Cold Chain: A New Investment Horizon in Tanzania

The burgeoning production of perishable goods in Tanzania presents a significant investment opportunity in cold-chain infrastructure. As demand escalates across various sectors, including horticulture, livestock, fisheries, poultry, food processing, and logistics, the need for enhanced cold-storage capabilities becomes increasingly critical.

Challenges of Current Infrastructure

Despite the promising growth, Tanzania’s cold-storage capacity remains inadequate, hindering its ability to preserve products effectively, minimize post-harvest losses, and meet the quality standards required for both domestic and export markets. A recent study from the Bank of Tanzania highlighted inadequate cold-chain and storage infrastructure as a key barrier to boosting horticultural exports, pointing to limited cold-room capacity, poor insulation, and insufficient temperature-controlled offloading facilities.

Market Potential and Growth

An investment analysis conducted in 2022 estimated that Tanzania’s cold-infrastructure market is valued at approximately $50 million, with an annual growth rate of around five percent. From 2016 to 2020, imports of cold-storage facilities averaged $25.9 million annually, underscoring the substantial infrastructure gap that exists.

Opportunities for Investors

According to Gilead Teri, the director general of the Tanzania Investment and Special Economic Zones Authority (TISEZA), the increasing production of perishable goods and the rising demand for efficient logistics and value-added services are generating new opportunities for investors. Teri emphasized that cold storage is becoming a prominent investment avenue in Tanzania, expanding beyond horticulture to encompass sectors such as meat, poultry, fisheries, food processing, and logistics.

Regional Demand for Cold Storage

The demand for cold-storage facilities is particularly noticeable in regions known for avocado production, such as Mbeya and Njombe, where rising production levels necessitate adequate facilities to preserve produce and ensure quality throughout the supply chain. Furthermore, the expansion of cold-storage facilities is evident in the aviation sector, with significant operations already established at Julius Nyerere International Airport.

New Investments on the Horizon

TISEZA has actively engaged with investors exploring opportunities for new cold-storage facilities. Notable among these is Adani Airport Holdings Limited, which is assessing the potential for establishing cold-storage infrastructure at the port. In Bagamoyo, an investor has committed €10 million to develop a meat cold-storage facility, aimed at enhancing the livestock value chain and catering to both domestic and export markets.

Integrated Value Chains

Some investors are considering integrated operations that encompass livestock management, including plans by farmers in Iringa to establish animal-feed production and processing facilities. This integrated approach could create a seamless value chain that connects feed production, livestock processing, slaughtering, cold storage, and distribution.

Diverse Investment Interests

Interest in cold-chain infrastructure is not confined to traditional sectors. For instance, a Belgian investor is exploring opportunities in Bagamoyo, while interest in pineapple processing and poultry production is also gaining traction. Companies like Yamyam are investing in chicken production alongside cold-storage facilities, and Kenyan investors are looking into food processing, including ice cream production.

Job Creation and Economic Impact

TISEZA’s records indicate that 15 approved cold-storage projects represent planned investments of approximately $16.14 million, anticipated to create around 635 jobs. These projects are spread across Dar es Salaam, Pwani, Mwanza, and Kigoma, and they encompass a range of facilities including cold rooms, warehouses, and milk chillers.

Growing Demand for Infrastructure

Despite these promising developments, industry stakeholders emphasize that Tanzania requires a significantly greater investment in cold-chain infrastructure as production continues to rise. Professor Mohammed Sheikh, the Deputy Permanent Secretary in the Ministry of Livestock and Fisheries, noted that increasing fish production has heightened the demand for storage facilities.

Government Initiatives

The Tanzanian government is investing in port infrastructure and storage facilities, while the Tanzania Fisheries Corporation (TAFICO) operates cold-storage facilities in Kigamboni to support the growing fisheries sector. As fish production increases, so too does the necessity for enhanced cold-storage capabilities.

Future Needs for Horticulture

Dr. Steven Tumaini, the Trade, Market and Investment Manager at the Tanzania Horticultural Association (TAHA), stressed the urgent need for more cold-chain infrastructure as the horticultural sector expands. He pointed out that while some facilities currently exist at key airports and ports, additional infrastructure is essential to support the anticipated growth in demand through 2030 and beyond.

Conclusion

The expansion of cold-chain infrastructure in Tanzania offers a multifaceted opportunity for investors, extending beyond mere construction of facilities. It encompasses the development of refrigerated transport systems, temperature-controlled warehouses, specialized handling equipment, and reliable power sources. By addressing these needs, Tanzania can significantly reduce post-harvest losses, elevate product quality, and access higher-value markets, thus creating a more robust economy centered around its growing perishable goods sector.

• Investment Growth: Tanzania’s cold-infrastructure market is projected to grow by 5% annually.
• Sector Expansion: Opportunities are expanding beyond horticulture to include livestock, fisheries, and food processing.
• Job Creation: New projects are expected to create over 600 jobs, boosting local economies.
• Government Support: The Tanzanian government is actively investing in related infrastructure to support industry growth.
• Integrated Systems: There is a growing trend toward developing integrated value chains that connect various sectors.

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