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Cablegate: Tanzania: Reaction to Opic-Supported Investment Fund

VZCZCXYZ0294
RR RUEHWEB

DE RUEHDR #0199 0911351
ZNR UUUUU ZZH
R 311351Z MAR 08
FM AMEMBASSY DAR ES SALAAM
TO RUEHC/SECSTATE WASHDC 7424
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHNR/AMEMBASSY NAIROBI 0926

UNCLAS DAR ES SALAAM 000199

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: EINV EFIN TZ
SUBJECT: TANZANIA: REACTION TO OPIC-SUPPORTED INVESTMENT FUND

REF: STATE 27714

1. Post welcomes the opportunity to comment on a new OPIC $150
million private equity fund: GEF Africa Consumer Fund to invest in
companies targeting essential supply chain products and services
throughout the consumer goods and services sector, including
logistics support, distribution and transportation, light
manufacturing, and agro-processing.

2. The proposed investment would be particularly useful in the
agriculture sector, which contributed 44.7 percent to GDP in 2006.
Agriculture employs approximately 80 percent of the Tanzanian labor
force. Tanzania's agricultural economy provides readily available
raw materials for the agriculture-based industrial sector.
Currently, the vast majority of Tanzania's agricultural produce is
exported raw or unprocessed. Countless opportunities exist in
processing and other value adding activities from agricultural raw
materials, as well as in distribution and transportation.
Accounting for just over 9 percent of GDP in 2006, the industry
sector--including light manufacturing and agro-processing--leaves a
large part of Tanzania's economic potential untapped.

3. Agro-processing is an important area of potential economic
growth and development in Tanzania. Some of the specific products
that would most benefit from additional investments in
agro-processing include fruit concentrates, jams, and juices; cashew
nuts; specialty coffees; fish; meat, both cattle and game; molasses;
honey; dairy products such as milk, butter, ice cream, yogurt, and
cheese.

4. Established businesses in Tanzania are often hindered by the
lack of logistical support and the difficulty of distribution and
transportation. For example, horticulture--particularly cut
flowers--are a major Tanzanian export. However, this thriving
industry has not yet realized its full potential due to constraints
particularly with distribution and transportation. In the
horticulture sector, USAID in collaboration with the Tanzania
Horticultural Association (TAHA), is funding the Tanzania Airfreight
Project (TAP). TAP seeks to introduce regular and frequent air
cargo service through Kilimanjaro International Airport to
facilitate market access for its members, who produce flowers, cut
vegetables, and fruits for export to the European Union and other
global markets.

5. Accounting for protection of natural resources, investment in
supply chain products and services would fill a gap in Tanzania's
economic development and complement Post's goals to aid economic
development through encouraging processing and value addition,
stimulating trade competitiveness, and improving the business
climate.

GREEN

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