Youth in Climate Change and Energy Transition: How Tanzania Government can repurpose youth for SDGs, NDCs and a fossil free future

Young people are the majority of Tanzania’s population ,  destined to inherit the future yet are seriously at a risk of climate change. Many are actively engaged in mitigation measures such as tree planting campaigns with limited focus on the policy and practical measures that are required to ensure or determine a fossil free future is achieved. Effective youth participation in SDGs and NDCs is a goal that is still far from reach.

Author: Arafat Bakir Lesheve, SDG Ambassador and Junior Associate, Governance and Economic Policy Centre

# Featured photo image source: African Climate and Environmental Centre-AFAS

# Click here to register for the forthcoming webinar on implementation of SDGS and NDCs in Africa scheduled for 31st October 2024 via the Link: https://us06web.zoom.us/meeting/register/tZYodOCsqTsuEt1URomW6I9uz6IjSyzq5S96

The transition to a fossil-free future is crucial for Tanzania to achieve sustainable development and combat climate change. The United Nations has set several targets for achieving a fossil-free future by 2030 and 2050. These targets aim to enhance international cooperation in the fight against climate change, promote clean energy research and technology, reduce reliance on fossil fuels, reduce greenhouse gas emissions and speed up the transition to clean and renewable sources of energy.

In 2021 Tanzania developed its Nationally Determined Contributions (NDCs), which spells out how the government plans to build resilience against climate change and contribute to clean future. The NDC is anchored on delivering a fossil free future by 2050 yet the document and its implementation has remained largely a technical exercise with limited knowledge and participation of young people.

Many young people are actively engaged in mitigation measures such as tree planting campaigns with limited knowledge, focus, engagement and participation in the policy and practical measures that are required to ensure or determine a fossil free future is achieved.  With the youth comprising over 65% of Tanzania’s total population, engaging and empowering young people will be crucial to the success of these national and global targets.

This short brief exposes the opportunities , gaps and the need for an intentional repurposing of Tanzania’s youth in climate change and the implementation of the NDC along with the Sustainable Development Goals (SDGs) so as to achieve a fossil free future by 2030 and 2050.

Climate Change and a fossil free future in Tanzania 

Despite being among the least polluters, Tanzania is seriously affected by climate change. The country has experienced irregular rainfall patterns, extended droughts, floods and deforestation. Currently, a significant proportion (about 70%) of all types of natural disasters in Tanzania are climate change related and are linked to recurrent droughts and floods.

The most recent projections for climate change in Tanzania (Future Climate for Africa, 2017)9 show a strong agreement on continued future warming in the range of 0.8°C to 1.8°C by the 2040s, evenly distributed across Tanzania. The warming trend leads to a corresponding increase in the number of days above 30°C by 20-50 days in the central and eastern parts and up to 80 additional days in the coastal area of Tanzania.  Warming until 2090 is projected in the range of 1.6°C to 5.0°C depending on the level of greenhouse gases in the atmosphere[1]

Moreover, climate change’s impact on Tanzania’s forest cover and sensitive ecosystems has been increasing.  According to reports, Tanzania’s forest cover has reduced by at least one third over the past decade, thereby reducing the coverage of the natural carbon sink that has protected us for generations.  Annually, almost 38% of Tanzania’s forest cover is being lost at the rate of about 400,000 ha annually and should this continue, the country would deplete its forest cover in the next 50-80 years[2].

Figure 1: Map of forest loss in Tanzania during 2010–2017 and location of ground survey points

The extreme weather patterns affect National Economic growth due to large dependence of Tanzania’s Growth Domestic Product (GDP) on Climate sensitive activities such as agriculture. The recent floods affected crops and farmland while the extended droughts in some regions have increased food insecurity and poverty by almost half. Sensitive ecological and biodiversity systems hosted within from forests and wooded areas are affected and climate related diseases such as malaria in previously cold and less malaria prone regions such as Moshi, Arusha, Lushoto, Iringa and Mbeya are on the increase.

