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Humanomics The problems facing agricultural sector in Zanzibar and the prospects of WaqfMuzar’ah-supply chain model: The case of clove industry Issa Salim Moh’d, Mustafa Omar Mohammed, Buerhan Saiti,

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The problems facing agricultural sector in Zanzibar and the prospects of Waqf-Muzar’ahsupply chain model

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The case of clove industry Issa Salim Moh’d Institute of Islamic Banking and Finance, International Islamic University Malaysia, Kuala Lumpur, Malaysia

Mustafa Omar Mohammed Department of Economics, International Islamic University, Kuala Lumpur, Malaysia, and

Buerhan Saiti Institute of Islamic Banking and Finance, International Islamic University Malaysia, Kuala Lumpur, Malaysia

Abstract Purpose – This paper aims to identify the appropriate model to address the financial challenges in agricultural sector in Zanzibar. Since the middle of 1960, clove production has continually and significantly decreased because of some problems and challenges that include financial ones. The financial intermediaries such as banks, cooperatives and micro-enterprises provide micro-financing to the farmers with high interest rates along with collateral requirements. The numerous programmes, measures and policies adopted by the relevant parties to find out the solutions to the dwindling clove production have failed. Design/methodology/approach – The authors will review and examine several existing financial models, identify the issues and challenges of the current financial models and propose an appropriate Islamic financing model. Findings – The numerous programmes, measures and policies adopted by the relevant parties to find out the solutions to the dwindling clove production have failed. This study, therefore, proposed a Waqf-Muzara’ah-supply chain model to address the financial challenge. Partnership arrangement is also suggested in the model to mitigate the issues of high interest rates and collateral that constrains the financial ability of the farmers and their agricultural output. Originality/value – The contribution of the agricultural sector to the economic development of Zanzibar Islands is considerable. As one of the important agricultural sectors, the clove industry was the economic backbone of the government of Zanzibar. This study is believed to be a pioneering work; hence, it is the first study that investigates empirically the challenges facing the clove industry in Zanzibar. Keywords Waqf, Islamic finance, Micro-enterprise, Muzara’ah, Supply chain model Paper type Research paper

1. Introduction Clove in Zanzibar is a major cash crop and has been the principal source of export earnings, hence making lucrative profits since its introduction in the isles (Martin, 1991). Clove industry is the second major agricultural sector through which the Revolutionary

Humanomics Vol. 33 No. 2, 2017 pp. 189-210 © Emerald Publishing Limited 0828-8666 DOI 10.1108/H-02-2017-0033

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Government of Zanzibar derives its national revenue (Sheriff, 2001). However, the industry has been experiencing a drastic decline over the past five decades. Studies show that the decline has been mainly caused by common problems, namely, price differentials, lack of fund, the monopoly of the Zanzibar State Trade Corporation (ZSTC), lack of logistics and lack of involvement of private sectors. Several measures were taken to address these challenges such as increase in the price of clove, restructuring of the ZSTC, distributing incentive packages and seedlings to farmers (MKUZA II[1] and Zanzibar Clove Growers Association [CGA]; Juma, 2010 and Serikali ya Mapinduzi ya Zanzibar, 2011c). Despite all these measures, therefore, one wonders whether the problems identified by the previous studies are the real problems facing the clove industry. There is also a concern whether the government measures taken to solve the problems in the clove industry have been effective. Moreover, one is tempted to assume whether the ineffectiveness of all remedial measures is due to the ineffectiveness of the existing models being used for financing the clove industry. Hence, the present study tries to fill these gaps by conducting an empirical research to primarily investigate the underlying causes for the persistent decline in the clove industry in Zanzibar, despite all the necessary measures taken by the Zanzibar Government to remedy the situation. 2. Economy of Zanzibar Zanzibar is a vital semi-autonomous part of Tanzania which is geographically located in East Africa, bordering the Indian Ocean. Historically, Zanzibar was known as an international trade gateway and had been a node between the USA, France and Britain and maintained a good trade link with India (Sheriff, 2001, 1979). Zanzibar comprises two large sister islands such as Unguja and Pemba and several other smaller isles, some of which are inhabited (Revolutionary Government of Zanzibar, 2007). The islands have been strategically blessed with virgin land and fertile soil with a plenty of water resources, making it arable and productive for the agricultural activities. Zanzibar, on the other hand, has a young, small and gradually growing population. The total population of Zanzibar is 1,303,568 (this is according to the last and recent census of 2012) with a steady annual growth rate of 3.1 per cent (population and housing census of 2002) where 51 per cent of its population is female, while the remaining is male. Both male and female are involved in agricultural activities as their main source of income for their day-to-day economic life. Zanzibar population is predominately rural (68 per cent) and youthful (Revolutionary Government of Zanzibar, 2010). Most of the main agricultural activities take place in rural areas where the young population (68 per cent) constitutes the main labour force. According to Revolutionary Government of Zanzibar (2010), Zanzibar’s national accounts categorize the economy into three major sectors, namely, industry[2], service sectors and agriculture which is the main economic activity in isles. Agriculture contributes over 75 per cent of the national Gross Domestic Product (GDP) (speech of the Zanzibar Minister of Finance Burhan Sadat Haji, 2009/2010). On average, 70 per cent of the population depends directly or indirectly on the agricultural sector as their main economic activities (OCGS, 2007). However, the country depends on limited agricultural commodities primarily for exports, namely, clove and seaweed. Clove is an essential cash crop in the agricultural sector in Zanzibar. Since its introduction, clove as an agricultural cash commodity has been contributing 75 to 90 per cent of the foreign exchange earnings in the isles (Sheriff, 2001). 2.1 Clove in Zanzibar Clove occupies a prime position in the history and agricultural system of Zanzibar. It had been a major foreign exchange earner in Zanzibar for the past 150 years. It can be said that


