Empowering Tanzanian Youths in Agribusiness: Lessons from the SUGECO Model

Published: 29 April 2021

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Executive Summary

For the past two decades, there has been a great deal of effort to engage youths in agribusiness in Tanzania. Despite these efforts, to date, the level of successful youth involvement in agribusiness is still low. A survey made by the review team in five regions of Shinyanga, Mwanza, Moshi, Dodoma and Dar es salaam shows that youths are still constrained by a lack of access to market information, capital and land, as well as inadequate skills. More specifically, a major challenge for those that do engage is to maintain a marketable quality of the agribusiness products.

Moreover, the main gaps in the current interventions to engage youths in agribusiness include: (i) a focus by stakeholders on technical training in agricultural production while overlooking other capacity building aspects such as business skills, mindset change and monitoring and evaluations of agribusiness; and (ii) ineffective methods of identifying appropriate youths for agribusiness projects.

This policy brief uses a case study of SUGECO’s project titled “Youth Special Incentive Schemes in Agribusiness in Tanzania (2014-2019)” to advocate for an effective model of engaging youths in agribusiness. The project was financed by BEST-Dialogue and most of the information for this brief is based on the end-of-project evaluation report.

The popular model involves five phases which are as follows: (a) changing mindset; (b) technical capacity building including an understanding of the entire value chain; (c) entrepreneurship and business planning; (d) internship and apprenticeship attachments; (e) and incubation. The model has led to 10,000 capacity building actions, around 5,000 successful agribusiness start-ups, and more than 15,000 new and decent jobs over a period of three years. This is equivalent to a total annual income of Tshs. 60 billion (approx. USD 30m).

Policy Recommendations

  • Advocate for the adoption of the SUGECO model by other stakeholders engaging youths in agribusiness.
  • Include the SUGECO model while drafting the new National Strategy for Youth Involvement in Agriculture (NSYIA 2022-2026).

Content

Background

By the end of the year 2005, Tanzania was already the 12th largest youth populous country in the world, with 66% of its entire population younger than 25 years. Youths (i.e. 15-35 years) accounted for 35% of the country’s population of 46 million people (African Youth Alliance, 2006). It is estimated that by the year 2050, 80% of the country’s population will consist of youths (World Population Prospects, 2020). According to a report by Restless Development (2018), around 800,000 to 1,000,000 youths enter the labor market each year. Unfortunately, only 10% of these youths are absorbed by the market (ILO, 2019). This results in a large number of well-educated yet unemployed high-potential youths who remain idle across Tanzania. This represents an important (socio-) economic development challenge for the government and the country in general.

To address this challenge, engaging youths in agribusiness is regarded as an important strategy to create employment opportunities because agriculture remains the principal employment option in the country1. Despite that, the sector contributes to only 4.4% of the country’s total Gross Domestic Product (Bank of Tanzania, 2020), due to low level productivity and earnings caused by traditional farming practices which add little or no value to the farm products. This causes most educated youths to form a negative perception of agriculture as a career, despite its great potentiality for income generating opportunities. According to the Integrated Labor Force Survey (2019), youths constitute about 65% of the total labor force in Tanzania, and would constitute a key factor for increasing agricultural productivity, and notably also by transforming the agricultural sector through innovation and entrepreneurship.

Thus, the government in collaboration with development partners has been implementing various interventions in order to facilitate youth engagement in agribusiness since 2005. Despite these efforts, the level of youth engagement in agribusiness has remained low compared to the high attention given to the youth agenda at international, regional and national level. For example, by the year 2014, there were 800 youth groups that were involved in agribusiness and only 10% had successful agribusiness projects (National Strategy for Youth Involvement in Agriculture (NSYIA), 2016).

Interventions by SUGECO

In 2014, the Sokoine University Graduate Entrepreneurs Cooperative (SUGECO)2 carried out a study to find out reasons for the low involvement of youths in agribusiness. SUGECO found out that the main hindrance was the lack of appropriate incentives to support start-ups especially in terms of access to land and finance for agribusiness projects. Available guarantee schemes like PASS (i.e. Private Agricultural Sector Support Trust), ACG (i.e. Agricultural Credit Guarantee), and SAGF (i.e. Sustainable Agricultural Guarantee Fund) were not designed to support startups and pressure on land suitable for agri start-ups is high, making it difficult to start new farms by youths interested in agricultural commodities.