According to medical reports, malaria is a major public health problem in mainland Tanzania and a leading cause of morbidity and mortality, particularly in children under five years of age and pregnant women.  Moreover, the climate condition has become favourable for transmission throughout almost the entire country, with about 95% of mainland Tanzania at risk.

Over the past few years Tanzania now has the third largest population at risk of stable malaria in Africa after Nigeria and Democratic Republic of the Congo[1]. Clearly, there is a nexus between climate change and the social-economic and public policy challenges that Tanzania faces.

Figure 2: Malaria Prevalence in Mainland Tanzania 2017-2019: Source: Research Gate

The UN’s perilous search for a fossil free future

The UN under the Agenda 2030 targets to achieve a fossil free future by reducing global greenhouse gas emissions by half by 2030 and to achieve net zero by 2050.

For this to be feasible the world has to gradually transit from the use of fossil-based fuels towards renewables and clean energy sources.  Fossil fuels, such as coal, oil and gas, are by far the largest contributor to global climate change, accounting for over 75 percent of global greenhouse gas emissions and nearly 90 percent of all carbon dioxide emissions.

Therefore, ramping up investment in alternative sources of energy that are clean, accessible, affordable, sustainable, and reliable offers a way out of the enormous climate change challenges that we face. To achieve this requires a radical shift in global energy system but equally collective participation.  The UN has encouraged countries to develop and implement Sustainable Development Goals (SDGs) and Nationally Determined Contributions (NDCs), as road maps towards a sustainable cleaner future, yet many countries like Tanzania face a bumpy road ahead. The underfunding and limited meaningful participation by the youth is holding back success.

Climate Change, SDGs and the Nationally Determined Contributions (NDC) in Tanzania

In line with the UN Paris Agreement and call to climate action, the Tanzanian government set targets for climate change response and achieving a fossil-free future. The government aims to accelerate mitigation and adaptation measures, cutting Green House Emissions and contributing towards a transition to cleaner and renewable sources of energy.

These targets are clearly stipulated in Tanzania’s National Adaptation Plans (NAPs), National Climate Change Response Strategies (NCCRS) and most recently the Nationally Determined Contributions (NDC) in 2021.  The NDC provides a set of interventions on adaptation and mitigation which are expected to build Tanzania’s resilience to the impacts of climate change and at the same time contribute to the global efforts to reduce greenhouse gases.

According to the NDC, the government commits to reduce greenhouse gas emissions economy-wide between 30- 35% relative to the Business-As-Usual (BAU) scenario by 2030. The NDC further indicates that about 138-153 million tons of Carbon dioxide equivalent (MtCO2e)-gross emissions is expected to be reduced depending on the baseline efficiency improvements, consistent with its sustainable development agenda.

The NDC goals are aligned to the UN Sustainable Development Goals (SDCs) 2015, in particular SDG13 and other closely related goals such as SDG (1.7,12,14,15.16 &17). They further in synchrony with the Agenda 2063 on the Future of Africa We want and the Sendai Framework on Disaster Risk Reduction (2011).

To achieve these targets, the government commits to consider the impacts of climate change in development planning at all levels and to pursue adaptation measures as outlined in the NDC. Despite these efforts, many SDG targets are off course and NDC’s implementation has been slow. The NDC implementation is faced with financial, governance, institutional and participation gaps, which are delaying or may ultimately thwart its successful achievement of a climate safe and fossil free future.

Gaps in Climate Change, NDC and SDG implementation

The Economics of climate change and implementation of SDGs and the NDC for a climate safe and fossil free future is proving to be an expensive affair.

According to The Economics of Climate Change reports for Mainland Tanzania (2011) and Zanzibar (2011) , an initial cost estimate of addressing current climate change risks is about USD 500 million per year[2].  These reports provide indicative costs for enhancing adaptive capacity and long-term resilience in Tanzania.  This cost is projected to increase rapidly in the future, with an estimate of up to USD 1 billion per year by 2030[3].

