The latest Tanzania Economic Update sub-titled ‘Realizing the Potential of Agriculture for Inclusive Growth and Poverty Reduction,’ which was launched yesterday, says recent signs of transformation in Tanzania’s agricultural sector offer encouraging opportunities for acceleration of growth.
“Current trends in agriculture offer a tremendous opportunity to catalyze private investment, both local and foreign, and raise the incomes of the poor,” said Bella Bird, the World Bank Country Director for Tanzania.
The report underscores the importance of having supportive public policies and spending which crowds in more private investments needed to catalyze a nascent agricultural transformation.
Signs of transformation within the study period (2008-2014) include a growing number of medium-scale farmers, opening up opportunities for smallholder farmers through positive spillovers.
These spillovers have created jobs for farmers through their demand for extra agricultural inputs and financial services, traction or rental services and transportation, the report indicated.
“What we are seeing for example is that medium-sized farms grew from 23- percent of all farm land holdings in 2008 to 35 percent in 2014.
This group is in the 5–20 hectare (ha) range compared to the typical smallholding of 1–2 ha whose numbers are decreasing, remarked Holger Kray, World Bank agriculture practice manager and co-author of the report.
“These farmers employ, invest in technology and knowledge, and they attract commercial services that can provide a basis for agro-based and food-based tax revenue. Small-scale farms on average improved their farming outcomes the nearer they were to medium-scale farms, providing an opportunity for more inclusive growth.”
The presence of medium-scale farms in a district generally builds and deepens markets for agricultural inputs and outputs by enhancing local demand, which attracts suppliers.
As a result, small-scale farms were more likely to use improved seed and fertilizer, cultivate a larger proportion of their landholdings, and access agricultural extension services and credit in areas where there are more medium and large-scale farms.
The report shows that the 368,000 medium-scale farms added in Tanzania between 2008 and 2014 created 13 million days of additional work annually for hired workers, and US$225–300 million in net backward and consumer links.
The agriculture sector provides livelihoods directly to around 55 percent of the population (and three quarters of the poor) and indirectly to a further 15 percent within related value chain functions such as traders, transporters and processors.
The report emphasizes the sector’s centrality, by virtue of its size and spread, to achieving higher and more inclusive overall growth.
“This will remain so for decades to come,” the report stated, recommending several actions that the government needs to consider in order to make the most of the opportunities in the sector.
The Tanzania Economic Update series is published twice a year, featuring an overview of the recent performance and outlook, along with focusing on a topic of strategic significance to the country’s development for more intensive analysis.
The latest update shows that economic growth prospects remain positive but depend on the speed of reforms to improve fiscal management and the business environment for private investment and growth.