Based on the gaps identified above, there was a need to promote a more enabling environment in order to attract youth involvement in agribusiness, and to reduce the rate of unemployment which was threatening the youth generation in the country. SUGECO sought funds from BEST-Dialogue, to improve the business environment for agri start-ups. SUGECO designed a project known as “Special Incentive Schemes for Youths in Agriculture” which aimed at ensuring that youths interested in agribusiness have access to land and start-up capital; that (new) policies, laws and regulations are designed to improve and ease access to land and startup capital for youths in agribusiness. Moreover, it promoted existing policies, laws and regulations relating to access to land and finance for youths were sensitized to key stakeholders and implemented by the government. The project involved dialogues between the public and private sectors, official roundtable sessions, multi-stakeholder platforms, and so on.

Achievements

After several dialogue sessions, workshops, consultative meetings and media campaigns, the following achievements were made:

First, the government in collaboration with private sector stakeholders designed the National Strategy for Youth Involvement in Agriculture (NSYIA for 2016-2021) which took into account most of the recommendations made by SUGECO during the advocacy campaign. The strategy aimed at facilitating self-employment for youth and at creating an enabling environment for increasing youth participation in agricultural economic activities along the value chain.

Second, local authorities started providing funds for youth for agribusiness start-ups. In the financial year 2016/2017, district councils established youth SACCOS and the government agreed to allocate Tshs. 4 billion per annum as start-up capital for youth agribusiness projects in 133 districts.

Third, youths got access to land for agribusiness projects. The government set aside around 85,000 ha of land in areas such as Rufiji, Geita, Morogoro, and Singida. This move enabled youths to have access to land, thus allowing youths to engage in agricultural value chains. Other interventions that facilitated access to land were land rentals and leasing.

Fourth, youths got competitive access to grants/loans, contractual agreements with business networks and funding agencies. For example, SUGECO managed to secure Tshs. 2 billion (approx. 1 million USD) from CRDB Bank Ltd. for financing start-ups in agribusiness for youths.

Despite the achievements made by the advocacy programme, these youths still faced hurdles in trying to earn a living from agriculture and agribusiness, as a result, all youths who were involved in the initial phase of the project, failed. Most of young people in Tanzania aspire to take up “white collar” jobs in the government offices, hence they have no skills to help them start and sustain an enterprise let alone an agribusiness which is labor intensive with difficult working conditions and high risks. According to (Ngek, 2012), less than 18% people have the right mindset for real entrepreneurship, and prefer to be employed rather than to take existential risks.

Another reason for the first phase challenges was lack of experience among the first batch of candidates in managing the size of capital provided; they had never handled such amounts of money; it needed more hand-holding and a more modest approach.

The New SUGECO Model: Key for Success

Realizing the above mentioned challenges, SUGECO engaged in phase II of the project in 2017, which involved sensitization and training to better prepare youths to allow themselves to become more creative, innovative, and entrepreneurial in order to stimulate successful agribusinesses. The model involved five phases which are as follows: (a) changing mindset; (b) technical capacity building; (c) entrepreneurship and business planning; (d) internship and apprenticeship attachments; (e) and incubation.

These training activities met the needs of the beneficiaries and served the purpose of building capabilities in order to pursue or strengthen an economic activity in the agricultural sector, to obtain a job or to start an MSME.

When the lessons from phase 1 were incorporated into phase 2, there were better results. Thus, a combination of availability of start-up capital3; access to land; mindset change and capacity building trainings yielded positive outcomes in terms of bringing about attitudinal change towards engaging youths in agribusiness, thus enabling more successful business start-ups and knowledge transfer and ensuring a high quality of final products. This resulted in breaking the initial defiance, and as a result of this new model a total of 10,000 youths have benefited from the project. Out of those, 4,000 are women.

In addition to that, other factors which have contributed to the success of SUGECO include: (i) champions – passionate SUGECO Chair; (ii) location of catalyst (SUGECO) strategically within a University (i.e. Sokoine University of Agriculture), hence benefiting from academic resources, but enjoying autonomy from university bureaucracy, including term limits for leaders; (iii) advocacy and partnerships building by SUGECO and support of government and Donor Partners; and (iii) action learning – learning from what did not work well to improve design, and scaling up what has been working.

To sum up, based on the impact assessment report of the project, the revised SUGECO model applied in the second phase of this project has led to 10,000 capacity building actions, around 5,000 successful agribusiness start-ups, and more than 15,000 new decent jobs over the period of three years. This is equivalent to a total annual income of Tshs. 60 billion (approx. USD 30 million.