Further, the net economic costs of addressing climate change impacts are estimated to be equivalent to 1 to 2% of GDP per year by 20305. Similarly, Tanzania would require an investment of approximately USD 160 billion for mitigation activities aimed at achieving 100% renewable energy for electricity, buildings, and industry by 2050[4]. In total the NDC estimates that USD19,232,170,000 is required for its full implementation.

Moreover, Tanzania is facing several challenges related to weak institutional, financial constraints, poor access to appropriate technologies; weak climate knowledge management, inadequate participation of key stakeholders, and low public awareness have significantly affected effective implementation of various strategies, programmes, and plans[5]

The government has identified an institutional and governance framework for implementation. This includes the National Steering Committees and National Technical Committees for Mainland Tanzania and Zanzibar.  It further mentions the need for mainstreaming intervention but conspicuously, misses listing or identifying the youth as key stakeholders in this implementation.

With tweaks to its current policy and practice landscape, by purposefully targeting involvement of more young people, we believe, Tanzania’s achievement of its SDGs targets and climate change and energy transition goals as elaborated in the NDCs and overall National Development Plans could be faster

Tanzania’s road towards a fossil free future

In 2014 the per capita emissions of the United Republic of Tanzania were estimated at 0.22 tCO2e[1] . This was significantly below global average of 7.58 tCO2e[2] recorded in the same year. However, given the disproportional effect of climate change, adaptation to the adverse impacts continues to be a topmost priority in the implementation of the NDC.

Tanzania underlines the importance of harnessing opportunities and benefits available in mitigating climate change through pursuing a sustainable, low-carbon development pathway in the context of sustainable development. Thus, the NDC takes into account global ambition of keeping temperature increase well below 2°C as per the Paris Agreement.

Moreover, Tanzania is aiming for a greater use of natural gas and harnessing renewable energy sources to reduce on emissions. There are an estimated 57 trillion cubic feet of discovered reserves of which to-date over 100 million cubic feet have been exploited to produce 527 MW10. The government acknowledges that whilst natural gas is a fossil fuel, and therefore contributes to increasing climate change, it results in half the CO2 emissions as charcoal

Currently the government of Tanzania aims to shift away from biomass and increase the share of renewable energy sources such as hydro, wind, and solar in its energy use mix. Tanzania’s energy sector is currently dominated by traditional biomass; accounting for more than 82% of the total energy consumption as of 2019. As of 2022 energy usage in households, charcoal and wood represented 87% of the energy used, Liquefied Petroleum Gas (LPG) accounted for 10%, and other sources such as electricity accounted for about 3%[3].

Secondly, Tanzania has an estimated hydro potential of up to 4.7GW. However, as of 2021, only 573.7 MW (around 12%) of hydro capacity had been installed. The government plans to further develop its hydro capacity to increase the share of renewable energy.

Thirdly, while Tanzania aims to increase its renewable energy generation, there are also plans to ramp up investment in natural gas and coal. The government aims to reach 6700MW (33%) from natural gas and 5300MW (26%) from coal by 2044. However, further investments or reliance on fossil fuels such as coal and natural gas is considered as an energy transition risk as the country may lock itself into a high carbon-intensive pathway and thereby running contrary to achieving the NDC goals.

Furthermore, Tanzania has significant deposits of critical minerals that are considered essential for the clean energy transition. These minerals include nickel, graphite, copper, lithium, and others. The demand for these minerals expected to increase as clean energy technologies develop. This presents an opportunity for Tanzania to benefit from their extraction to value addition hence powering the global transition to a green economy.

The youth dividend and missed opportunities for climate change, NDCs and SDGs in Tanzania

Globally, the youth represent a significant portion of the population and their active involvement and engagement in supporting government and UN targets are essential. According to Tanzania’s 2022 census reports, the youth (under 35 years) constitute significant proportion (over 60%) of Tanzania’s population.  They account for the largest active labour force of the population and no doubt have potentials   to bring about economic growth and development of the country. Moreover, the demographics and dynamics of youth have changed substantially over the last decade. Many young people are highly educated and technologically exposed and skilled.  They are a dividend waiting to be utilized in many respects.

