An Action Plan for Developing Agricultural Input Markets in Tanzania

to be assigned for every five to six wagons, adding to
the cost. Movement is slow and a wagon takes about 7
days from Dar es Salaam to Tabora. Since the tariff
classification for fertilizers is in the lower rate category,
rail transport, despite the problems, is cheaper for shipments
to the west and northeast regions.
Road Transport—There are an estimated 2,000
road trucks operated by five to six large companies and
several smaller ones. Of the 2,000 trucks, about 50%
are with a net carrying capacity of 28 tons. Most of the
trucks that are imported are 2-3 years old and the cost
is about $100,000 each. Generally, the freight rates are
$0.10/km per ton for rough roads and $0.08/km per ton
for tarmac roads. The 28-ton capacity trucks were generally
carrying up to 50 tons of goods; this practice has
been curbed since the government introduced
weighbridges and there are heavy penalties for overweight
trucks. There is also a limit on the width, axle
weight, and the number of axles of a truck. The configuration
of the axle weight is also specified:
Front 1x8 tons = 8 ton gross
Middle 2x9 tons = 18 ton gross
Rear 3x8 tons = 24 ton gross
Total = 50 ton gross
There is no tolerance at the weighbridge, like 5%
in Kenya, and the gross weight in Tanzania cannot exceed
50 tons. Also, since the number of weighbridges
is limited, there are long queues and a waiting time of
5-6 hours is not uncommon. As a result, transporters
are having problems with the weighbridges. The matter
has been taken up with the Ministry of Works by
the Transport Association of Tanzania (TAOTA) with
the request that the regulations (SADEC) should be
harmonized with those prevailing in other countries in
East Africa (COMESA) so that cross-border movement
is not hampered.
There is 10% import duty plus 20% VAT on trucks
and spares and 25% duty on tires plus 20% VAT. On
the freight, there is 20% VAT. The operating costs for a
27- to 28-ton truck net carrying capacity are shown in
Table II.13.
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Table II.13. Tanzania—Estimates of Prevailing
Road Transportation Costs
(November 2003)
(1) $0.10/km/ton on rough road.
(2) $0.08/km/ton on tarmac road; e.g., Mbeya 823 km from
Dar transportation charge is $65.84/ton.
Note: Plus weighbridge charges and tips, road fines, and other
charges.
Banking System
There are several banks operating in Tanzania.
Among the larger banks are CRDB, Exim Bank, National
Bank of Commerce (30 branches), National Micro
Finance Bank (100 branches), Standard Chartered,
Citibank, Barclays, and Stanbic. In terms of deposits,
CRDB is the largest in the country.
In agriculture, banks finance the purchase of coffee,
cotton, etc., and provide financing to the big tobacco
farmers. Of production loans, 80% (with 10%-
12% interest rates) is given to the tobacco farmers or
tobacco farmer cooperatives with the farm as collateral.
The balance goes to the small coffee and cotton
growers (and also cooperatives) with urban property
as collateral. Interest rates vary from 12% to 15% for
medium loans and from 15% to 19% for the smaller
loans (risk factor) and with collateral at least 150% of
the loan amount. Collateral management companies
provide services in handling all aspects of collateral
including auction and recovery.
Commercial lines of credit are available for the
importers of agri-inputs like any other commercial