PRIVATE
AGRICULTURAL
SECTOR SUPPORT
TRUST (PASS)
Paper Presented on 18th October 2012
During DP/PASS meeting held at
PASS Board Room
PASS – Private Agricultural Sector Support Limited
©Copyright PASS, Tanzania 2003
Background




PASS was established in 2000 as a project by Govt of
Tanzania under the Danish funded Agriculture Sector
Programme Support (ASPS)
The goal of PASS is to stimulate investment and growth of
private commercial farmers and agri-businesses by
facilitating access to Financial services
PASS was registered as an autonomous legal Trust in May
2007
“PASS Trust” started under IPSAS financial regulations
and management of the Trust on 1 November 2008 .
PASS – Private Agricultural Sector Support Limited
©Copyright PASS, Tanzania 2003
PASS Trust 2008-2013 Program
New Program under BSPS-III

Aim: To facilitate agricultural loans worth
TZS 100 billion across the country

Budget : DKK 140million (TZS 35 billion)

Plan: To open new zonal offices –Mbeya, Moshi,
Mwanza & New head office in Dar
PASS – Private Agricultural Sector Support Limited
©Copyright PASS, Tanzania 2003
PASS’s Products and Services:
1.
Business Development Services (mainly Feasibility
studies & Business Plans)
2.
Financial Service (mainly Financial Linkages)
with/out Credit Guarantee
3.
Farmer development services: group formation,
outgrower schemes, contract farming
PASS – Private Agricultural Sector Support Limited
©Copyright PASS, Tanzania 2003
PASS team & facilities 2012













Six Board Members
Managing Director
1 Director: Finance & Administration Department,
1 Director : Business Development Department
1 Senior Accountant
5 Branch In Charges/ Senior Business Development Officers
5 Secretaries/Accounts-Assistants
7 Business Development Officers
6 Drivers
1 Technical Advisor
1 IT consultant (out sourced)
Head Office at Patel Building, Dar es Salaam
Branch offices in Mbeya, Morogoro and Mwanza & Moshi
(Total: 26 Full Time staff members )
PASS – Private Agricultural Sector Support Limited
©Copyright PASS, Tanzania 2003
The PASS Model
PASS – Private Agricultural Sector Support Limited
©Copyright PASS, Tanzania 2003
Achievements as of August 2012

One head office (Dar) & five Zonal offices (Morogoro,
Mbeya, Mwanza, Moshi, Mtwara) have been established

In the 10 years: 977 individuals and 1,770 groups have
received agricultural loans worth TZS 92 billion
facilitated by PASS Trust.

PASS is now working with 7 banks-CRDB, NMB, Exim,
FBME, TIB,KCBL and ABC.
PASS – Private Agricultural Sector Support Limited
©Copyright PASS, Tanzania 2003
Who can apply for PASS Trust’s
Products and Services?

Private Entrepreneurs – consisting of individuals,
associations, companies and farmer groups within
or linked to the agricultural and livestock sector.

Private Entrepreneurs – who have a vision and a
viable investment idea above 7 million Tshs. (less
for groups)
PASS – Private Agricultural Sector Support Limited
©Copyright PASS, Tanzania 2003
Challenges

Collateral Crunch: Title Deed-Residential license??
Social Collateral??

Some branches refuses to support livestock projects such as
poultry, piggery and dairy

Changing in personnel dealing with PASS/CRDB projects
causes some delays and disqualify of potential projects for
agricultural investments

Number of applicants from CRDB declining day to day
PASS – Private Agricultural Sector Support Limited
©Copyright PASS, Tanzania 2003
Costs of PASS Trust Services

Commitment fee: TZS 30,000- (non-refundable)

Business Plan Fee: 0.5% - 2 % of the requested loan
amount depending on complexity

Additional services e.g. as a medium/large feasibility
study are provided on cost sharing basis between PASS
Trust and the client at a favorable rate for the client
PASS – Private Agricultural Sector Support Limited
©Copyright PASS, Tanzania 2003
Current Status

Outstanding loans amount TZS 43 billion.

Default claims and doubtful category TZS 1.9 billion
This equates to 4.4% which is within an acceptable scale of
below 5%