The implementation of Tanzania’s NDC is supposed to be guided by the principles of the UNFCCC, particularly the principle of equity and that of common but differentiated responsibilities and respective capabilities. Furthermore, the implementation is supposed to be implemented in a transparent and participatory manner in accordance with the provisions of the Paris Agreement. Despite these principles, the youth are yet to be fully engaged and harnessed for climate change and a fossil free future.

Since 2006 government has made efforts by developing the National Climate Adaptations Programs and the National Climate Change Strategy. However, Tanzania does not have a climate change policy and its practical engagement of youth despite the numbers has been quite fragmented.

Despite the major progress made, very limited deliberate and structured youth engagement opportunities have been created. For example, there is a government initiative on clean cooking targeting women but is not clear what role the youth can play in this campaign. Moreover, the Youth Policy is not aligned with the Climate Change and Energy policy. The NDC for example is very silent on youth and mentions these in generic terms lobed together under the gender considerations. Governance challenges and weak intra-government coordination exists. There is weak insufficient capacity and resources for youth to engage.

To date, this potential of Tanzania’s youth participation, in the context of the global climate change is largely limited or focused on climate mitigation while engagement in energy transition discourse towards a fossil free future has been substantively low.

How can youth be repurposed for climate change, SDGs and NDC implementation for a fossil free future? 

There are collective actions that Tanzanian youth can uptake to support government plans and UN targets for SDGs, NDCs and a clean future by 2030 and 2050. These includes actions such as creating a facilitative environment,  investment in advocacy, awareness creation, skills development, creating of innovations, movement mobilization, partnership and collaboration for the goals. Tanzanian youth possess the energy, innovation, and sense of urgency required to drive the transition to a fossil-free future. By leveraging their skills and passion, young people can play a vital role with multiple entry points as below.

1. Promote education amongst youth on SDGs and NDCs in Tanzania

As indicated, despite the good intentions and targets set in the Sustainable Development Goals (SDGs and the Nationally Determined Contributions (NDCs), these goals and documents remain largely unknown to youth and young people in Tanzania. Deliberate efforts to popularize them can ramp up youth uptake and support in their implementation.

2. Raise Awareness and Advocate for Renewable Energy:

Towards achieving this, the youth and other stakeholders, including the government should organize awareness campaigns and workshops to educate youth about the benefits of renewable energy and the negative impacts of fossil fuels. As the population continues to grow, so will the demand for cheap energy, and an economy reliant on fossil fuels is creating drastic changes to our climate; Investing in solar, wind and thermal power, improving energy productivity, and ensuring energy for all is vital if we are to achieve SDG 7 by 2030.

 Tanzania Youth led organizations must be supported to amplify the voices of Tanzanian youth in advocating for a transition to renewable energy. Engage in advocacy efforts to promote renewable energy policies and initiatives at the local, national, and international levels; 

2. Promote Energy Efficiency and Conservation

Tanzanian youth can organize campaigns and workshops to raise awareness about the importance of energy efficiency and conservation. They can educate their peers and communities about the benefits of using energy-efficient appliances, reducing energy consumption, and adopting sustainable practices.

Dr. Samia Suluhu Hasan the President of the United Republic of Tanzania is a global champion of clean cooking solutions that aims to address over reliance on toxic biomass, gender inequality against women as well as reduce impact of climate change.  Tanzania’s youth should be in frontline to promote clean cooking solution with the country.

For the government to support youth roles is key to encourage energy-efficient practices among youth by promoting energy-saving habits in households, schools, and communities. Youth and youth led organizations should be supported to advocate for the implementation of energy-efficient infrastructure and appliances in public spaces and buildings.

NGOs, and government agencies must collaborate with energy experts to develop engaging and interactive training materials that cater for the needs and interests of young people towards promoting energy efficiency.