Zanzibar and clove are inseparable historical twins. The island was once the largest producer of clove in the world, and her economy was based on large incomes thus derived (Revolutionary Government of Zanzibar, 2010). Clove was the mainstay of the Zanzibar’s economy during the colonial period (Sheriff, 2001). It is still a major export in the isles, and this has made the agricultural sector to be considered as an engine of the growth of the Zanzibar economy and a priority sector for poverty reduction. Clove accounts for an average of 23 per cent (Revolutionary Government of Zanzibar, 2009) as of 2006 and 32 per cent as of 2010 of the GDP, providing 75 per cent of foreign exchange earnings. Clove farming is a very important traditional export as well as the main contributor to GDP. Official statistics (OCGS, 2007) show that clove contributed an annual average of about Tanzanian shillings 6.5 billion to smallholder farmers who sold their clove to ZSTC between 2002 and 2006, and Tanzanian shillings 71 billion in 2011 (US$33,411,764.706 as of 22 December 2013). Thus, clove contributes significant income that surpassed the contributions of all other economic activities combined. The key players in the clove production are as follows: Farm, i.e. the clove field; the farmers; the middlemen; and the ZSTC. These four key players are explained as follows: (1) Farm is a piece of land on which clove trees are planted and owned by the farmers. (2) Famers. These are owner-producers who sell their clove to ZSTC, and sometimes, there are leasing their farms to other small farmers who originally do not own any farms. (3) Middlemen. This group comprises clove pickers and renters of the clove farm. The former, i.e. wachumaji, are the people hired by the farmers to pick clove from its stalks and dry them, while the latter, i.e. wakodishwaji, are those who lease clove farm from the farmers to earn for themselves clove revenue. (4) The ZSTC. This is a government agency whose main function is to purchase clove from the local farmers at different grades with different prices after which they export, thus deriving government’s revenue. 3. Literature review The literature in the clove industry in Zanzibar is very scanty. However, a few available give a general situation of the clove industry in Zanzibar, for example, Juma (2010). Generally, Zanzibar economy depends on the agricultural sector (70 per cent) which is dominated by the clove industry (Bakari, 2001; Revolutionary Government of Zanzibar, 2010). This part of the agricultural sector since its introduction in the isles in the eighteenth century was the source of the isles’ revenue, thus deriving earning of about 90 per cent of the foreign exchange (Martin, 1991; OCGS, 2002, 2010 and Sheriff, 2001). Despite this contribution, the sector has been facing recurring and common problems, namely, price differentials, lack of access to financing, poverty, production cost, monopoly, lack of involvement of the private sector, lack of logistics and lack of a viable model for financing the clove industry. These problems slowed down the productivity of the clove (OCGS, 2002; Revolutionary Government of Zanzibar, 2010 and Juma, 2010). The following sections comprehensively elaborate those challenges facing the clove industry in Zanzibar. These challenges are divided into two categories: (1) internal challenges in the industry; and (2) external challenges.

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3.1 Internal challenges in the clove industry The key players of the clove industry in Zanzibar are farm, farmers, middlemen and the ZSTC; and each one is responsible in one way or another in the production of clove. These players are faced with several recurring and common challenges including the issue of price, the issue of high cost of production, lack of financing, poverty and lack of private sector participation. Each one of these issues will be comprehensively discussed in the next sections. 3.1.1 Price. Price is the main and very common existing problem in the clove industry in Zanzibar. This problem takes different forms like the increase and decrease in price, risk factor and the market monopoly of the clove. For example, the increase in the price of fertilizer, pesticides, tools and other inputs for clove cultivation has slowed down the better clove productivity. This is due to the fact that farmers can only sell their clove at low prices that do not give them incentive to produce more. This has, therefore, resulted in the decline of the clove productivity Tejeda (2010). Farmers are also exposed to the risks of price decrease which, in turn, affects them for the preparation of producing clove that involves buying of tools for drying clove like “majanvi” and paying of wages to the middlemen for picking the cloves. According to Tejeda (2010), maize producers in Tanganyika are faced with the price fluctuation which affects their productivity. Price fluctuation in the clove market in Zanzibar, on the other hand, has been mostly caused by the government-monopolized agency – ZSTC (Juma, 2010; Revolutionary Government of Zanzibar, 2010) which has caused for many years the ups and downs of the clove production. This has led other clove-related activities to slow down because farmers do not have any other market choice other than ZSTC. This market discourages them from producing and engaging in clove industry (Gershon et al., 2011). In addition, literature suggests that price differential in China and Russia are caused by many reasons including smuggling and black markets. For example, Merriman (2012) found that: […] people smuggle goods for mainly one or two reasons, namely, “to avoid excise taxes and to evade rules prohibiting the sale of such goods”. Because, when similar products are sold at substantially different prices in different locations, there is an incentive to transport the product from the lower-priced to the higher-priced market.

The ZSTC as the sole buyer of cloves in Zanzibar offers lower prices for the clove produced at home compared to prices farmers get from the black market. Thus, this has led to clove smuggling in the Islands to neighbouring Kenya. Smugglers, like any other businessmen, operate to make profit. As emphasized above, price differentials enable smugglers to profit by purchasing products in low-price markets and reselling them in markets where prices are higher and the difference will be their profits. In Zanzibar, farmers sell their clove to smugglers at good prices higher than that offered by the ZSTC. These smugglers then resell the clove to neighbouring Kenya at a better and higher price than that offered by ZSTC (Juma, 2010). Unfortunately, the literature has remained silent about the price fluctuation of cloves in Zanzibar. It is also not known whether this problem is due to the existing models employed in the industry. 3.1.2 High cost of production. The problem is associated with the first two key players in the chain production process, i.e. clove farm and farmers (Cooper, 1981 and Martin, 1991). The majority of farmers leave their clove farms idle because of the high cost of production. This is because when the clove industry was introduced in Zanzibar only, Arabs elite, most of whom were sultans, owned clove farms. Unfortunately, these Arabs were overthrown as a result of the so-called Zanzibar Revolution in 1964, and the aftermath of the revolution was that the government confiscated majority of the clove farms owned by the Arabs elite (Martin, 1991). These lands were then nationalized and redistributed to the African


