A $5 Billion Export Vision- Unlocking Tanzania’s Investment Potential Through the Warehouse Receipts System (WRS)

Dodoma, Tanzania – December 5, 2024

Public and private sector leaders gathered in Dodoma, Tanzania, to chart the future of the country’s Warehouse Receipts System (WRS). The transformative workshop, organized by the International Finance Corporation (IFC), the Warehouse Receipts Regulatory Board (WRRB), and the Southern Agricultural Growth Corridor of Tanzania (SAGCOT Centre Ltd.), underscored the WRS’s immense potential to revolutionize agriculture, drive export growth, and attract significant investment into the sector.

Dr. David Biswalo, Principal Investment Facilitation Officer at the Ministry of Agriculture, captured the event’s spirit: “The WRS is not just a system—it’s a game changer for Tanzanian agriculture. It offers an opportunity to empower farmers, attract investors, and position Tanzania as a leader in global agricultural markets.”

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A $5 Billion Export Vision

Tanzania’s agricultural export sector is poised to grow from its current valuation of $5 billion annually. The WRS is a critical tool in this transformation, ensuring traceability, quality control, and better market access for high-demand crops such as coffee, cocoa, sesame, and cashews. By providing structured storage and streamlining market processes, the WRS enables farmers to negotiate better prices and reduces post-harvest losses, which remain a significant challenge.

“The value chains we focus on—coffee, cocoa, and sesame—are not just commodities; they are opportunities,” said Lara Oje, a senior advisor with IFC. “By harnessing the full potential of WRS, we can deliver enormous value to farmers and investors alike.”

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Bridging Infrastructure Gaps

The workshop highlighted the critical need to expand and modernize Tanzania’s warehouse infrastructure. With 1,897 warehouses currently operational across the SAGCOT corridor, their total capacity of 1.17 million tons falls short of meeting the growing demand for agricultural storage. Notably, only 70% of these warehouses are fully functional, and many require upgrades to handle high-quality storage demands, such as cold storage and silos.

To address this gap, the workshop identified the need to construct an additional 1,954 warehouses, an undertaking estimated to cost Tsh 246.2 billion. Additionally, renovating existing warehouses will require an investment of Tsh 46 billion. Together, the total financing need for infrastructure amounts to over Tsh 292 billion.

Rodrigo Silva, a consultant at A2F Consulting, emphasized the investment potential: “These figures are not just challenges; they are opportunities for public and private sector investors. Building this infrastructure will not only enhance Tanzania’s storage capacity but will also unlock the full value of our agricultural exports.”

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Innovative Financing Models

Financial institutions play a pivotal role in making the WRS ecosystem thrive. Warehouse receipts, which serve as collateral, allow farmers and agribusinesses to access financing that was previously out of reach. However, financial institutions are often cautious due to concerns over market organization and the quality of stored produce. The workshop provided an avenue to address these concerns through improved oversight and transparent processes.

“One of our key priorities is ensuring that the financial ecosystem supports the WRS,” said Diti Chatterjee, a senior manager at A2F Consulting. “By making warehouse receipts a trusted form of collateral, we can empower farmers to secure loans and improve their production cycles.”

Additionally, participants emphasized the importance of integrating digital financial systems, such as mobile banking, into the WRS framework. This integration will streamline payment processes, reduce delays, and build stakeholder confidence.

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Public-Private Partnerships: A Path to Success

The role of public-private partnerships (PPPs) emerged as a cornerstone of the WRS’s expansion. By leveraging PPPs, Tanzania can develop community-based warehouses that cater to smallholder farmers and cooperatives, ensuring inclusivity and sustainability.

“PPPs have been instrumental in countries like Ghana and India,” said Tamila Mimanova, a senior economist at A2F Consulting. “In Tanzania, these partnerships can help standardize grading, improve infrastructure, and bring smallholder farmers into the fold.”

Workshop discussions also highlighted the need to reduce quantity requirements for smallholder farmers to participate in the WRS. This move, inspired by best practices from Ghana, would lower entry barriers and promote inclusivity across Tanzania’s agricultural landscape.

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Digitizing for Transparency and Efficiency

Digital transformation is key to building trust and efficiency in the WRS. Recommendations included the adoption of electronic warehouse receipts, centralized platforms for licensing, and AI-led monitoring systems to ensure quality and security.

“Our shift toward digitization will revolutionize how warehouses operate,” said Mr. Asengye Bangu, Chair of the WRRB Technical Group. “With AI-powered monitoring, we can guarantee the quality of stored produce and enhance transparency for all stakeholders.”

These innovations will not only streamline operations but also attract investors who prioritize data transparency and reliability. A centralized electronic system would provide real-time access to warehouse information, further strengthening confidence in the system.

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Expanding Crop Portfolios

Currently, the WRS supports a range of high-value crops, including coffee, cocoa, sesame, and cashew nuts. Expanding the crop portfolio to include staple crops such as maize will significantly increase its impact. Workshop participants called for integrating crops critical to Tanzania’s food security into the WRS framework.

“We must expand the WRS to include all crops that matter to Tanzanians,” said Tullah Mloge of SAGCOT Centre Ltd. “This ensures that the system benefits every farmer, regardless of the size of their farm or the crop they grow.”

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President Samia Suluhu Hassan’s administration has committed to attracting investment in Tanzania’s agricultural sector. By creating a favorable regulatory environment and supporting initiatives like the WRS, the government is paving the way for transformative growth.

“We have the policies, the infrastructure, and the vision,” said Dr. Biswalo. “Now, we need the investments to bring it all together.”

The workshop concluded with a resounding call to action for investors to seize the opportunities presented by the WRS. From infrastructure development to financing innovations, the system offers high-impact, scalable projects that promise significant returns while contributing to Tanzania’s economic and social development.

The Future of WRS in Tanzania

The Warehouse Receipts System represents more than a storage solution—it is a catalyst for economic transformation. By fostering collaboration between public and private stakeholders, embracing digitization, and prioritizing inclusivity, Tanzania is poised to unlock the full potential of its agricultural sector.

Lara Oje sadi, “Tanzania’s WRS is a testament to what is possible when vision meets action. The opportunities are immense, and together, we can create a system that benefits everyone—from farmers and traders to financiers and consumers.”

For investors looking to make a lasting impact, Tanzania’s WRS offers a unique blend of profitability and purpose, making it a cornerstone of the country’s journey toward sustainable agricultural growth.