From Storage to Empowerment: Warehouse Receipts System Reforms To Enhance Tanzania’s Agricultural Sector

Dodoma, Tanzania – December 5, 2024:

Why is Tanzania focused on modernizing its Warehouse Receipts System (WRS)? Because it’s not just about warehouses; it’s about empowering farmers, securing food supplies, and driving economic growth. Public and private sector leaders convened in Dodoma on December 5, 2024, for a transformative workshop to advance Tanzania’s WRS. Organized by the International Finance Corporation (IFC), the Warehouse Receipts Regulatory Board (WRRB), and the Southern Agricultural Growth Corridor of Tanzania (SAGCOT Centre Ltd.), this event was pivotal in fostering collaboration among key stakeholders to discuss reforms essential for strengthening the WRS.

This ambitious initiative aligns with Tanzania’s vision to become a regional food security hub and achieve $5 billion in food exports by 2030. The workshop, themed “Unlocking Tanzania’s Agricultural Potential through WRS,” brought together leading experts and decision-makers, creating a dynamic environment for addressing challenges and opportunities within the WRS framework. Attendees included high-profile figures such as Dr. Hashil T. Abdallah, Permanent Secretary for the Ministry of Industry and Trade, and Mr. Asangye Bangu, Executive Director of WRRB.

WRRB Executive Director Asangye Bangu emphasized the need for public-private synergy, stating, “To ensure the WRS’s success, all key players—from smallholder farmers to government officials—must come together to make informed decisions that drive progress. We have the opportunity to transform how our agricultural produce is valued and managed, but it will require collective effort and commitment.”

The workshop underscored the importance of addressing warehousing gaps to unlock Tanzania’s agricultural potential. Dr. Diti Chatterjee, Senior Manager at A2F Consulting, noted that the WRS is more than just a storage mechanism—it’s a platform for financial inclusion and market access for farmers. Currently, only 70% of the 1,897 warehouses across the SAGCOT area are fully functional, highlighting the urgent need for investment and reform.

Challenges and Reforms: A Path Forward

The workshop identified several systemic challenges within the WRS framework, including financial constraints, competition from unlicensed facilities, and inefficiencies in the warehouse licensing process, which takes an average of 2.65 months. The solutions proposed during the workshop focused on enhancing farmer education, modernizing infrastructure, fostering digitalization, and promoting public-private partnerships.

Key Findings and Statistics

• Expansion of Warehouse Coverage: Registered warehouses have increased significantly, from 83 in 2021 to 246 in 2023, indicating a strong push towards broader adoption of WRS.
• Increased Commodity Trading: Traded commodities have risen from 300 metric tons in 2021 to 485 metric tons in 2023, with projections pointing towards 600 metric tons by the end of 2024.
• Financial Growth for Farmers: The income generated by farmers through WRS increased from TZS 687.8 billion in 2021 to TZS 1.3 trillion in 2023, demonstrating the system’s capacity to enhance farmers’ financial stability.
• Geographic Expansion: The number of districts participating in the WRS has grown from 39 to 61, with plans to cover all regions by 2025.

Dr. David Niswalo from the Ministry of Agriculture reiterated the WRS’s role as a bridge between farmers and global markets. He noted, “By improving infrastructure and reducing inefficiencies, we create a value chain that benefits every stakeholder.”

The workshop also highlighted the importance of integrating staple crops like maize and rice, as well as perishable goods, into the WRS. This will not only improve Tanzania’s export capacity but also help modernize agricultural practices across the country.

Tullah Mloge, representing SAGCOT Centre Ltd., highlighted the growth potential of a modernized WRS. “By addressing storage gaps and incorporating staple crops like maize and rice, we can significantly improve access to global markets,” she said. “Improved and efficient warehousing will increase Tanzania’s export capacity.”

Global Best Practices and Future Steps

Insights from successful WRS implementations in countries like India and Ghana were shared. As an IFC expert, Dr. Ravi Patel emphasised electronic warehouse receipts’ transformative potential, stating, “India’s centralized registries have revolutionized their agricultural market. Tanzania can adopt similar systems to reduce administrative delays and enhance market transparency.”

The discussions revealed critical findings about Tanzania’s warehousing landscape:

• The SAGCOT area currently has a storage capacity of 1.17 million tons, far below the demand.
• An estimated 1,954 new warehouses are needed, requiring a total investment of TZS 246.2 billion.
• Regions like Kilombero and Mbarali require significant investments of TZS 33.1 billion and TZS 80.1 billion, respectively.

These figures underscore the pressing need for infrastructure investments to expand and modernize warehousing facilities. The goal is not only to meet the current storage demand but also to ensure that farmers have access to quality facilities that can preserve their produce and enhance its value. Such investments would provide a foundation for farmers to participate in both local and international markets, increasing their income and improving their livelihoods.