indigenous majority. These African indigenous peasants were poor and not able to productively take care of these farms because they could not afford the high cost of production (Sheriff, 2001 and Bakari, 2001). 3.1.3 Lack of financing. As indicated earlier, 67.9 per cent of the population live below the income poverty line which is according to Human Development Report (2011) is $1.25 a day. In addition, the majority population in Zanzibar is farmers who lack financing and they cannot access any financing facility from either public or private financial institutions. One reason for this is their poverty and being characterized by the financial institutions, especially banks, as the un-bankable people. Normally, financial institution will usually ask them to pledge collateral for the financing applied. In addition, there are a lot of banking restrictions for them to access financing from the financial institutions to support their clove production activities. Hence, this has significantly contributed to the decline of the production in the clove industry in the isles (Abbas et al., 1995). The literature, on the other hand, has tried to relatively discuss this problem; for example, the studies of Juma (2010) and Revolutionary Government of Zanzibar (2010). Both of them recommended incentive packages in the form of providing and distributing seedlings to farmers. To practically implement this recommendation, Zanzibar Ministry of Agriculture and Natural Resources planted and distributed 500,000 clove seedlings freely to farmers in the year 2011/2012. However, farmers were required to prepare their farms for these new seedlings given to be planted (Serikali ya Mapinduzi ya Zanzibar, 2011c). The question which arises here is that, will these poor farmers be able to prepare their farms without financing even though they are given clove seedlings freely? The researcher of this study has a vast evidences showing high cost production unbearable by these poor farmers. Eventfully, this has led to the decrease in the clove production in the isles. It is, therefore, apparent that the measures taken which are part of the structural problems of the existing models in the clove industry in Zanzibar have failed (Revolutionary Government of Zanzibar, 2010). Furthermore, there is no empirical study done to investigate this dilemma; hence, to conduct such an empirical study to investigate this issue becomes significant. 3.1.4 Lack of private sectors participation. The participation of private sectors in the economy has a lot of benefits, including creating jobs and entrepreneurial opportunities; cultivating inter-firm linkages; enabling technology transfer; building human capital and physical infrastructure; generating public revenues for governments; and offering a variety of products and services to consumers and other business, sectors and enterprises (A leadership Dialogue at Harvard University, 2007). China is cited to be a good example in supporting private sector participation in her economies (Dickson, 2007). In addition, private commercial banks in Turkey are more efficient than public banks (Ayranci, 2011). Another example is South-East Africa regions (Malawi, Zambia and Mozambique) whereby cassava processing and marketing have remained largely in these regions because of the private sector participation though with minimal government involvement in all three countries (Haggblade et al., 2012). Contrary to Zanzibar where the tourism sector that has significant private sector participation, clove industry, on the other hand, does not (Revolutionary Government of Zanzibar, 2010). In fact, studies show that clove industry in Zanzibar needs modification (Juma, 2010 and Revolutionary Government of Zanzibar, 2010). Therefore, one is strongly convinced that the existing models in the industry has failed to accommodate the industry (Sheriff, 2001). Thus, a need to conduct an empirical study for the viable and alternative model for the clove industry in Zanzibar becomes significant in this regard. 3.1.5 Poverty. Almost all farmers are poor, and their clove farms are poorly managed. At the moment, absolute poverty in the Islands has not been eliminated, although this was one

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of the main objectives of MKUZA I and MKUZA II. As previously discussed, the poverty in the Islands is 69.7 per cent, this population lives below the poverty line of $1.25 per day. As a matter of fact, in any society, factors like assets, productivity tools, markets and other enabling conditions for the economic improvement are very important in the very economy of the society concerned. Society, on the other hand, is the compilation of different classes of people: low class, middle class and upper class. However, for the low class, i.e. the poor (majority of the clove farmers as mostly used in this study), livelihood choices, in both employment and entrepreneurship are constrained by a wide range of interdependent obstacles, ranging from geographical isolation to market failures, weak institutions, corruption, etc. Thus, when thinking about eliminating poverty, hence increasing the incentive to farmers of producing more cloves, one should think broadly about creating economic opportunity for these poor farmers. Creating an economic opportunity is not a solution by itself; rather, it is a context in which individuals can create their own solutions. It is, therefore, a combination of factors (as mentioned above) that enables the poor to manage their assets in ways that generate incomes and choices (Sheriff, 2001). As stated earlier, the vast majority of the Zanzibar labour force is from the rural areas. These are the poor farmers and middlemen. One reason for their poverty is being geographically isolated from receiving a productively financial access, although they are the primary players of the clove production in the Islands. In fact, one of the central aims of the Zanzibar poverty reduction plan 2007 was to mobilize and utilize domestic financial resources both public and private. The plan aimed at reducing income poverty, improving human capabilities, survival and social well-being. To achieve these goals, the plan offered these opportunities to prioritized sectors including agricultural sector, hence clove industry (Revolutionary Government of Zanzibar, 2007). Juma (2010), on the other hand, suggested to introduce and promote the provision of incentive packages for those farmers who plant new clove seedlings and successfully manage them to fruition stages. As cited earlier, the majority of these farmers is poor. They need more incentives in managing their clove trees, as some of these trees have become ageing. Therefore, encouraging these farmers to replant and replace the ageing trees will productively benefit them and the country at large. No one can deny the fact that agricultural extension plays leading roles among the public services (Feder et al., 2011). Unfortunately, the existing model in the clove industry has not been able to exploit these farmers’ opportunities; hence, they have remained poor. One of the objectives of this research is to empirically investigate the failure of the existing model employed in the clove industry in Zanzibar in exploiting farmers’ economic opportunities; hence, this research is very significant to conduct. 3.2 External challenges to the clove industry Clove industry in Zanzibar is not only facing the challenge of price, production cost factor, the lack of fund, poverty, lack of logistics and lack of involvement of private sectors but also there are other external challenges which face this industry. Some of these challenges are monopoly of the market and lack of a viable model in the clove industry. 3.2.1 Market accessibility and monopoly. Unlike foodstuff sellers in Ghana who purchase their produce in different markets, namely, from intermediaries, from producers or from producer-sellers which either through producer-wholesalers or producer-retailers. ZSTC, on the other hand, is the sole buyer of the clove in Zanzibar. This market offers lower prices for the clove compared to prices farmers get from the black markets. For example, given the discrepancy between the official price, 3,500 Tanzanian shillings ($3.5) per kilo in Zanzibar, and the black market price – reportedly between 7,000 and 10,000 Tanzanian shillings in


Kenya $7-$10 (it is almost twice, the price farmers get from ZSTC). This has thus contributed to the decline in productivity and encouraged clove smuggling in such a way that many farmers take the illicit option to smuggle their clove to neighbouring Kenya[3]. Studies conducted by Sheriff (2001), MKUZA II and Juma (2010) assert that the price structure employed by the ZSTC has failed to stop farmers from smuggling their clove; hence, the model has not been able to encourage these farmers to sell their clove to the domestic market. This calls for a new and viable model to accommodate this missing structure in the existing model in the clove industry in Zanzibar; hence, this study becomes very significant to conduct. 3.2.2 Lack of a viable model in the clove industry. Currently, there are several models being adopted in the agricultural sector in Zanzibar. These models are micro-enterprises in nature. By definition, micro-enterprise in Zanzibar context is defined as follows: […] informal sector which consists of units engaged in production with the primary objectives of generating employment and incomes to the persons concerned. These units typically operate at a low level of organization, small scale, and with little or no division between labour and capital (ZHDR, 2009).