3. Advocating for policy changes

Advocating for policy changes is a crucial step in promoting renewable energy and climate action. Tanzanian youth have the opportunity to actively engage with local and national government representatives to push for policies that support renewable energy and discourage the use of fossil fuels.

Through outreach to their government representatives, youth can express their concerns about climate change and the need for renewable energy policies. They can request meetings or participate in public forums to discuss the importance of transitioning to renewable energy sources and highlight the benefits it can bring to the environment and the economy. By sharing their knowledge and experiences, youth can help policymakers understand the urgency of taking action on climate change and recognize the potential of renewable energy.

Additionally, youth-led organizations and initiatives focused on climate action must provide a platform for young people to come together and advocate for sustainable policies.

4. Engage in Sustainable Agriculture and Land Use

Tanzania youth must be supported to engage in sustainable agriculture and land use. Engaging in sustainable agriculture is of paramount importance in promoting environmental conservation and reducing reliance on fossil fuel-based inputs in farming practices. Tanzanian youth have a significant role to play in actively supporting and advocating for sustainable farming methods that prioritize organic techniques, agroforestry, and permaculture.

5. Foster Entrepreneurship and Innovation in Renewable Energy

Support young people to engage in entrepreneurship and renewable energy. Participating in green entrepreneurship presents Tanzanian youth with exciting prospects to contribute to the sustainable energy sector while establishing their own businesses. By developing innovative solutions for energy efficiency and conservation, young entrepreneurs can make a positive impact on the environment and contribute to the country’s economic growth.

6. Engaging in waste management practices

Promoting environmental sustainability and mitigating the harmful effects of waste necessitate active engagement in waste management practices. Tanzanian youth can play a vital role by championing recycling, composting, and waste reduction initiatives within schools, communities, and households.

By raising awareness about recycling’s significance and providing resources for proper waste separation, the youth can redirect recyclable materials away from landfills, thus fostering a circular economy. Moreover, they can advocate for composting as an effective means of minimizing organic waste while generating nutrient-rich soil for gardening and agriculture. Through their enthusiastic involvement in waste management, Tanzanian youth can contribute significantly to creating cleaner and more sustainable communities and a brighter future for the environment.

Conclusively, Tanzania’s road towards a fossil free future has so far been bumpy and marked with commitments and challenges. Tanzania however has opportunities amongst its youthful population and can turn up the tide to ride faster towards net zero.

References

[1] National Climate Change Strategy, Vice President’s Office, United Republic of Tanzania.

[2] Emissions Database for Global Atmospheric Research (EDGAR), Joint Research Centre (JRC).

[3] ibid

[1] https://web-archive.lshtm.ac.uk/www.linkmalaria.org/country-profiles/tanzania.html

[2] The Economics of Climate change in the United Republic of Tanzania, January 2011

[3] Ibid

[4] URT; Tanzania’s Nationally Determined Contributions, 2021

[5] URT; Tanzania’s Nationally Determined Contributions, 2021

[1] URT: Tanzania Nationally Determined Contribution, 2021

[2] https://dicf.unepgrid.ch/united-republic-tanzania/forest

Re-Positioning women and gender concerns in Critical Green Transition Minerals: Should women be treated differently?

With the increasing focus on climate change and green transition minerals, multiple questions are asked whether women really matter and deserve to be treated differently.

 

Authors: Gloria Shechambo, Moses Kulaba and Judith Karangi, Governance and Economic Policy Centre

*We acknowledge valuable inputs from Ms Rachel Chagonja,  CEO National Council of NGOs, Tanzania and  Natural Resource Consultant

  • Featured photo: Courtesy of IGF:https://www.igfmining.org/four-ways-empower-women-artisanal-small-scale-mining/

The mining sector has mostly been male dominated and has had a differential impact on how women have contributed and benefitted from the sector. Women in mining face multiple challenges including ownership to mining licenses, gender-based discrimination and earn less value from mining.   Moreover, women have been traditionally the artisanal miners and dealers of what were considered less value minerals such as copper, gemstones and pearls. The global shift of interest towards cleaner energy has put a different demand on critical or transitional minerals such as tin, tungsten, has generated a new wave and venture by the rich into new territories, previously held by women and potentially exacerbating the problems that they already faced. (HakiRasilimali, 2021). There is already a rush by mining companies to take over land and acquire new licenses over land previously utilised by artisanal women.  This shift could potentially lead to further inequalities and jeopardies the livelihoods of women in the sector (Pact World,2023).

