FAQs

1. Because of the linkage aspect, it is believed that the Catalytic Trust Fund has wholesale interest in Tanzania’s agricultural transformation, including farming beyond the corridor. Is that a misplaced belief? 1.1 It is also argued that the CTF wants to see all farmers --- big and small -- in the corridor access finance. Is this correct?

The mandate of SAGCOT CTF is limited to the Southern Agricultural Growth Corridor of Tanzania as identified in the CTF trust deed and SAGCOT program policy documents including the SAGCOT Blue print. It is however, important to note that the agricultural financing continues to be one of the limiting factor for sustainable agricultural growth. The demand for innovative agricultural financing which targets investments in areas which provides more opportunities for growth and prosperity especially for smallholder producers is highly needed across the country.

2. It is also argued that the CTF wants to see all farmers --- big and small -- in the corridor access finance. Is this correct?

This is correct, CTF is designed to operate two Funds, namely the Matching Grant Fund and Social Venture Capital Fund. The former aims at improving the productivity and incomes of smallholders through incentivise and support the efforts of established agribusinesses to expand supply chains encompassing large numbers of smallholders.  The Matching Grant Fund support investments in the necessary public goods and services which directly benefit participating smallholders. This way the cost of production is lowered and farmers’ produces become competitive.  The Social Venture Capital Funds on the other hand aims to promote the development and expansion of emergent agribusiness to become commercially and financially viable business. Catalytic Fund objective is to support activities and capital expenditures required for the growth of a company to the point that it obtain commercial finance or investment by private investors. By doing so, opportunities for markets in profitable value chains is promoted for majority of farmers including large scale farmers.

3. What are the Funds Objectives?

The objective of the CTF is to provide funds to catalyze agribusiness investment associated with developing the agribusiness sector and the strengthening of supply chains encompassing smallholders and to assist with the initial costs of developing commercially viable agricultural business in SAGCOT that incorporate smallhoder.

4. Does the Scope of the Catalytic Trust Fund include components of agricultural clusters as described in the SAGCOT Investment Blueprint??

Yes, scope does include these clusters but is not limited to these or any such clusters.

5. What is the relationship between the Matching Grant Fund (MGF) and Social Venture Capital Fund (SVCF)? Would it be possible to use capital from both funds to make a single investment?

The MGF and SVCF are two separate funds with a shared geographical focus and general mission. Once function, both funds will operate very differently and have separate pools of capital. Two separate fund managers will be recruited, one to manage each fund. However, one bidder may tender for the management of one or both funds.  In some cases, it may be possible for the MGF and SVCF to support the same project, if the opportunities are approved separately by both funds and the investments do not conflict in any way. However, based on the eligibility requirements of the two funds, we believe it is unlikely that a single project will be eligible for both funds simultaneously. Also, the CTF will look to mobilize private capital. It would not be acceptable if, for example, the MGF recipient co-funding element were to be financed by the SVCF

6. What are the eligibility criteria on investment for both Funds? Is there a preference for any type of investment instrument?

The Matching Grant Fund is expected to support the efforts of established agribusiness to expand supply chains encompassing large number of smallholder farmers. The Fund support investments in public goods and services necessary to establish such relationships. The facility will only cover the costs of public goods/ services that would directly benefit participating smallholders. Public goods are investments that deliver significant collective benefits but are not profitable in their own right.  Example of such activities includes.

  • Developing or expanding contract farming and out-grower schemes
  • Improving the productivity of smallholders in established supply chains through enhanced extension support and improved access to agricultural technology
  • Capacity building for farmers organizations that are in a partnership with an agribusiness entity.
  • Providing “last mile” infrastructure to serve smallholders eg. Feeder roads, electricity connections and small reservoirs.
  • Making value chains investments such as assembly points, storage, and cold store conservation units.

Any project funded by the MGF must require the proportion of any assets that have been created or developed using MGF funds remain for the benefit of the beneficiaries of the project. The recipient of a grant from the MGF will continue the relationship with the beneficiaries for as long as the business activity funded by the MGF is in existence.

Applicants will need to demonstrate how the proposed project, with the use of the grant will be able to be financially viable and self-sustaining.

The SVCF on the other hand, is designed to make mezzanine debt and, potentially, quasi-equity investments (though never straight equity investments) in earlier stage companies to facilitate the growth of emergent agribusinesses to commercial scale and develop greater interaction with smallholders.

7. What are the application procedure for the funding and how long does it take for the project to be approved from the application date. The Matching Grant Fund is a demand driven

Financing from CTF is a demand driven and competitive process. It commences by the announcement of the funding opportunity (FoA) through various media which invites eligible applicant to submit the concept note proposals. Upon submission the concept note proposals are screened and validated, later on successful applicants are encouraged to develop full proposals to be review by the SAGCOT CTF Investment Committee. Finally successfully proposals are communicated for the grant awarding and gearing up for the project implementation.

8. For the Matching Grant Fund what are the Matching level for the projects from the offtakers?? Are in-kind contributions acceptable?

Projects matching level is considered on the size of the entire project costs in addition of the matching grant. This may be determined on a case-by-case basis; In general, matching grant recipients must contribute a sufficient amount to demonstrate that they have a financial incentive to succeed. Other consideration includes, companies with greater than 51% ownership by Tanzanian citizens grant amount cannot exceed 70% of the total estimated project cost while the difference of at least 30% must be covered by the contribution of the recipient. And for the companies with less than 51% ownership by Tanzanian citizens grant amount cannot exceed 60% of the total estimated project cost.  At least 40% of the total project cost must be covered by a contribution of the recipient.  It is important to note that companies that provide a higher percentage of the funding from their own sources will be viewed more favorably in the selection process as Matching grant fund aims primarily to achieve leverage on its funding.

In-kind resources/contributions are acceptable within 10% of the recipient contribution

9. Has the Matching Grant Fund considered non-reimbursable grants and/or could there be a revolving mechanism element??

Matching grant schemes are normally based on the principles of additionality which means that the grant assistance will not be given to support an activity which a company would undertake anyway without grant assistance utilizing its own fund.  This however can be difficult to define as most of grant assisted projects and activities make good commercial sense therefore the principle of additionality is often refined in practice by judging if the grant assistance is incentivizing the applicant to undertake the initiative efficiently than it would otherwise do.

In additional all grants will be paid retrospectively on reimbursable basis after the applicant submit claims for reimbursement on activities implemented with regard to the signed grant agreement with CTF. The claim for reimbursement must be accompanied with supporting documentation and receipts confirming claims.