These informal sectors differ according to the capital investments they hold and the number of employees employed; hence, they can be micro, small and medium enterprises, depending on the number of the workers and the capital investment held by them. For example, the biggest category is micro, having less than four employees with a capital investment of up to Tanzanian shillings 5 million (US$2,352.941 as of 22 December 2015). About 13 per cent of the existing enterprises in the isles sell their products to traders and merchants intermediaries, while only 10 and 4 per cent of them sell their products to small and large businesses, respectively[4]. It is worth noting that these enterprises in Zanzibar do not appear to take significant share in the export market as the quality of services and products they produce have been less competitive. They mainly depend on the domestic market and sell their products mostly to individual consumers. For example, about 71 per cent of the micro-enterprises engage their businesses in domestic markets and usually sell to individual consumers as mentioned above. But it is very interesting and worthwhile to note that the nature of the clove in Zanzibar cannot be sold to individual consumers. The reports of Juma (2010) and MKUZA II (2010) admit the lack of a viable model in the industry. Yet the literature is very silent about what kind of a model should the clove industry in Zanzibar to adopt research becomes significant. 3.3 Efforts taken to remedy the situation Several efforts and measures have been taken to remedy the challenges facing the agricultural sector including clove industry in Zanzibar. For example, in 2000, the Revolutionary Government of Zanzibar launched the Zanzibar Development Vision 2020 with a central theme of improving agricultural sector and aiming at eradicating an absolute poverty and attaining sustainable development (Revolutionary Government of Zanzibar, 2010 and ZATI, 2009). These initiatives include the following: MKUZA I[5], MKUZA II[6], ASSP[7], ASDP-L[8], PADEP[9], SMOLE II[10] and Agro-Processing[11]. Other efforts are crop development and plant protection; capacity building and farmer empowerment; provision of incentive package schemes and clove seedlings to farmers; and support services such as research, extension and advisory services (ZATI, 2009). The attempt of the Revolutionary Government of Zanzibar to tackle the problem of price differentials and discourage farmers from smuggling their clove to neighbouring Kenya was to increase the price of the clove in the domestic market, i.e. ZSTC. According to Bank of Tanzania (BoT) monthly economic review of April 2012, the export value of clove significantly increased,

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following the surge in price of clove in the world market. and during 2010, 2011 and 2012, the exports of cloves were 2.2, 1.1 and 9.8 per cent, respectively (export proceeds of cloves to US$64.8 million from US$7.3 million). However, despite this increase in price and exports, the decline in clove production still continues and farmers have been reported to take illicit action by smuggling their clove to neighbouring Kenya[12]. Despite all these measures taken by the government to address these major challenges facing the clove industry in Zanzibar, productivity in the clove industry in Zanzibar continues to decline. For example, over the past five decades, the clove productivity has decreased from an annual average of about 16,000 tons in 1970s to a current average of between 1,500 and 3,500 tons in the 2000s (ZATFSD, n.d. and OCGS, 2010) as previously mentioned. This raises a few pertinent questions. Is the decline in productivity of the clove industry because the government measures are ineffective? Is the decline because of other related challenges that have not been documented yet? Is the decline attributed to the failure and the structure of the existing agricultural models employed in the clove industry? It is, therefore, apparent to conduct a study that will empirically investigate these questions. 4. The existing models and their failures 4.1 First model: Government scheme The Revolutionary Government of Zanzibar implemented different schemes in managing the sector including introducing “Clove Bonus Scheme” in 1992 whereby a bonus was paid for each young tree raised under approved condition (Martin, 1991). The Government also had a “Clove Rehabilitation Program” in 1975 (Martin, 1991). In 1927, the Government formed the “Clove Growers Association” with the sole aim of controlling the costs of production, marketing cloves and providing loans to farmers. Later, this body was made a public entity, and it was given wider powers of operation, and in 1937, it was given statutory monopoly powers for the purchase and sale of cloves (Martin, 1991). However, after the 1964 Zanzibar Revolution, the role of the CGA was taken over by the ZSTC. The scheme operates as Figure 1 elaborates. In Figure 1, the steps involved in the Government scheme model are illustrated as follows: • Farmers own land and plant cloves. • Middlemen pick and dry the cloves. • Farmers send their clove produce to the customer who is ZSTC. • The ZSTC (the government) packs the cloves and exports them. The following is the explanation of the above-mentioned steps: • Farm is the land area in which clove trees are planted on. In Zanzibar, it is difficult to find many farmers owning lands for clove plantation. However, there are some clove plantations which were donated as waqf, but unfortunately, they have been left idle because of their high cost of production. • A farmer who owns the piece of land is supposed to manage, fertilize and water it, so that the clove trees grow well and hence produce significant cloves. Then, the farmer directly sells his/her clove harvests to ZSTC. The farmer bears the cost of upkeep and managing, fertilizing, the cost of pesticides and watering. However, they cannot access financing from any institution. In addition, usually the cloves are bought in terms of their grade (Grades A and B, i.e. fair, and C mpeta, lowest grade); hence, different prices are offered according to different grades. For a farmer to have a good grade which is “Grade A”, he/she needs to dry the clove using palm-mats (majanvi) which are expensive to buy; hence, the burden of production cost increases. Again, the farmer

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bears the cost of transportation to the ZSTC centres from the production areas (normally from villages). • Middlemen are the hand-labours hired by the farmers to pick the cloves from the trees and sometimes to dry them. Normally, the get paid after the sales. • Currently, the sole buyer of the clove produced in the Islands is the ZSTC. The ZSTC normally offers lower prices compared to black market. This has led to smuggling cloves to neighbouring Kenya. • The ZSTC exports the clove bought from the individual sellers (famers) to the international markets. Experience shows that this Government scheme has failed to operate properly and serve the players involved in the production of the cloves because of the fact that it does not fulfil some of the needs of these players. For example, the Government has the scheme of distributing seedlings to farmers and other incentive packages (Serikali ya Mapinduzi ya Zanzibar, 2011a, 2011b and Martin, 1991), but these farmers are then left without any financial assistance for them to manage, maintain and keep these seedlings grow healthy (Abbas et al., 1995). Therefore, the farmers are obliged to bear the costs of watering, fertilizing, weeding and the whole process of husbandry and buying of “majanvi”, i.e. palm-mats for drying the harvested clove (Martin, 1991; Abbas et al., 1995 and Sheriff, 2001). This de-motivates them and they have made them shy away from engaging in clove planting. In addition to this, the farmer is forced to bear the cost of transportation to the local ZSTC centres to sell their clove, this is because of bad road infrastructure (Sheriff, 2001). When they reach these ZSTC local centres, they get lower prices compared to the prices offered by the black market; hence, this has led them to smuggle their clove to neighbouring Kenya (Juma, 2010).

