The prospects of muzara`ah financing and supply chain model in Zanzibar clove industry

Abstract

The contribution of the agricultural sector, particularly the cloves, to the development of Zanzibar Islands is enormous. The government of Zanzibar relied on cloves for its national revenues, foreign exchange earnings and other development programs. However, since 1964, the clove production has continually declined significantly due to several challenges inherent in the existing models being employed in the sector. These challenges are: price fluctuation, high cost of production, lack of access to financing, minimal involvement of private sector in the industry, lack of logistics, monopoly of the crop (clove), and absence of an extended supply chain in the logistics and operations of the industry. Several programmes, measures and policies to remedy the situation were in vain. Evidences show the Waqf and Trust Commission (WTC) financing model in Zanzibar could be enhanced to overcome these inherent challenges. The present study has proposed waqf-muzara’ah- supply chain model (MSCM) to complement the WTC. Under this model (MSCM) the waqf resources and muzara’h financing are used for providing trainings and farming skills to farmers and financing farming equipment respectively based on a partnership contract where profit and loss are shared by both parties. The study has used mixed method (interview and survey) to validate the MSCM. The survey instrument was developed based on Theory of Reasoned Action (TRA). The survey hypothesized that, the behavioural intention (willingness) of farmers to use the proposed model is positively affected by their attitude and negatively influenced by their subjective norm. The survey data were analysed using SPSS and Structural Equation Modeling (SEM). While thematic analysis was used on the interviews data to generate the results. The findings from the interview show that the experts have strong opinion on the proposed model. Similarly, the results from the survey suggest that, individual beliefs of farmers (attitude) have positive influence and the perceived beliefs from their social pressure (subjective norm) have negative influence on their intention to use the proposed model. The findings in this study set a new direction for future research to extend the model in the agricultural sectors of other African and OIC member countries.