The Southern Agricultural Growth Corridor of Tanzania (SAGCOT): Successes, Challenges, and Future Prospects

Juma Msafiri

Abstract

The Southern Agricultural Growth Corridor of Tanzania (SAGCOT) initiative was launched in 2010 to transform Tanzania’s agricultural sector into a sustainable, commercially viable engine of economic growth and food security. SAGCOT aims to promote large-scale agribusiness investments alongside smallholder farmers, encouraging private-public partnerships and infrastructure development to boost productivity. This paper examines the successes and challenges of the SAGCOT initiative, evaluates its impact on agricultural development and rural livelihoods, and explores opportunities for enhancing its effectiveness in the future.

Keywords

SAGCOT, Agriculture, Tanzania, Smallholder farmers, Agribusiness, Food security, Public-private partnerships

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1. Introduction

Agriculture remains a critical sector in Tanzania’s economy, employing over 65% of the population and contributing around 28% to the country’s GDP. Despite its importance, Tanzanian agriculture faces significant challenges, including low productivity, poor infrastructure, inadequate market access, and vulnerability to climate change. To address these challenges, the government of Tanzania, in collaboration with international partners, launched the Southern Agricultural Growth Corridor of Tanzania (SAGCOT) in 2010. This initiative aims to transform the agricultural sector by attracting large-scale investments, improving infrastructure, and fostering public-private partnerships to boost agricultural productivity and improve rural livelihoods.

SAGCOT focuses on a 300,000 square kilometer region extending from Dar es Salaam to the southern highlands and the borders with Zambia and Malawi. This region is considered to have high agricultural potential due to its fertile soils, favorable climate, and access to water resources. By leveraging these natural advantages and mobilizing both public and private investments, SAGCOT seeks to enhance agricultural output, increase incomes for smallholder farmers, and contribute to Tanzania’s broader goals of economic growth and poverty reduction.

This paper explores the successes and challenges of the SAGCOT initiative since its inception. It evaluates the impact of SAGCOT on agricultural development, food security, and rural livelihoods, and assesses the future prospects of the initiative in addressing Tanzania’s agricultural challenges.

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2. The SAGCOT Vision and Goals

SAGCOT was conceived as a public-private partnership (PPP) designed to unlock Tanzania’s agricultural potential by fostering investments along the agricultural value chain. The initiative is structured around several key goals:

1. Agricultural Productivity: To improve agricultural productivity through the introduction of modern farming techniques, high-quality inputs, and better access to markets for smallholder farmers.
2. Infrastructure Development: To enhance infrastructure such as roads, irrigation systems, and storage facilities that facilitate efficient agricultural production and trade.
3. Private Sector Engagement: To attract private-sector investments that would create agribusiness opportunities, generate jobs, and promote commercial farming.
4. Smallholder Farmer Integration: To integrate smallholder farmers into commercial agriculture by connecting them with agribusinesses, markets, and financial services.
5. Environmental Sustainability: To promote sustainable agricultural practices that protect natural resources and ensure long-term productivity.

The SAGCOT initiative is backed by a coalition of stakeholders, including the Tanzanian government, multinational corporations, local agribusinesses, development partners, and financial institutions. Key funders include the World Bank, the African Development Bank (AfDB), the United Nations, and several bilateral donors.

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3. Successes of the SAGCOT Initiative

3.1. Improved Infrastructure

One of SAGCOT’s notable achievements has been its role in improving infrastructure in southern Tanzania, particularly in transportation, irrigation, and storage facilities. These developments have reduced post-harvest losses, facilitated market access, and increased productivity for both smallholder farmers and commercial agribusinesses.

Key infrastructure projects under SAGCOT include the rehabilitation of rural roads to improve connectivity between farms and markets, the construction of storage facilities to reduce spoilage, and the development of irrigation systems that allow farmers to engage in year-round farming rather than being reliant solely on rain-fed agriculture. These improvements have enabled farmers to produce and transport more agricultural goods, reducing bottlenecks in the value chain.