Figure 1. The Government scheme model

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4.2 Second model: Tanzania Investment Bank-agriculture window model In Figure 2, the Tanzania Investment Bank-agriculture window (TIBAW) model operates based on the following key steps: • TIBAW provides loans on interest according to the nature of the borrower, for example, to the companies, corporate farmers, microfinance institutions, savings and credit co-operative societies (SACCOSs), farmer cooperatives and associations and technical assistance. • The corporate bodies, in turn, finance individual farmers on interest. • The individual farmers repay the corporate bodies the principal with interest portion. The Tanzania Investment Bank opened window solely to help the agricultural sector in Tanzania. The window provides loans 35 per cent to companies which are involved in agriculture and corporate farmers, 30 per cent to microfinance institutions involved in agriculture, 30 per cent to SACCOSs, farmer cooperatives and association and 5 per cent to technical assistance. In turn, these bodies, entities and institutions lend this borrowed money to individual farmers who are supposed to repay the principal amount along with the interest. The farm produces supported include maize and maize seeds, paddy, coffee, flower seeds, onions, sesame, cashew nuts, sunflower, sugarcane, sisal, beans, tomatoes and various export vegetables. Unfortunately, this service does not reach Zanzibar where clove is

Second Model: Tanzania investment bank-agriculture window model (TIBAW)14

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Figure 2. The TIBAW model

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produced. Therefore, the clove farmers do not get financing from this window, and there are lengthy financial requirements including the following: • good track record in managing agricultural activities commercially; • acceptable legal status of the borrower; • collaterals acceptable to the bank; • equity stake of the borrower of not less than 30 per cent of the total investment; and • a bankable business plan.

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In fact, the clove farmers do not qualify for this financing because they cannot meet the above-mentioned requirements. The financing is granted to those qualified from 6 months to 15 years, depending on the nature of the financed project with an interest charged of 5 and 4 per cent p.a. for direct lending and on-lending, respectively. In turn, the corporate bodies charge individual farmers high interest rates which exceeds 8 per cent[13]. Again, this model has failed to participate in the clove industry, as it only operates in Tanganyika. It has not reached Zanzibar where the clove is produced. In addition to this, the crops that are financed by this service/model are maize and maize seeds, paddy, coffee, flower seeds, onions, sesame, cashew nuts, sunflower, sugarcane, sisal, beans, tomatoes and various export vegetables which are significantly produced in Tanganyika; as said earlier, interestingly, none of them is clove! Moreover, as of 31 March 2012, loan applications in this window/model amounted to TZS 192 billion. Loans that were approved add up to TZS 27.785 billion, and were extended to 81 applicants located in 18 regions (43 districts). Of the 81 approved applications, 32 are corporate borrowers, 42 SACCOS/cooperatives/associations and 7 microfinance institutions. Of all these, there is no clove or even clove-related activities which are involved in this TZS 192 billion loan. Again, of 43 districts, there is no Zanzibar district given this facility where the clove is produced. 4.3 Third model: the microfinance model The steps involved in the above-mentioned microfinance model are illustrated as follows (Figure 3): • Microfinance institution provides financing at interest to be paid to the individual farmer and/or group of farmers. • The individual and/or group of farmers is then supposed to pay back the principal amount they borrowed along with the interest portion. The interest percentage depends on the nature of the financing applied and/given ranging from 3-2.5 per cent monthly to 15-20 per cent annually.

According to Mohamed and Temu (2008, p. 9): […] there are three types of microfinance institutions in Zanzibar. These institutions are the financial Non-governmental organizations (NGOs), Savings and Credit Cooperatives (SACCOS) and

Loan Group of farmers

Microfinance Institutions


Figure 3. The microfinance model

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government managed credit schemes. More than half (56 per cent) of the clients are served by Savings and Credit Cooperatives (SACCOS), while the financial NGOs serve about 43 per cent of microfinance institution clients and the remaining 1 per cent is served by the government managed credit schemes. The problem of this model is that they charge high interest rates in such a way that, the poor farmers are hardly able to pay back the principal amount borrowed along with the interest portion. For example, the interest charged ranges from 2.5-3 per cent monthly to 15-20 per cent annually, depending on the institution offering the service (Mohamed and Temu, 2008). It should be noted that microfinance institutions are commonly seen (in developing countries like Zanzibar) as a promising instrument for helping the poor by providing capital to the under-served segments of the population. The common vision of these institutions is to lift poor households out of poverty by providing them with financial help. However, these institutions in the case of Zanzibar do not reach rural areas where majority farmers reside. It is worth notingthat of all microfinance institutions in the Islands, none of them engages in clove or clove-related activities (Mohamed and Temu, 2008).

4.4 The need for an alternative model The existing models operating in the agricultural sector and in clove industry particularly in Zanzibar have proven failure as highlighted by Juma (2010), Martin (1991), Sheriff (2001); Merriman (2012), Mohamed and Temu (2008), Revolutionary Government of Zanzibar (2011); Abbas et al. (1995). This failure is due to basically the following main reasons: monopoly of the industry which restricts and hinders farmers from selling their clove produce to other markets locally or internationally; for example, Kenya. Hence, this has led them to smuggling activities. Other problems that have not been tackled yet by the existing models are the lack of private sector participation; lack of funding and/or financing (to) farmers; burden of collateral on the farmers when applying for funding; high cost that farmers bear because of the production process, e.g. watering, weeding, husbandry and transportation; and lack of a proper marketing system. Therefore, such a failure calls for an alternative model that provides a steady access to funding that is based on the collateral-free; allows private sector participation that will be based on profit and loss sharing basis; is cost-efficient; and does not give farmers financial burden with their farm to productively cultivate clove. As the existing models have failed to produce significant results in the industry, it is pertinent here to develop and adopt a new model that will restore the clove industry in Zanzibar of being the world largest and first producer and exporter of the crop, thereby earning lucrative national revenue. 5. Proposed Waqf-Muzara’ah-supply chain model Owing to the ineffectiveness and inefficiency of the existing models as proven above, it is significant here to propose a new model. This proposed model is called Waqf-Muzara’ah-supply chain model (WMSCM) that will combine four dimensions in its essence, namely, waqf, zakat, muzara’ah and supply chain. These four combined components will be comprehensively discussed here, respectively. 5.1 Waqf and human welfare The institution waqf in Islamic history has played a significant role in the socioeconomic and socio-political development of the Muslim societies throughout their history. Among the roles played by this institution in the early days were to provide basic needs; social goods like education, e.g. building of libraries and funding scientific research; and care of animals and the environment and health care and public infrastructure like road, bridges, dams, parks and drinking water; lending to small businessmen and other development infrastructure. These services provided would eliminate the problem of poverty in the Muslim society


