A decade-long journey of public-private partnerships reveals how focused commodity compacts turned regional innovation into a $100 billion national vision
DAR ES SALAAM —
When Norway’s Kjetil Schie and PASS Trust’s Yohane Kaduma exchanged signatures in Dar es Salaam on October 23, 2025, they were formalising more than a $4.8mn agricultural partnership. They were activating what development finance experts describe as Tanzania’s first comprehensive “commodity compact”—a coordinated financing mechanism designed to prove that blended capital structures can unlock commercial credit for smallholder farmers at scale.
The model synthesises 25 years of PASS Trust’s guarantee innovations with Norway’s catalytic development finance, AGCOT’s corridor coordination, and commercial bank participation—all aligned around a single value chain. For 21,000 soybean farmers in Ruvuma region, success means yields quadrupling from 700kg to 3,000kg per hectare and household incomes rising by 40 per cent. For Tanzania’s agricultural sector, it means testing whether structured coordination can solve the chronic under-financing that has constrained smallholder productivity for decades.
Yet the ultimate significance of this October 2025 agreement will only become clear in the years ahead. If the commodity compact model proves replicable—scaling across crops, geographies, and ultimately borders—it could reshape how development capital flows to African agriculture. If it remains a promising pilot that fails to escape donor dependency, it will join dozens of other well-designed interventions that never achieved transformative scale. The next three years in Ruvuma will help determine which future materialises.
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But this October 2025 moment—and the commodity compact model it represents—didn’t emerge overnight. It is the culmination of a decade-long evolution in Tanzania’s approach to agricultural partnerships, a journey that began in the southern highlands and has now scaled to become the nation’s primary framework for agricultural transformation.
When SAGCOT Centre signed its first cluster compact in May 2015, few could have predicted that this regional agricultural initiative would eventually reshape Tanzania’s entire approach to agricultural development. Yet a decade later, the “SAGCOT way” — a structured partnership model built on commodity-specific compacts — has become the template for the nation’s Agricultural Sector Development Programme Phase II (ASDP II) and the ambitious Agricultural Master Plan (AMP) 2050.
The transformation from a southern corridor project to a national development framework represents one of East Africa’s most significant experiments in public-private partnership for agricultural modernization, with lessons that extend far beyond Tanzania’s borders.
The Foundation: Building Clusters, Testing Partnerships (2015-2019)
The story begins in the southern highlands and plains of Tanzania, where SAGCOT Centre identified three strategic geographical clusters: Ihemi (spanning Iringa and Njombe), Mbarali (covering Mbeya and Songwe), and Kilombero (in Morogoro region). The initial strategy was deliberately broad — establish physical and operational foundations across these clusters while focusing on key commodities including tomato, potato, soya, dairy, and tea.
The Ihemi Cluster Development Compact (ICDC), signed in May 2015, became the prototype. The agreement bound together regional and district governments, private sector actors, and service providers around 42 specific commitments: 21 from the public sector, 14 from private companies, and 7 from service providers. It was an ambitious coordination mechanism designed to tackle the interconnected challenges of infrastructure, policy, and market access that had long hampered agricultural growth.
Early wins validated the approach. The Tea Strategic Partnership successfully lobbied for electricity connection to the Njombe Tea Factory. At the same time, the coordinated advocacy network channelled critical infrastructure concerns — roads, power, taxation — directly to high-level policy working groups.
By 2017, SCL had formalised five Strategic Partnerships (SPs) through detailed Terms of Reference, creating dedicated platforms for stakeholders in soya, dairy, potato, tomato, and tea value chains. Partners like Silverlands and the Clinton Development Initiative committed to purchasing significant volumes from smallholder farmers, while processors like Darsh Industries and dairy cooperatives like Njombe Milk Factory gained forums to address quality standards and market development.
Yet challenges remained. When Mbarali Cluster expanded its focus in 2018 to include six value chains — adding avocado, poultry, rice, and sunflower to its existing dairy and potato partnerships — budgetary constraints forced SCL to postpone formal compact development until 2020. The setback underscored a crucial lesson: ambition required sustainable financing.
The Pivot: From Geography to Commodities (2020-2023)
The maturation of SAGCOT’s model came not through expanding geography, but through deepening commodity focus. Between 2020 and 2023, SCL pivoted from broad cluster agreements to laser-focused commodity compacts that addressed specific production and market bottlenecks.
The 2022 Soybean Compact, signed in Iringa, exemplified this new approach. Rather than addressing soya as one commodity among many within a cluster framework, the compact created a dedicated coalition binding seed companies like Sundy Agro-Merchant, international NGOs like CARE International, local government authorities, and farmer cooperatives around precise supply-side challenges: timely seed availability, fertilizer access, and labor-saving technologies. The strategic rationale was clear — soya’s critical role as animal feed made it foundational to both dairy and poultry value chains.