3.2. Private Sector Investment and Agribusiness Development

SAGCOT has successfully attracted significant private-sector investment, with several large agribusinesses establishing operations in the corridor. These investments have spanned various agricultural sub-sectors, including horticulture, rice, sugarcane, and livestock. By promoting value chain development, SAGCOT has helped facilitate linkages between smallholder farmers and larger agribusinesses, which has, in turn, improved market access for small-scale producers.

For example, the Kilombero Plantations Limited (KPL), a major rice producer in the SAGCOT area, has introduced improved rice varieties and modern farming techniques, resulting in higher yields for local farmers. Similarly, companies like Yara International have invested in fertilizer distribution systems, which has helped smallholders access high-quality agricultural inputs more easily.

3.3. Integration of Smallholder Farmers

A critical element of SAGCOT’s success has been the integration of smallholder farmers into commercial agriculture. Through contract farming models and outgrower schemes, smallholders have been able to access markets, financial services, and extension services that were previously beyond their reach. For example, outgrower schemes in the sugarcane industry have provided farmers with technical assistance, inputs, and guaranteed markets for their produce, improving their incomes and livelihoods.

Moreover, the SAGCOT Catalytic Trust Fund, established to de-risk private sector investments, has provided financial resources to support smallholder farmers in adopting modern farming techniques and increasing their productivity. By offering financial assistance, the fund has helped bridge the gap between smallholders and commercial agribusinesses, ensuring that they benefit from the growth of the agricultural sector.

3.4. Job Creation and Economic Growth

SAGCOT has contributed to job creation in both rural and urban areas by stimulating agribusiness development and related services. The initiative has supported the establishment of agro-processing industries, which has generated employment opportunities in areas such as food processing, logistics, and transport. By creating jobs, SAGCOT has helped reduce rural-urban migration and contributed to economic growth in the southern regions of Tanzania.

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4. Challenges Facing SAGCOT

4.1. Limited Reach and Unequal Benefits

One of the main challenges facing SAGCOT is that its benefits have not been evenly distributed across the region. While some commercial farmers and agribusinesses have reaped significant rewards from the initiative, many smallholder farmers, particularly those in remote areas, have struggled to access the resources and opportunities created by SAGCOT. Limited reach and exclusion of marginalized communities remain key concerns, as the corridor’s development has primarily focused on areas with higher investment potential.

The challenge of reaching smallholder farmers is compounded by the fact that many lack access to formal land tenure, which limits their ability to participate in SAGCOT programs and access credit. Furthermore, the commercialization of agriculture has sometimes resulted in land conflicts, as large-scale agribusinesses have acquired land that was previously used by smallholders or pastoralists.

4.2. Environmental Sustainability Concerns

Although SAGCOT promotes sustainable agricultural practices, there are concerns about the environmental impact of some of the agribusiness projects in the corridor. Large-scale commercial farming often involves the extensive use of water resources, fertilizers, and pesticides, which can lead to environmental degradation if not managed properly. The expansion of commercial agriculture in the corridor has raised questions about water use efficiency, soil fertility management, and deforestation, particularly in areas close to sensitive ecosystems like the Kilombero Valley wetlands.

While SAGCOT has taken steps to promote sustainable practices, such as encouraging agroecological farming methods and resource-efficient technologies, more needs to be done to ensure that environmental sustainability is fully integrated into the initiative’s operations. Without careful management, the drive for increased productivity could lead to unintended environmental consequences, undermining the long-term goals of SAGCOT.

4.3. Financing and Investment Gaps

While SAGCOT has succeeded in attracting some private sector investments, there are still significant financing gaps that hinder the full realization of the corridor’s potential. Many smallholder farmers and agribusinesses face difficulties accessing affordable credit, which limits their ability to invest in modern farming techniques and expand their operations. In particular, rural financial services are underdeveloped, and many banks are reluctant to lend to smallholder farmers due to perceived risks.

The SAGCOT Catalytic Trust Fund, designed to address this issue, has made progress in de-risking private investments, but the scale of funding available is insufficient to meet the needs of all potential beneficiaries. Expanding access to finance, particularly for small and medium-sized enterprises (SMEs) and smallholder farmers, will be crucial for ensuring the long-term success of SAGCOT.