(Wajdi Dusuki, 2008; & Larbani et al., 2011; Mohamad Suhaimi et al., 2014; Mahamood and Ab Rahman, 2015). For example, Mahamood and Ab Rahman (2015) proposed that the role of waqf is significant in providing financial assistance to their communities as well as strengthening their academic quality. It is due to these roles played by this institution whereby the Muslim societies developed and they were able to eliminate many of the socio-economic problems they faced. The existing model in the clove industry in Zanzibar has not been able to address the challenges facing it; however, with the use of the waqf and Zakat institutions, these challenges could be best attempted. Interestingly; in Zanzibar, Muslims are 98 per cent, though the poverty is 68 per cent, as indicated in the previous sections. Of the 68 per cent are poor farmers with low level of education, who also lack entrepreneurial skills as well as access to financing for the agricultural activities. These affairs make them risky and un-bankable class of the society in the eyes of the most financial institutions (Larbani et al., 2011). To reduce such a risk, there is a need to improve the quality of their human resources, particularly in the agricultural activities, as they depend mostly on agriculture for their livelihood, earning and economic development. Private institutions as seen by Larbani et al. (2011) can provide such services but at a cost, which the poor cannot afford. On the other hand, as it was previously discussed at length, the public sector has failed towards providing any worthwhile solution to the agricultural sector particularly in the clove industry in Zanzibar. Therefore, the other option available is the third sector, as noted by Larbarni et al. (2011), which is a voluntary sector – hence, waqf institution. Furthermore, the Revolutionary Government of Zanzibar has its nationwide policy “Zanzibar Strategy for growth and poverty reduction” famously known by its Swahili acronym MKUZA I and MKUZA II together with a lot of NGOs which act as a complementary schemes to help the government reduce the socioeconomic problems have not been able to achieve their main stated objectives of alleviating poverty and improving human socio-economic welfare of the people (Revolutionary Government of Zanzibar, 2010). Therefore, the role of waqf and zakat will become pertinent to fill this gap. In Zanzibar, waqf is mostly given for graveyards and mosques. However, there are some “farm” which were given as waqf assets and some of them have clove trees. Unfortunately, they have been left idle and no one is looking after them; as a result of which, they have become forest mostly because of the high cost involved for their husbandry and upkeep (The researcher on this is the best witness). Islam encourages self-development and emphasises much on eradicating one brother’s burden. 5.2 Muzara’ah financing Financing as described by Kahf and Khan (1993) involves channelling of resources from wealth holders to the deficit producing or consuming units. As such, financing enables the deficit units to have command on a quantity or resources larger than what they can command with their internal means. Larbani et al. (2011) noted that in Islamic finance and economics, there are a lot of modes to finance real activities like agriculture whereby the parties involved will bear the risk and share the profit earned or loss incurred from the business. These modes of finance may take the form of participatory like Muzara’ah, Musaqah, Musharakah and Mugharasa (State Bank of Pakistan, the Islamic Banking Department), and they may be leasing-based financing that involves the leasing of agricultural equipment to farmers on deferred payment basis (Larbani et al., 2011). This study focuses on the Muzara’ah mode of financing because of its suitability for agricultural financing, especially in rural areas where farming activities take place – hence clove farming. The word Muzara’ah (sharecropping) comes from the Arabic word “zara’a” which means “crop” (verb). Muzara’ah, therefore, is a form of partnership between landlord

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and agricultural labour whereby the productive outcomes are shared according to agreed terms (Larbani et al., 2011). For example, the bank provides the land and machinery to the farmer, the farmer cultivates the land and the output generated from the cultivation is shared between them in a pre-agreed proportion (Mohsin, 2005). The nature of this mode of financing, in fact, addresses many challenges facing the clove industry in Zanzibar. Thus, under this mode of financing, the problem of poverty and being un-bankable will be overcome. Muzara’ah also provides logistics package which is one among the challenges facing the clove industry in Zanzibar. In addition to this, Muzara’ah helps farmers with the cost of production with collateral free financing and funding to look after their farm and hence produce more cloves. Muzara’ah finds its legitimacy from Prophet Muhammad (SAW) where lands seized from the conquered Kaybarite Jews were leased to them for equal sharing of the produce based on the principle of Muzara’ah (Larbani et al., 2011). Muzara’ah has played a tremendous role in financing agricultural sector in the modern banking system. The good examples are as follows: the State Bank of Pakistan through its Islamic banking department has a special scheme for agricultural activities; Sudanese Islamic Bank (SIB; Khaleefa, 1993); and Iranian banks (Islamic Development Bank, 1993). Sudan per se has a considerable experience of Islamic banking involving in the agricultural sector since its establishment in 1983. SIB has been providing different schemes of agriculture financing including Musharakah which takes the form of Muzara’ah which has been successful to small Sudanese farmers. To illustrate this, the Sudanese experience through SIB; for example, a farmer gets 75 per cent and 25 per cent goes to the bank as the profit and loss sharing basis. SIB has been giving agriculture financing amounting to 29.4, 33.5, 33.9 and 24.7 per cent from 1406H (1985), 1407H (1986), 1408H (1987) and 1409H (1988), respectively, whereby Muzara’ah on the basis of Musharakah was financed at 47.59, 60.9, 54.7 and 52.1 per cent and on the basis of Mudarabah financing amounting to 0.67, 0.3, 0 and 0 per cent in the same four years. According to Khaleefa (1993), during 1986 and 1987, SIB acquired fixed assets (tractors, discs, water pumps, etc.) for financing Musharakah in partnership with small farmers. In addition, 858 of Musharakah contracts were signed with small Sudanese farmers involving a cultivated area of 2,900 “feddans” of irrigated farms and 1,000 of rain-fed farms. In this mode of financing, SIB applies three methods in offering financing to the farmers who apply for the facility. For example, SIB provides the capital, and the farmer provides his/her farm and cultivates it. The second method is whereby SIB sets a three-party partnership between SIB, the farm-owner and an agricultural expert whereby the SIB provides working capital; the farm-owner provides the farm and all the basic infrastructures, e.g. water, labour and electricity; and the expert manages and supervises the project. The last method applied is in crop production, whereby SIB owns its own machinery (e.g. tractors and water pumps) and presents its contribution to the partnership in the form of a comprehensive package of inputs and services provided on real cost basis (Khaleefa, 1993). The nature of Muzara’ah is the participatory financing in which both parties (financier and farmer) participate in sharing profit earned and loss incurred from the project. The participation of the financier in the management decision, for example, as noted by Larbani et al. (2011), will minimize losses and moral hazard that are part of the causes of the failure of the existing microfinance and government loan schemes and policies in Zanzibar. According to Khaleefa (1993), Muzara’ah financing experiment of 1986 and 1987 was successful and the small farmers were able to realize unprecedented profit. There is no doubt that Muzara’ah financing in the modern banking system can function and be successful, as the Sudanese


