PROJECT INFORMATION DOCUMENT (PID) Tanzania: Additional Financing to the Agricultural Sector Development Project Stage: Appraisal

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1 Project Name Region Country Sector(s) Lending Instrument Project ID Borrower(s) Implementing Agency PROJECT INFORMATION DOCUMENT (PID) Tanzania: Additional Financing to the Agricultural Sector Development Project Stage: Appraisal Environmental Category Date PID Prepared Report No AB7113 Second Agricultural Sector Development Project - Additional Financing AFRICA Tanzania Irrigation and drainage (40%), Agricultural extension and research (30%), General agriculture, fishing and forestry sector (30%) Specific Investment Loan P Ministry of Finance Ministry of Agriculture Food Security and Cooperatives B-Partial Assessment 2-Aug-2012 Estimated Date of Appraisal Completion 16-Aug-2012 Estimated Date of Board Approval Concept Review Decision Other Decision I Introduction and Context Country Context 27-Sept Aug Tanzania experienced sustained robust economic growth rates of about 7 percent per annum from 2002 to 2008, driven by sound macroeconomic policies, market oriented reforms, favorable global environment and debt relief The Gross Domestic Product (GDP) dropped to 6 percent per in 2009 due to global financial crisis, but Government stimulation measures resulted to 70 percent growth rate in 2010 The main sectors affected by the slowdown are cash crop (cotton and coffee), mineral, tourism and manufacturing which underpin exports Despite the growth record, findings from the 2007 Household Budget Survey (HBS) pose a mixed picture of the country s progress in poverty reduction over the past eight years One of the country s main challenges remains to translate economic growth into poverty reduction, with the country registering only a small decline in poverty incidence from 357 percent in 2000/01 to 335 percent in 2007 Rapid population growth of 3 percent annually and continued global economic slowdown is likely to further impede poverty reduction efforts, especially in rural areas where about 87 percent of the poor reside Sectoral and Institutional Context 2 Agriculture accounts for 265 percent of Tanzania s GDP, 80 percent of employment, and 75 percent of rural household incomes The country is largely self-sufficient in basic food production, and has potential to expand food exports to neighboring countries, particularly in the north The value of Tanzania s cash crop production has been increasing A growing number of smallholders seek to produce for the market, though many struggle to produce competitively in the context of variable market prices Most farmers remain poor, semi-subsistence farmers, applying rudimentary technologies and selling little 3 Tanzania remains a country of huge agricultural potential, with an abundance of good arable land, pasture land, and water resources However, only 23 percent of Tanzania s 42 million hectares of arable land are cultivated and only 1 percent of the estimated 27 million ha of irrigable land is now irrigated Much of the country is also favored by reasonably reliable rainfall