4.4. Governance and Coordination Challenges

SAGCOT involves a wide range of stakeholders, including the government, international donors, agribusinesses, and local communities. Coordinating the activities of these diverse actors has proven to be a complex task. There are concerns about the effectiveness of governance structures within SAGCOT, particularly in ensuring that the voices of smallholder farmers and local communities are adequately represented in decision-making processes.

Moreover, there have been instances of misalignment between national policies and SAGCOT’s objectives, particularly with regard to land-use planning and rural development strategies. A lack of coherence between different government agencies involved in SAGCOT has sometimes resulted in delays in project implementation and challenges in scaling up successful initiatives.

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5. Future Prospects and Recommendations

Despite the challenges, SAGCOT holds great promise for transforming Tanzania’s agricultural sector and contributing to national food security and economic development. Several steps can be taken to build on the successes of SAGCOT and address its shortcomings:

5.1. Strengthening Smallholder Inclusion

Ensuring that smallholder farmers are more fully integrated into SAGCOT’s programs is essential for achieving the initiative’s broader goals. This can be achieved through targeted investments in extension services, capacity building, and infrastructure improvements in remote areas. Additionally, addressing land tenure issues and providing smallholders with secure land rights will enable them to access credit and participate more effectively in commercial agricultural activities.

5.2. Enhancing Environmental Sustainability

SAGCOT should strengthen its focus on environmental sustainability by promoting climate-smart agriculture and resource-efficient technologies. Greater investment in agroecological practices, such as conservation agriculture and integrated pest management, will help ensure that agricultural intensification does not come at the expense of environmental health. Collaboration with environmental organizations and local communities to develop sustainable land-use plans will be critical to balancing the needs of agriculture and conservation.

5.3. Expanding Access to Finance

To bridge the financing gap, the Tanzanian government, in collaboration with development partners, should work to expand rural financial services and improve access to credit for smallholder farmers and SMEs. Expanding the reach of the SAGCOT Catalytic Trust Fund and developing new financial products tailored to the needs of smallholder farmers will help ensure that they can invest in the tools and technologies needed to improve productivity.

5.4. Strengthening Governance and Coordination

Improving governance and coordination within SAGCOT is essential for ensuring that all stakeholders are working towards common goals. The government should strengthen SAGCOT’s governance structures to ensure greater transparency, accountability, and inclusivity, particularly for smallholder farmers and local communities. This will require better coordination between government ministries, donors, and private sector actors, as well as mechanisms for ensuring that the needs and concerns of local populations are taken into account.

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6. Conclusion

The Southern Agricultural Growth Corridor of Tanzania (SAGCOT) represents a bold vision for transforming Tanzania’s agricultural sector by fostering private sector investment, improving infrastructure, and integrating smallholder farmers into commercial agriculture. While the initiative has achieved notable successes in infrastructure development, agribusiness growth, and smallholder integration, it faces significant challenges related to inequality, environmental sustainability, financing, and governance.

Addressing these challenges will be critical to ensuring that SAGCOT fulfills its potential as a driver of agricultural transformation and rural development. By strengthening smallholder inclusion, enhancing environmental sustainability, expanding access to finance, and improving governance, SAGCOT can become a model for inclusive and sustainable agricultural growth in Africa. The future success of SAGCOT will depend on continued collaboration between the government, private sector, and development partners, as well as a commitment to ensuring that all stakeholders benefit from the corridor’s development.

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References

1. United Republic of Tanzania. (2010). Southern Agricultural Growth Corridor of Tanzania (SAGCOT) Investment Blueprint. Dar es Salaam: SAGCOT Centre Ltd.
2. World Bank. (2019). Tanzania Agriculture Sector Review: Addressing Challenges and Opportunities. Washington, DC: World Bank.
3. SAGCOT Centre Ltd. (2020). Annual Progress Report 2019. Dar es Salaam: SAGCOT Centre.
4. African Development Bank (AfDB). (2018). Tanzania Agriculture Sector: A Catalyst for Economic Growth. Abidjan: AfDB.
5. Nelson, F. & Martin, A. (2021). “Agribusiness, Smallholders, and the Southern Agricultural Growth Corridor of Tanzania (SAGCOT).” Journal of Agrarian Change, 21(3), 504-520.