experience has proven a success. However, the Muzara’ah applied in the Islamic history is quite relatively simple and the contemporary market as noted by Larbani et al. (2011) is a complex which needs logistics, expertise and knowledge of market mechanisms. Generally, the small farmers lack these essential elements to face the challenges of the contemporary agricultural activities. All these components are incorporated into the supply chain in the next section.

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5.3 Supply chain A supply chain may be defined as an integrated process wherein a number of various business entities (i.e. suppliers, manufacturers, distributors and retailers) work together in an effort to: acquire raw materials; convert these raw materials into specified final products; add value to these products; deliver these final products to retailers; and facilitate information exchange among different business entities (e.g. suppliers, manufacturers, distributors, third-party logistics providers and retailers) (Beamon, 1998; Min and Zhou, 2002). This chain is traditionally characterized by a forward flow of materials and a backward flow of information. Thus, a supply chain is an integrated manufacturing process wherein raw materials are converted into final products, then delivered to customers (Beamon, 1998). The supply chain in agricultural sector starts with the supplier of inputs, e.g. fertilizers, seeds and pesticides (Larbani et al., 2011). A supply chain is dynamic and involves the constant flow of information, product and funds in different stages – hence, in clove industry. For example, it can start from the “farm”, middlemen, ZSTC and finally to the international market. According to Min and Zhou (2002), the supply chain is very advantageous because it reaps the following key components: • “Customer service initiatives, i.e. it is intended to meet the customer’s satisfaction”. • “Monetary value added, i.e. it enhances its monetary value through increasing sales revenues, market share and labour productivity while reducing expenditures, defects and duplication”. • As such value directly reflects the cost efficiency and the profitability of the supply chain activities, it also provides a wide information on the product, i.e. knowledge transaction. • It mitigates risk because in the supply chain, member does not have to stretch beyond its core competency, as it can pool the resources with other supply chain partners.

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The supply chain model as explained here has been successful in its operation; however, it has some flaws, including a greater risk of failure because of its complexity and volatility (Min and Zhou, 2002). According to Larbani et al. (2011), supply chain model, the capital provider is not directly involved in this model because the relation between the supply chain partners and the capital provider is the debtor-creditor; hence, the capital provider does not and is not exposed to any risk; thus, he/she cannot be a partner in this model. The Muzara’ah model discussed in the previous section can be used to solve this problem. 5.4 Other components incorporated in the Waqf-Muzara’ah-supply chain model The key important components in this model are the waqf, farmers and private institutions. 5.4.1 Waqf institution. As mentioned earlier, some of the farms were donated as waqf assets in Zanzibar. Assuming that the role of waqf is the provision of farms, although because of the high cost of husbandry, these farms as discussed earlier have been left idle, they are unproductive. But in the WMSCM, waqf expands its role in financing those lands which were left idle because of their high cost of managing, and hence, these institutions will

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maintain the idle farm. In addition to this, the revenue generated from waqf institution will be used to further finance these farmers for their working capital; paying of middlemen, for example, those who pick cloves; and buying of “majanvi”, i.e. palm-mats, so that the cloves will be dried well so much so that they will obtain Grade “A” for their clove in the market, thereby earning a good price. 5.4.2 Farmers. The farmers who have been equipped with necessary farming skills by private institutions (assuming banks through Muzara’ah financing) and are given working capital and have access to funding to maintain and manage their farm via waqf institution. They will now enter into a Muzara’ah contract with the private institution. This private institution could be a financial institution or any other institution which will be allowed to participate in the clove industry. Farmers, therefore, will contribute their labour and expertise in clove production and share the crop output based on a predetermined ratio with the private institution. In addition to this, the farmers are also responsible for growing, weeding, watering, preserving, maintaining and managing their “farm” and maintaining the crop and selling to market. The market now could be ZSTC or private institution that will be allowed to participate in the buying of cloves. On the other hand, as a part of their partnership, the private institution which could be a financial institution will finance weeding, watering and the whole husbandry expenses because the financial institution is a partner now with the farmers and does not act as their creditor. 5.4.3 Private institutions. One of the elements embodying supply chain model is the linkage among the institutions. With the proposed WMSCM, farmers are now well equipped with necessary farming skills by zakat institution financing and they have the land donated by the waqf institution. However, a need to sell the cloves now becomes crucial. It was vastly suggested previously that farmers do not want to sell their clove to ZSTC because of the lower price offered by this market. To solve this problem, the private institution will enter into a Muzara’ah contract with the farmers. Private institution can be any private institution that can provide financing for farming activities, link farmers to markets where they can sell their cloves at reasonable prices. The contract is a partnership contract between the parties. Therefore, the harvest will be shared by the private institution, assuming that it is the financial institution and the farmers based on the predetermined ratio. As previously discussed that the traditional Muzara’ah model is relatively simple, the role of private institution, say financial institution, stops at this level. However, in the proposed WMSCM, the private institution, e.g. financial institution, is expected to extend its role because it is a partner with farmers. One of the very key components of the supply chain model is to satisfy customer and ensure the support of the product from the very first step. In addition to providing funding for agricultural inputs, i.e. clove inputs like seeds, fertilizers and pesticides, the financial institution (a private institution) supports to facilitate the supply chain, e.g. supporting an efficient transportation of the ready cloves to sell to the local clove centres (ZSTC or private) where cloves are sold. Moreover, the financial institution will also engage in buying and/or finding any investor local or international who wishes to invest in the clove industry; hence, the problem of the private sector will be solved, thereby linking to other markets which will remove dependency on ZSTC monopoly. The financial institution as suggested by Larbani et al. (2011) may also give micro- and macro-economic data related to the clove industry and predicting about the prices, demand of the crop, i.e. marketing expertise, and market dynamics. It does this because it is a partnership contract; hence, it is the partner with the farmers and no longer a debtor– creditor relationship. This partnership requires coordination and cooperation between the parties for their contract is based on profit and loss sharing.