Main Gaps and Policy Recommendations

Youths elsewhere are still constrained when engaging in agribusiness

A survey made in five regions of Mwanza, Shinyanga, Moshi, Dodoma and Dar es salaam shows that the level of successful participation of youth in agribusiness is still low. Based on the survey, the main barriers to youth participation in agribusiness include a lack of access to market information, a lack of skills, a lack of access to capital and a lack of access to land. Youths lack business and marketing skills that may allow them to put together viable agri-business proposals.

Weaknesses in current interventions

Information from the survey, key informant interviews and secondary data show that interventions made by the government and other stakeholders so far display several gaps:

  • Stakeholders have mostly focused on providing technical trainings on agricultural production. In order to encourage youths to participate effectively in agribusiness and to enable them sustain their enterprises, the following additional trainings are equally needed: identification and selection of viable agribusiness ideas; accounting and record keeping; preparing, understanding and monitoring business plans, budget discipline and improving quality of products.
  • Most youths complain of a lack of market for their products. However, further analysis reveals that most youths produce products of very low quality, or they fail to maintain quality, which discourages buyers and consumers.
  • The existing instruments in the identification and selection of potential youths for the agribusiness projects are not effective. For example, this include testing entrepreneurial aptitude first (which is expected to be above 20%) . As a result, most programs have failed to transform youths and their local economy. Thus, improved selection methods for identifying potential youths for entrepreneurial and trainings programs are needed.
  • Most youths tend to become increasingly dependent on government and other stakeholder support measures, rather than on their own entrepreneurial drive and competence. Empirical and field evidence show that there are basically two main variables that affect the success rate of participation in agribusiness, (i) the environment, and (ii) the individual himself/ herself. This is one of the main reasons that the efforts done so far by key stakeholders to involve youths in agribusiness have not contributed much to the general economy. This implies that a lot of initiatives to empower youths are carried out, but with little impact.

In many cases, training alone is not enough to tackle the multiple barriers faced by youths who wish to start agribusiness. Indeed, the evidence base suggests that training tends to yield better results when combined with other interventions, particularly with access to land and capital.

 

Main Policy Recommendations

  1. There is a need to raise awareness about the SUGECO model of engaging youths in agribusiness and to promote the approach for adoption by a growing number of district authorities and local stakeholders. The model has proven to be very successful in engaging youths in agribusiness in Tanzania.
  2. The SUGECO model should feature prominently among the various approaches when designing the new National Strategy for Youth Involvement in Agriculture (NSYIA 2022-2026).

 

References

  • AYA (2006) Evaluation of the African Youth Alliance Program in Tanzania, African Youth Alliance, Research Report, JSI Research and Training Institute, Rosslyn.
  • ILO (2019) Multilateral Framework on Labor Migration in Tanzania, International Labor Organization, Geneva.
  • National Bureau of statistics (2019) Intergraded Labor Force Survey in Tanzania, Ministry of Labor and Employment.
  • Ngek, N. (2012). An Explorative Study on Entrepreneurial Mindset in the SME Sector: A South African Perspective on Fostering SME Success. African Journal of Business Management, 6 (9)
  • Restless Developments, Annual Report, 2019 (Restless)
  • World Population Prospects-Population Division, United Nations.
  • URT- The National Strategy for Youth Involvement in Agriculture (NSYIA for 2016-2021)

 

Footnotes

  1. The Tanzanian economy is based mainly on agriculture whereby 80% of the sector is conducted on a small scale by smallholder farmers in rural areas. These produce about 75% of the national agricultural output employing 80% of the working age population.
  2. SUGECO is a Private Sector Organization which was established in 2011 at Sokoine University of Agriculture with the objective of assisting youths and graduates interested in agribusiness and self-employment by focusing on supporting them with business start-ups; access to capital, land, technology and human resource. For more information on SUGECO, please visit https://www.sugeco.or.tz
  3. This included correction of the error of pumping relatively large amounts of credit in a group of youths with hardly any planning, budgeting or financial/administration experience.

      About the Author

Dr. Kaihula Bishagazi

Dr. Kaihula Prudensia Bishagazi

Dr. Kaihula Prudensia Bishagazi a lecturer at Saint Augustine University of Tanzania (SAUT) and a consultant in policy reforms. She has been involved in several consultancies on policy advocacy and Public Private Dialogues (PPDS) relating to Local Economic Development (LED).

Download the Policy Brief in PDF format here:
Policy Brief no. 3 SDGs (PDF/2 MB)