2 4 Since 2000 the Government of Tanzania (GoT) has increased emphasis on agriculture, and has undertaken efforts to remedy a legacy of past neglect and underinvestment An agricultural strategy, which is currently undergoing revision, was developed in 2001 The Agricultural Sector Development Program (ASDP) has provided a foundation point of investment in the implementation of this strategy since Agriculture has been named a priority under the several national plans and series of National Strategy for Reduction of Poverty (NSGRP) (known by the Kiswahili acronym, MKUKUTA), Tanzania s Five Year development Plan 2011/12 to 2015/16, and the country s Long Term Development Prospective Plan 2011/12 to 2025/26 In complement, the country signed a Comprehensive African Agricultural Development Plan (CAADP) compact which was followed by the adoption of a new Tanzania Agriculture and Food Security Investment Program (TAFSIP) in November 2011 In combination with these commitments, the government has increased the proportion of its budget committed to agriculture from 58 in 2006/07 to 77 percent in 2010/11 During this period the agriculture sector grew at an average rate of 40 percent per annum 6 The World Bank has supported the pursuit of these agendas through the Agricultural Sector Development Programme (ASDP) the Accelerated Food Security Project (AFSP) and the Eastern Africa Agricultural Productivity Program (EAAPP) These complement commitments of USAID to the Feed the Future initiative, IFAD s Marketing, Infrastructure, Value Addition and Rural Financing and AGRA s Grain Basket The contributions of World Bank s investments to the transformation of the agricultural sector have been significant but uneven The AFSP has improved access to seed and fertilizer to over 3 million farm households, increasing adoption rates and productivity However, the sustainability of these gains remains uncertain The ASDP has supported the rehabilitation and establishment of 96,126 ha in irrigation, contributing to a 37 percent gain in total irrigated area, which has contributed to a doubling in irrigated rice productivity This project has provided fundamental support to decentralize agricultural development efforts by strengthening the planning and implementation capacities of local government authorities This has contributed to improved access and management of local agricultural interventions such as irrigation schemes, market infrastructures, resource centers, warehouses and local processing centres Research and extension programs have received funding to strengthen capacity to respond to farmer demand for new technologies The EAAPP, a regional project is at an early stage of establishing a Regional Rice Center of Excellence for technology generation and dissemination and research capacity building 7 Overall, Tanzania s agricultural growth has benefited from improved national and international prices for the country s major commodities However, much of the gain in production has been derived from growth in crop area and livestock numbers rather than improvements in productivity Farmers are beginning to adopt improved technologies, recognizing the importance of productivity growth for competitiveness Growing numbers of farmers are interested in the expansion of production for the commercial market While there remain questions about the quality of agricultural statistics, adoption rates for many improved technologies remain low and productivity gains have been limited Considerably more must be done to improve sector performance 8 The agenda initiated under the initial ASDP investment remains relevant Capacity for agricultural investment has been strengthened at both national and local government levels However, the results orientation of these efforts needs to be strengthened Renewed emphasis needs to be committed to achieving more rapid productivity growth linked with the integration of larger numbers of smallholder framers into the commercial economy This will required a stronger emphasis on sustained growth in technology adoption, particularly in crop and livestock products grown by larger numbers of farmers and offering the most favorable market prospects Relationship to CAS 9 ASDP is fully consistent with IDA s current Country Assistance Strategy (CAS, FY12 14) It contributes to the CAS objective of promoting inclusive, sustainable, and private sector-led growth through increasing productivity and income It is also in line with the priorities of the MKUKUTA II, which underscores agriculture s importance to Tanzania s economy, employment, food security, and poverty reduction The MKUKUTA II focuses on outcomes in three broad clusters: (i) growth and reduction of income poverty, (ii) improvement of quality of life and social well-being and, (iii) governance and accountability The ASDP is aligned to the first cluster and implement activities to enhance economic growth and reduce poverty through empowering the poor and creating opportunities for increasing production and household income

