Our dual-key investment series continues to showcase our initiatives on the field.

The negative effects of climate change (ecological and biodiversity) in semi-arid climatic condition like Kalemawe in Same district, Tanzania is a good example of how human life, animals and settlements are being threatened. The effects extend to social inspiration and economic returns. Mitigation using legislation/by-laws and punitive actions are not always effective.

To be Inclusive and multi-encompassing they have to be coined with business approach and private capital injection to translate it into gainful opportunities. This is the case of Kalemawe Dam Investment Limited, a Special Purpose Vehicle/Company structured under Public Private Community Partnership (PPCP) business mode.

Tanzania has huge potential for fishing activities mainly for those areas which borders sea, lakes and other water bodies such as rivers, ponds and dams. The semi-arid areas do not enjoy these comparative advantages including economic and nutritional benefits accrued to this sub-sector.

Usually however, these semi-arid areas experience heavy short-term rains which cause landdegradation and loss of fertility and natural vegetations. As a result, these areas experiences food and proteins shortages, conflicts between different water users like farmers and livestock keepers etc. The Kalemawe ward in the eastern part of Same District in Kilimanjaro region, Tanzania is one of these areas. This community has conceived rainwater and commercial fish farming as a centrepiece for reversing the economic, social and environmental challenges in their area.

Same District Council (SDC) is endowed with a sizable man-made lake which is located at Kalemawe and Ndungu administrative Wards. The dam was constructed in 1952-59 by the British Colonial Government to control floods and support agricultural activities of the Pare pastoralists who were evicted from the Mkomazi Game Reserve in 1951. Kamewale district and surrounding communities and Pangani Water Basin Agency in a very close support from UNCDF embarked into commercial fish farming since 2017. These stakeholders have formed Kalemawe-Dam Investment Ltd, a Special Purpose Vehicle (SPV) company to spearhead this economic activity in a business way.

The intervention has demonstrated UNCDF business model and developmental finance approach which bundles and combines (i) Technical Assistance; (ii) seed capital (first loss) to unlock more development and impact-based finance; (iii) market and business development and (iv) governance and legal architecture.

Imanuel Muro is a Senior Finance Specialist of the Local Finance Initiative (LFI-T) Programme, he responded to questions about this initiative:

• What made you enthusiastic about this investment?

To reveal the community economic initiatives are not only inhibited by financial constraints, lack of appropriate technology and capital equipment but there are other inescapable interventions which are equally important i.e. project preparation and repackaging. Unquestionably, banks find challenges to embark in this kind of community investments because of difficulties in projecting financial returns and viability but also absence of appropriate legal entity to interface, engage and enter into formal arrangements with explicit mandates, rights and obligations. These are difficult to quantify and monetize and therefore a weak link which UNCDF has assisted bridging. Uniquely, this project confirms how these project preparations stages were critical in transforming invaluable rainwater floods from its destructive nature into unleashing social and economic returns through proper reservation, re-directing, and distribution to different stakeholders and users. It also discovers how Inclusive and multi-encompassing approaches involving various stakeholders are critical in unlocking complicated and expensive undertaking that requires huge resources mobilization and investment. The investment reminds the importance of early stage involvement of key stakeholders and supportive administrative and political actors in every stage of sub-national settings. With these interventions and small seed grant the project is now attracting both development and private capital to scale.

• What were the challenges faced by this project?

The first major challenge was the low patience among political leaders and district council staff in their desire to see quick tangible results. At initial stages it was difficult to conceive the prerequisite of feasibility studies, environmental and social impact assessment (ESIA), legal studies and establishment of the governance structure i.e. SPV /Project company. The delivery of these pervasive business development services has unlocked every other notable achievement to-date. Being the first SPV structure under PPCP arrangements the Kalemawe Dam Investment Limited is now a good reference among several LGA in Tanzania. The second challenge was the limited knowledge, skills and experience of running an income generating company with public and community shareholders. About 35% of shares are reserved for strategic private investor. This may add another layer of challenges in management and governance. At operational level the first fish harvest has been relatively low (60%) compared to the projections. This challenge will force the management to address the technology component of the business plan. Access to developmental finance to rehabilitate the dam which is the source of water to the fishing ponds remains a big challenge. This finance is difficult to source from commercial sources.

• What are the lessons learned from this example?

The negative effects of climate change (ecological and biodiversity) in semi-arid areas like Kalemawe in Same district is a good example of how human life, animals and settlements are being threatened. Adaptation and mitigation using legislation/by-laws and punitive actions are not always effective and not eliminate these threats. To be Inclusive and multi-encompassing the initiatives must be coined and blended with business approach to translate it into gainful opportunities. The attraction of private capital is not easy to come-by at early stages because of returns unpredictability. UNCDF’s “development Finance” approach of gradual growth and unlocking from concept to pilot to scale has been tested and validated using this project. The project is now attracting not only new development finance but also technology. It is expected the economic and social benefits from commercial fish farming project will inform the political and community leaders and other development stakeholders to decode rainwater and floods from natural disaster to essential input for renewed efforts of social inspiration, biodiversity and income generating activities i.e. irrigation. Kalemawe a man-made lake!

More about Imanuel Muro:

Mr. Imanuel Muro combines practical expertise as a financial and investment advisor and BDS trainer with extensive experience on development finance, project finance, private equity, and debt transacting. He has over 27 years’ experience working in both the private and public sectors and has experience of working with Local Governments in Zanzibar, Lesotho, The Gambia and Uganda.

Mr Muro is a Certified Public Accountant (CPA). He also holds master’s degree in Enterprise and Entrepreneurship Development (MEED) from Business School, University of Dar-es salaam. He formerly graduated in Bcom from the same University.

For more information please contact him :imanuel.muro@uncdf.org