Challenges and Solutions: Moving Beyond the Status Quo

The workshop identified a number of systemic challenges that hinder the effectiveness of the WRS, including:

1. Financial Constraints and Competition from Unlicensed Facilities: Farmers often face challenges securing financing, and competition from unregulated facilities adds to their woes. The lack of capital prevents them from expanding their warehousing capabilities, thereby limiting their ability to participate in the WRS.
2. Low Awareness of WRS Benefits: Despite its advantages, many farmers remain unaware of how the WRS can benefit them. Enhanced awareness campaigns and education programs are needed to demonstrate the tangible benefits of the WRS to farmers and other stakeholders.
3. Licensing Inefficiencies: The warehouse licensing process, currently averaging 2.65 months, presents a bottleneck in expanding WRS coverage. Streamlining this process is essential to attract more participants.

Proposed Solutions:

• Farmer Education Programs: The workshop emphasized the need for comprehensive educational initiatives that inform farmers about the benefits of using the WRS. Such programs would not only raise awareness but also empower farmers to make informed decisions about their produce.
• Infrastructure Investments: To meet international standards, modernization of warehouses is key. This includes investment in cold storage for perishable goods and improvements in existing infrastructure to ensure it meets safety and efficiency benchmarks.
• Digitalization: The introduction of centralized electronic platforms was proposed to enhance monitoring and transparency within the WRS. By utilizing digital tools, the system can become more efficient and accessible, reducing the administrative burden on farmers.
• Public-Private Partnerships (PPPs): Collaboration between the public and private sectors is crucial for the development of community-based storage solutions. PPPs can provide the necessary funding, expertise, and operational management to expand WRS coverage.

Global Best Practices and Lessons for Tanzania

Insights from global best practices were integral to the workshop. Presenters shared their experiences from successful WRS implementations in India and Ghana, where the systems have improved market access, transparency, and financial inclusion for farmers.

Dr. Ravi Patel, an IFC expert, highlighted India’s centralized registries as a revolutionary model for agricultural markets. He explained that the introduction of electronic warehouse receipts in India drastically reduced administrative delays and increased market transparency. “Tanzania can adopt similar systems to expedite processes and enhance trust among stakeholders,” Dr. Patel suggested.

Another significant takeaway was the adoption of AI-based monitoring systems in Ghana, which has allowed for real-time tracking of inventory and ensured that standards are maintained throughout the warehousing process. Rodrigo Silva, a consultant at A2F Consulting, added, “Digitalization is the key to fast-tracking WRS adoption nationwide. By introducing electronic warehouse receipts and AI-based monitoring systems, we can ensure that the WRS is accessible, transparent, and reliable for all stakeholders.”

Voices from the Workshop: Key Quotes

Tullah Mloge from SAGCOT Centre Ltd. highlighted the broader economic implications of an improved WRS, stating, “Transforming warehouses into hubs of innovation and sustainability will redefine Tanzania’s agricultural potential.”

WRRB Executive Director, Mr. Asangye Bangu, stressed the importance of collaboration: “To ensure the success of the WRS, it’s crucial that all key players—from smallholder farmers to government officials—come together to make informed decisions that drive progress. We have the opportunity to transform how our agricultural produce is valued and managed, but it will require collective effort and commitment.”

Dr. David Niswalo, Principal Investment Facilitation Officer at the Tanzania Investment Center, highlighted the strategic importance of the proposed reforms: “The reforms we propose today will play a key role in unlocking the potential of Tanzania’s agricultural sector. We must create an enabling environment that encourages investment, simplifies processes, and ultimately empowers farmers with the tools they need to succeed.”

Dr. Diti Chatterjee, Senior Manager at A2F Consulting, also underscored the need for raising awareness among farmers: “There needs to be more awareness regarding how the WRS can help farmers access credit and improve the quality of their produce. Capacity building must be a priority, and we also need to leverage digital tools to increase efficiency in warehouse operations.”

Rodrigo Silva reiterated the importance of technology integration: “Digitalization is the key to fast-tracking WRS adoption nationwide. By introducing electronic warehouse receipts and AI-based monitoring systems, we can ensure that the WRS is accessible, transparent, and reliable for all stakeholders.”

The Future of Tanzania’s WRS: A Vision for Transformation

The discussions and insights shared at the workshop highlight a clear vision for the future of Tanzania’s WRS—one that is dynamic, inclusive, and efficient. To achieve the ambitious goals of becoming a regional food security hub and achieving $5 billion in food exports by 2030, Tanzania must address the current gaps in warehousing infrastructure, regulatory inefficiencies, and stakeholder awareness.

Modernizing the WRS involves more than just building new warehouses—it is about creating an integrated system where farmers, traders, and financial institutions can interact seamlessly. By leveraging global best practices, fostering public-private collaboration, and investing in digital tools, Tanzania can create a WRS that empowers farmers, increases agricultural productivity, and enhances food security.

The WRS’s potential extends far beyond storage. It represents a foundational shift in how agricultural value chains are structured in Tanzania, providing farmers with access to markets, financial services, and modern storage solutions.