Major indicators included SME’s increased
turnover,
returns to investor, tax to GOT, export earnings and
substantial increase of employment, more adoption of
improved practices and better productivity
PASS – Private Agricultural Sector Support Limited
©Copyright PASS, Tanzania 2003
Who has PASS Trust Helped
(31 December 2011)
Mobilized
investment worth TZS 95 billion and supported
over approximately 35,000 farmers
 About 190 tractors and equipments have been loaned to
farmers worth about TZS 8 billion
Enabled set up High quality speciality coffee exports
Initiated Horticulture Exports; Improved Poultry &
Piggeries, Dairy Production & Beef Fattening.
Food security: support to irrigation for food
Assist with investment in farm mechanisation on larger scale
Assist groups of farmers (SACCOS; Cooperatives; Irrigation
Associations; Farmers Groups) link to banks.
Assist commercial and government banks in linking up to
high potential agri-business clients and to group lending
opportunities /schemes with joint responsibility/ security of the
loan.
PASS – Private Agricultural Sector Support Limited
©Copyright PASS, Tanzania 2003
PASS’s Results and Impacts
Improved access to advisory, financial and marketing services
Increased volume of production
Improved quality of the produce
Farmers broadened and enhanced access to markets
Strengthened bargaining power of farmers through formation of
groups
Increased employment along nodes of value chains, also in agroprocessing
Increased income and demonstrable improved living standards
PASS – Private Agricultural Sector Support Limited
©Copyright PASS, Tanzania 2003
Number of Submitted and Approved PASS Business Plans 2002-2010
PASS – Private Agricultural Sector Support Limited
©Copyright PASS, Tanzania 2003
Oil Seed Sub-Sector Overview
Regional Trends
•Sunflower is one the major oilseeds in Africa
The leading sun flower seed producers in Africa in 2003 (MT)
South
Africa
Morocco
Egypt
Tanzania
Sudan
708,000
55,600
45,000
28,000
19,000
Production Trend in Tanzania
•2006/2007 data by MAFSC Tanzania Produced 88,753 tones of
sunflower
•The SHF estimated at 160,000 households in the central corridor
•Central Corridor produced 60% of sunflower seeds of the
national production of 187,000 tons (2009)
PASS – Private Agricultural Sector Support Limited
©Copyright PASS, Tanzania 2003
Overview cont….




135 processing machines installed in the central corridor with
a total installed capacity of 853 tons/day
This capacity is enough to process approximately 170,600 tons
(> 45% of installed capacity
Prices vary by region and within a season April/May and the
end in November
Price variation reflect the phenomenon of dwindling supply as
the season progresses, largely because of inadequate storage
and working capital at both the household and oil mill levels
PASS – Private Agricultural Sector Support Limited
©Copyright PASS, Tanzania 2003
Constraints of the Sub-sector
Small Holder Farmers
 Lack of appropriate knowledge
o Inadequate Extension Services
o Inadequate inputs
o Poor Infrastructure
o Poor Market Information
o Insufficient and poor access to working capital
Processors
 Lack of proper processing
o refining, packaging, Preservation/storage
 Poor marketing
o Labelling/ branding
 Policies and Regulatory Framework
 Insufficient and poor access to working capital
PASS – Private Agricultural Sector Support Limited
©Copyright PASS, Tanzania 2003
Opportunities






High Market demand in and outside the
country
Government support
Available actors to facilitate the sub sector
Favorable production conditions
Available processing technology
Available labor
PASS – Private Agricultural Sector Support Limited
©Copyright PASS, Tanzania 2003
Industry Analysis of Sunflower Oil in Tanzania
New Entrants: (Are there entry barriers for
new entrants in Domestic Market?)
 Presence of unregistered suppliers
 Tanzania is yet to have standard set for
double refined edible oil
 Consumers and Whole sellers buy from
SMEs
 Quality of sunflower not critical
Suppliers
 Quite large number of
suppliers in the market (small
& large scale processors)
 Varied quality and processing
technologies
 Concentration
of
local
suppliers in Central Corridor
 Aggressive
large
scale
suppliers (Murza and Mount
Meru)
Rivalry:
Metro, Ivory, Msalali,
Masoud,
SMEs,
Murza and Mount
MeruI
Buyers: (To what extent can the
buyers bargain?)
 Most buyers understand good
quality
 Price is not a major factor but
important
 Quality and consistence supply
are the pushing factors
 Branding
could
influence
buyers’ choice
Substitutes:
 KORIE
 SAFI
 OK
PASS – Private Agricultural Sector Support Limited
©Copyright PASS, Tanzania 2003
Constraints of
Value Chain
Product: Low quality that
has hindered provision of
TBS
Market: Inadequate
strategies to ensure
sustainable market
Process: Lack of refining
machine
PASS – Private Agricultural Sector Support Limited
©Copyright PASS, Tanzania 2003
VCD and Programming
Product upgrading:
Quality and standard control.
Process upgrading:
Acquisition of efficient machines
Market upgrading:
Establish distribution centers and agents
PASS – Private Agricultural Sector Support Limited
©Copyright PASS, Tanzania 2003
Suggested Business Model
Pool of
organized
producer
groups
Processin
g,
standardi
zation
and
branding
Supermarkets
Distributors
Middle
income
Populati
on
Promotion
Strategies
PASS – Private Agricultural Sector Support Limited
©Copyright PASS, Tanzania 2003
Opportunity for PASS



Facilitation on investment in efficient machines
and equipments for sunflower production and
processing
Facilitation on availability of working capital
for sunflower production and processing
Facilitation of godowns construction
PASS – Private Agricultural Sector Support Limited
©Copyright PASS, Tanzania 2003
Pass New Products
1.
Lenders Option Guarantee(Portfolio guarantee)
2.
Linkage Banking Guarantee( Institutional Guarantee)
3.
Lease/Asset financing
PASS – Private Agricultural Sector Support Limited
©Copyright PASS, Tanzania 2003
Thank you
We facilitate investments in
Agriculture
www.pass.ac.tz
PASS – Private Agricultural Sector Support Limited
©Copyright PASS, Tanzania 2003