The Lead-Firm Model: Connecting smallholders to high-value markets in Tanzania
In Tanzania, Oxfam adopted the ‘Lead-Firm’ Model and partnered with Katani Ltd. to improve smallholder access to markets for sisal. Katani agreed to improve the production and processing capacity of the smallholders, and committed to purchase all quality sisal fibre. Both Oxfam and Katani funded training for smallholders, while Oxfam supplied them with loans to purchase processing equipment.
As a result of the project, more buyers were attracted by the new supply of fibres, farmers and processors gained significant increased income, and the local sisal value chain greatly improved with sustainable connections to high-value markets.
The Lead-Firm Model provides many advantages, but the selected private-sector actor can monopolise supply and enforce less beneficial conditions of trade. This risk can be avoided by securing more buyers and less exclusive contracts, and providing loans directly to smallholders through an independent agent.