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The following are the illustrations of the above proposed WMSCM in Figure 4: • The waqf institution provides land to farmers and/or financing for farming activities. • The private institution (assuming it is a financial institution) enters into a partnership contract with the farmers, i.e. Muzara’ah, for financing agricultural, i.e. clove inputs and logistics related to clove industry. On the other hand, the farmers on their side contribute labour and farming expertise and skills necessary for clove cultivation. • Once the cloves have been harvested, they will be sent to the local market whether ZSTC or in case of private market (i.e. In this case, the financial institution engages with and links to other supporting markets).

Figure 4. The proposed WMSCM[15]

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• After the selling of the cloves, the profit and loss from the sales will be distributed between the two parties, i.e. private institution and farmers based on the predetermined ratio agreed. • As the proposed model is based on partnership contracts, the farmers are required to perform high ethical values. Many economists (Choudhury, 1998, 2002; Choudhury and Ziaul Hoque, 2004; Choudhury et al., 2008; Choudhury and Malik, 1992; Choudhury and Hassan, 2001; Hassan, 2014) discussed the importance of ethical values in non-interest bearing system. For example, Choudhury et al. (2008) charity-funds secured by mandatory processes of giving and ethical convictions in the community can establish the sustainable financial seed money for small-scale microenterprises. These would not have any transaction costs or interest charges on them. This spirit of giving reflects ethical consciousness contrary to self-interest. Additionally, the crux of Islamic microfinance can be described as having a concrete understanding of the five fundamentals of the Maqasid al-Shariah (Choudhury, 2015). Principles of Islamic business ethics has been applied successfully among Islamic microfinance recipients without the intent of repressing each other such as imposing excessive rates of interest as the conventional microfinance groups do it members (Hassan and Saleem, 2017). 5.5 Justifications of this model Clove industry in Zanzibar plays a significant role in the economy of these isles as mentioned earlier. This sector has had 90 per cent of its revenue derived and which became the world largest producer of the crop. As previously elaborated, the existing schemes of governmental and non-governmental microenterprises have significantly caused the decline of the clove productivity and farmers have been facing a lot of recurring and common problems. But with the proposed Waqf-Zakat-Muzara’ah-supply chain model, these problems are expected to be considerably solved because of its participatory nature and hence contribute to restore the reputation of the clove industry Zanzibar had. Other significances of this model are as follows: • It is hoped that this model, i.e. WMSCM, will enhance and improve small farmers’ welfare, assist them to access financing and funding and increase their income through improved farming skills and a good market link and integration among the enterprises. • The model is participatory in nature, and therefore, it will help to encourage the sense of belonging and the spirit of partnership between the parties, thereby reducing dependency on the interest mode of transactions. Moreover, the cooperation and partnership between farmers and private institution will have specific impacts on the economy of the isles. • About 98 per cent population of Zanzibar is Muslim and they have been shunning away from taking an interest-based contracts/financing because of their religious obligation. However, with the application of the WMSCM – as it complies with their religious principles – more people will be attracted in agricultural activities (because agriculture is their main economic activity) and hence in clove farming because they will have an access to finance, funding and linkage to different markets that will help them sell their products at competitive prices, thereby removing dependency on the prices offered by ZSTC. • According to Zanzibar Human Development Report (2011), 67.9 per cent of the population are poor people living below the poverty line standard of US$1.25 a day

whose life is depending on the subsistence agricultural activities. With the application of this model, it will help these majority poor farmers reduce their poverty in their society, thereby improving their socioeconomic life. Not only that, but it will also have impacts on other economic sectors of the Zanzibar. • Furthermore, it is expected that this model will have impacts on the other various aspects of life of the people of Zanzibar.

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207 6. Conclusion Prior to 1964, where the Revolutionary Government of Zanzibar was born, Zanzibar economy was stable. The stability was due to high level of agricultural productivity, especially clove crop production. However, since the overthrow of Arab-sultan leadership in Zanzibar as a result of the so-called 1964 Zanzibar revolution, the country’s economy has been dwindling because of the drastic decrease of clove production for the past five decades. It is clear that the current and existing models operating in the agricultural sector in Zanzibar are ineffective because of many operational problems facing them. These problems will constantly continue to slow down the agricultural productivity in the Islands if necessary and measures would not be taken on time. Thus, there is a need to review the structure of the current clove market system to adequately tackle these stumbling challenges. The nature of these challenges in the agricultural sector, especially clove industry, is operational. The model proposed in this study was tested and accepted by the majority respondents to be adopted in the clove industry, though it is likely to face challenges, especially at the implementation phase. The nature of this model is participatory whereby the parties involved are partners, and they share both profits generated and losses incurred in the business. This study is believed to be a pioneering work; hence, it is the first study that investigates empirically the challenges facing the clove industry in Zanzibar. Notes 1. MKUZA II is a Swahili acronym which means Zanzibar growth and poverty reduction strategy. 2. Manufacturing industries, textiles, etc. 3. Available at: http://news.irinnews.org/Report/33174/TANZANIA-Clove-smuggling-reportprompts-heated-debates-in-Zanzibar 4. According to the ZHDR of 2009, currently the total number of the MSMEs in Zanzibar is 15,192. 5. Zanzibar strategy for growth and poverty reduction, first phase. 6. Zanzibar strategy for growth and poverty reduction, second phase. 7. Agricultural Services Support Programme (ASSP). 8. The Agricultural Sector Development Programme. 9. The Participatory Agricultural Development and Empowerment Project. 10. Sustainable Management of Land and Environment Programme, Second Phase. 11. The aim of this project is to develop agro-processing skills and provision of quality control services to all agro-processing entrepreneurs in Zanzibar. 12. Available at: http://in2eastafrica.net/zanzibar-govt-raises-price-of-cloves-again/ 13. Available at: www.tib.co.tz/agriculturefinance.php 14. Extracted from the presentation for the AFRACA Eastern Africa Sub-Regional Workshop, Dar es Salaam – 16 May 2012 By Thomas M. F. Samkyi – Director of Development Financing, TIB on Practical Aspects of Agricultural Financing in Tanzania The Case of Tanzania Investment Bank. 15. This model is adapted from the model proposed by Larbani et al. (2011).

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Corresponding author Buerhan Saiti can be contacted at: [email protected]

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