3 II Proposed Development Objective(s) (Display Only - Pulled from PCN) Proposed Development Objective(s) (From PCN) 10 The Project Development Objective of ASDP is: to enable farmers to have better access to and use of agricultural knowledge, technologies, marketing systems, and infrastructure; and to promote agricultural private investment based on an improved regulatory and policy environment The ASDP is the government s primary tool for implementing the Agricultural Sector Development Strategy (ASDS), whose objective is to achieve a sustained agricultural growth rate of 5 percent per annum, primarily through private sector-led transformation from subsistence to commercial agriculture The aim of ASDP is to enhance agricultural productivity, farm incomes and food security, contributing to achievement of both the Second Poverty Reduction Strategy (MKUKUTA II) and CAADP goals to promote agricultural growth and achieving food and nutrition security Key areas of intervention in ASDP are irrigation development, agriculture service (research and extension), marketing and private sector development, local investments and capacity building of local staff through district programs III Preliminary Description 11 The ASDP is financed through the Basket Fund supported by the Government of the United Republic of Tanzania and five Development Partners (DPs): the World Bank, the Government of Japan, the International Fund for Agricultural Development, African Development Bank, and Irish Aid To achieve its objectives, the ASDP has two main components (local and national support), which are aligned with national and local budget, planning, and prioritization processes: Component 1 (Local Level Support) primarily fosters the first project objective by improving capacity of Local Government Authorities (LGAs) to plan, support, and coordinate agricultural services and investments in a more efficient, participatory, and sustainable manner Support is provided to develop and implement community-driven DADPs, increase farmers influence on decisions to allocate resources for services and investments, reform agricultural services, and improve the quality of public expenditure This component also finances advisory services, training, and infrastructure development, including small-scale irrigation at the district level through the demand-driven, performance-based District Agricultural Development Grants (DADGs) A competitive funding mechanism, the District Irrigation Development Fund (DIDF), provides supplemental resources for small-scale irrigation investments Component 2 (National Level Support) fosters the achievement of both project objectives The first objective is supported by improvements in the relevance and responsiveness of the agricultural research system, including better linkages with extension The second objective is supported by improvements in the national policy environment and by the development of mechanisms for greater public private partnerships Support is provided to reform agricultural services, primarily research and extension, to improve the overall sector policy framework, to carry out preparatory work and investment in national irrigation facilities through the National Irrigation Development Fund (NIDF), mainly under public private partnerships, to stimulate market development, and to improve food security and sector coordination Implementation Arrangement 12 The implementation of the ASDP is mainstreamed in the existing government systems and structures The ASDP project has successfully developed sector wide implementation systems from national level down to village level, and created a mode of operation which has streamlined planning, financial management, procurement, monitoring and reporting systems This arrangement has strengthened government systems at national and local levels Four Agricultural Sector Lead ministries (ASLMs) namely Ministry of Agriculture Food Security and Cooperatives (MAFC), Prime Minister s Office for Local Government and Regional Administration (PMORALG) Ministry of Industries and Trade (MIT) and Ministry of Livestock Development and Fisheries (MLDF) implement the project The implementation of local level components is primarily the responsibility of PMORALG and Local Government Authorities (LGAs), while implementation of National Level component is the

4 responsibility of MAFC, MIT and MLDF The MAFC is responsible for overall coordination of project implementation and monitoring performance The Basket Fund Steering Committee (BFSC) provides overall policy and strategic guidance for the project implementation to ensure that the project objectives are being achieved The Committee of Directors provides technical support and ensure implementation interface between national and local level through Thematic Working Groups and National Facilitation Team IV Safeguard Policies that Might Apply Safeguard Policies Triggered by the Project Yes No TBD Environmental Assessment OP/BP 401 Natural Habitats OP/BP 404 Forests OP/BP 436 Pest Management OP 409 Physical Cultural Resources OP/BP 411 Indigenous Peoples OP/BP 410 Involuntary Resettlement OP/BP 412 Safety of Dams OP/BP 437 Projects on International Waterways OP/BP 750 Projects in Disputed Areas OP/BP 760 V Tentative financing Financing Source Amount BORROWER/RECIPIENT 000 International Development Association (IDA) 3000 Total 3000 VI Contact point World Bank Contact: Zainab Z Semgalawe Title: Senior Rural Development Specialist Tel: zsemgalawe@worldbankorg Borrower/Client/Recipient Name: Contact: Title: Ministry of Finance Mr Ramadhani Khijjah Permanent Secretary Tel: rkhijjah@mofgotz Five Agcultural Sector lead ministries (ASLMs) namely Ministry of Agriculture Food Security and Cooperatives (MAFC), Prime Minister s Office for Local Government and Regional Administration (PMORALG) Ministry of Industries and Trade (MITM) and Ministry of Livestock Development and Fisheries (MLDF) will implement the project The implementation of local of local level component will be the primarily the responsibility of PMORALG and Local Government Authorities (LGAs), while implementation of National Level component will be the responsibility of MAFC, MITM and MLDF The Basket Fund Steering Committee (BFSC) established during the first phase will continue to provide overall policy and strategic guidance for the project implementation to ensure that the project objectives are being achieved The Committee of directors will provide technical support, ensure implementation interface between national and local level through Thematic Working Groups and National Facilitation Team The MAFC will be responsible for overall coordination of project implementation and monitoring performance

5 Implementing Agencies Contact: Ministry of Agriculture Food Security and Cooperatives Title: Permanent Secretary Tel: (255) VII For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, DC Telephone: (202) Fax: (202) Web: