Tanzania Among Top Beneficiaries of Agriculture Startup Investment in East Africa

Village Capital, a US-based venture capital firm, recently released a report dubbed “Mapping Agriculture Investing in Africa” indicating that Tanzania is among the top three countries in East Africa to receive investment in agricultural startups.

Of 101 investments in East Africa during 2010-2020, Kenya accounted for 60, followed by Uganda with eight and Tanzania with seven.

The report outlines the seven companies in Tanzania that received funding over the past 10 years:

1. Africado [2019] — Undisclosed debt financing — a pioneer of the avocado export industry in Tanzania supporting smallholders in avocado cultivation
2. AfriLife Products [2018] — Undisclosed funding — a brand of raw, organic and pure honey
3. FarmCrowdy [2017] — USD 1 million seed round — an online platform for individuals and businesses to invest in farming projects
4. Ikanga [2014] — Undisclosed investment — a tea processing and export company
5. Kijenge Animal Products [2013] — USD 6 million — a diversified agro-processing company engaged in maize milling, animal feed production, and poultry (broiler) farming and processing
6. Highland Seed Growers [2012] — USD 1.3 million private equity round — a company specializing in the production, processing and distribution of seeds of various crops to farmers
7. East Africa Fruits — Undisclosed funding — a food distributor that is formalizing the informal farm-to-market value chain by providing a stable, fair market for horticulture crops to improve productivity and incomes for smallholders and informal vendors.

Investment Opportunities in Tanzania Agribusiness

The Clinton Development Initiative (CDI), an initiative for development of agribusiness projects, indicates that there is a growing demand for high-quality cooking oil in Tanzania as the country imports over 50% of its vegetable oil from Asia.

CDI believes there is a strong demand for locally produced oil as much of the oil from Asia is of low quality.

The Private Agricultural Sector Support (PASS), a facility established to stimulate investment in commercial agriculture, notes that sugarcane is another important commercial crop in Tanzania.

However, the sugarcane farming and processing in Tanzania is very small and cannot meet the annual demand for sugar.

Tanzania’s sugar demand has increased by over 16% in 2019, to 710,000 tonnes per year from 610,000 tonnes in 2018. The demand for palm oil is estimated at 600,000 tons.

In April 2020, the Tanzania Investment Centre (TIC) issued a notice inviting domestic and foreign investors to develop sugarcane and sugar processing plantations using the 20,000 ha farm in Kibuye in the Kigoma region in northwestern Tanzania. 

Investors are also invited to develop horticulture and food processing plants at the Lugufu farm of 10,529 ha and the Basanza farm of 3,249 ha in the Uvinza District in Kigoma. 

The two farms have been set aside by the government for investment in palm cultivation to produce palm oil for food and to overcome the challenge of importing edible oil.