed that although the country’s banks had developed products aimed at supporting such farmers, the high costs of capital and of identifying investment-ready farmers increases the risks to extending irrigation financing on a large scale.
“Qualified demand for irrigation is dispersed and uncharted. Such conditions, combined with the relative disconnect between target farmers and financial institutions, make identifying bankable irrigation projects challenging” said Japhet Justine, Managing Director for TADB, “That’s precisely the challenge that this partnership is intended to address.”.
He said the consortium will identify, prioritize, incubate, and package irrigation financing opportunities that meet the requirements of funding sources, therefore reducing the coordination burden on financiers.
By facilitating smallholder and emerging farmers’ access to irrigation finance, the consortium will help to expand the amount of land under irrigation, helping to provide both a safeguard against the worst impacts of climate change while at the same time catalyzing economic growth, improving food security, and safeguarding Tanzania’s future water security.
Speaking ahead of the event, Onesmo Sigalla, the Country Coordinator with Tanzania 2030 WRG said: “Water security and food security in Tanzania go hand in hand”.
“The joint-efforts of this consortium are precisely the type of multi-stakeholder cooperation that can leverage sustainable water management as a vehicle for investment and growth, while also helping to safeguard the country’s resources for future generations”.