The compact evolved into the Tanzania Sustainable Soybean Initiative (TSSI), demonstrating how focused partnerships could scale from addressing immediate bottlenecks to coordinating comprehensive sectoral transformation.
Other commodities followed similar trajectories. The Avocado Strategic Partnership achieved a landmark breakthrough in 2022, contributing to opening new export markets in China, South Africa, and the United States. Stakeholders subsequently formalized their collaboration by establishing the Avocado Society of Tanzania (ASTA) as the industry’s official representative body.
The Poultry Compact, signed in 2023 after extensive convenings involving the Ministry of Livestock and Fisheries and commercial hatcheries, took the model further. A dedicated secretariat was established to monitor implementation, with a detailed implementation plan and budget finalized in 2024. The compact’s resolutions included developing a National Development Strategy for Poultry — a clear signal that commodity-specific partnerships were influencing national policy.
Perhaps most significantly, the Sunflower and Edible Oil compact demonstrated the model’s power in macroeconomic advocacy. Through coordinated lobbying, stakeholders successfully persuaded the government to maintain protective tariffs of 25% and 35% on imported crude and semi-refined edible oil, directly supporting domestic sunflower production to replace imported palm oil.
It was this track record of commodity-specific success that attracted the attention of international development finance institutions. By 2025, the soybean compact had matured sufficiently to become the testing ground for a new question: could the SAGCOT model of coordination be linked with catalytic finance to unlock commercial lending at scale? The October 2025 agreement with Norway represented the most ambitious attempt yet to answer that question, combining PASS Trust’s two-decade history of loan guarantees with AGCOT’s coordination architecture and Norway’s patient capital.
The National Blueprint: AGCOT and Beyond (2024-2030)
By 2024, the evidence was overwhelming: focused commodity compacts delivered results. The success prompted Tanzania’s government to designate the Agricultural Growth Corridors of Tanzania (AGCOT) — essentially a nationwide scale-up of the SAGCOT model — as Flagship No. 7 of the Agricultural Master Plan 2050.
SCL transitioned into the AGCOT Centre, reflecting its expanded mandate. The organisation’s 2025-2030 strategy prioritizes developing national commodity compacts across new corridors in Mtwara, Central, and Northern regions, with rice identified as the next major focus within SAGCOT.
The newly replanned ASDP II explicitly draws on SAGCOT’s partnership architecture, positioning commodity compacts as core mechanisms for achieving Tanzania’s agricultural transformation goals. The ultimate target is audacious: contributing to a $100 billion agricultural GDP by 2050.
The final piece of the puzzle emerged in 2024 when spice sector stakeholders — including public sector delegates from Morogoro and Tanga, private companies, and NGOs — reached consensus on Terms of Reference for a Spice Strategic Partnership, demonstrating that the compact model continues to attract new commodity sectors.
Lessons in Partnership Architecture
What makes the SAGCOT/AGCOT approach distinctive is not merely the convening of diverse stakeholders — a common enough feature of development initiatives. Rather, it is the discipline of formalized commitments, the focus on specific, actionable bottlenecks, and the deliberate evolution from broad geographical mandates to targeted commodity interventions.
The Mbarali and Kilombero cluster compacts, both reviewed and formally signed in 2022 after years of operational activity, illustrate another key insight: formalization follows function. The partnerships delivered value before they were perfected on paper.
Moreover, the model demonstrates adaptive learning. When the 2015 Ihemi Cluster Compact was reviewed and displayed publicly in Iringa as the 2022/2023 agreement, it reflected years of implementation experience, policy victories, and stakeholder feedback.
The Test Ahead
As AGCOT scales nationally, questions remain about replicating the southern corridor’s success in regions with different agro-ecological conditions, infrastructure challenges, and commodity profiles. The Norway-PASS Trust agreement in Ruvuma offers one answer: pair proven coordination mechanisms with catalytic finance designed to de-risk commercial lending.
Yet as the architects of the October 2025 agreement acknowledge, success is not guaranteed. The compact must prove it can achieve the promised yield increases, the commercial banks must maintain their commitments beyond the initial guarantee period, and the model must demonstrate replicability across Tanzania’s diverse agricultural landscapes.
From a single cluster compact signed in the highlands of Iringa to a national development flagship targeting a $100 billion agricultural economy, Tanzania’s commodity compact journey offers a compelling case study in institutional innovation. The Norway agreement represents the next evolution: testing whether coordination architecture can successfully integrate with catalytic finance to unlock sustainable, commercial-scale credit for smallholder farmers.
The ultimate measure of success will not be the agreements signed, but the farmers’ livelihoods improved, the markets expanded, and the food security enhanced. For the 21,000 soybean farmers in Ruvuma, the stakes are immediate and tangible.