This subject is essential at this point in time as it encourages governments to re-look into the state of women in critical minerals and how the new global shifts in the mining sector provide a different trajectory to small scale artisanal women miners in particular. Moreover, it is important because mining and transaction of critical/ transition minerals will be the ultimate development agenda of the next 30 years and is bound to affect Tanzania’s mineral governance landscape for the next foreseeable future (Kulaba,2022). Yet lopsided development without women, has always proven to be stagnant and unjust.

As Tanzania navigates the complexities of the energy transition, prioritizing gender inclusiveness in the mining sector will not only benefit women but also contribute to sustainable economic growth and development (BMZ, 2023).

 What are Transitional Minerals

 Critical, Green or Transitional Minerals are minerals that are considered vital in the support of the technology and industrial development required to support the global transition to clean energy. These minerals include but not limited to graphite, lithium, cobalt, copper, tungsten, tantalum etc. By virtue of their properties, these are slightly distinct from other conventional minerals such as gold and diamonds. According to global mining and energy reports the demand for  critical green transition minerals will surge by many folds in the next decade as the global demand and countries race up towards reaching the Paris Agreement targets of Net Zero by 2050.  Already Transition mineral rich countries such as the DRC, Zambia and Tanzania are experiencing a boom in global demand for mining licenses and opportunities for new investment.  While this surge represents an opportunity for mineral rich countries, there is a likely risk that the benefits from this critical/ transition minerals booms could by pass women artisanal miners.

The intersection between Transitional Minerals and negative Gender biases

The mining sector has long been awash with negative gender biases, cultural norms, regulatory, systemic, structural and physical barriers towards women. Mining is considered a man’s task, hard and hazardous for women. Women by their physiological nature are not considered fit to enter tinny deep underground mining pits to extract minerals. In many African mining societies, it is culturally believed that minerals will disappear if women appear on the mining sites or enter the mining pits. Some studies (Kondo 2023) have shown that women have been forbidden to enter mines, that they themselves own for ‘safety’ concerns by local officials.

While some women groups have gone on to challenge these norms and participate in mining, their degree of participation may nevertheless be limited. Norms around domestic roles in the home, for instance, mean that while men can focus solely on mining, women must first complete chores in the home and agricultural activities before participating in mining activities, which limits their earning capacity and career progression. Women also tend to be less mobile, restricted to selling their minerals within mining areas where prices are lower, unlike men who sell their minerals beyond the mining area (Buss et al., 2017).

Moreover, the current legal and policy framework governing the extractive sector has not fully untangled these barriers and does not guarantee effective participation of women in the mining sector (Majamba ,2020). As a result, women have consistently played the less visible roles and are found towards the tail end of the extractives value chain occupying roles such as those of administrative support staff, informal laborers for food supply, sexual entertainment, cleaning services and those that are closest to extracting are artisanal miners.

Women constitute about 40-50% of Artisanal miners in Sub-Sahara Africa (Pact World, 2023); and dominantly involved in extracting minerals that were previously considered ‘less value minerals’ such as salt gemstones, pearls, iron, cobalt, copper, tin, tungsten and tantalum.

In brief, despite their numbers, women neither control ownership nor value of the mining sector. Without addressing these challenges, the emerging boom in Transition Minerals could reinforce the already existing parochial and restrictive barriers that hinder women in the mining sector, keeping women in abeyance from enjoying the economic benefits that come with transition minerals and mining generally for yet the next decades.

Despite their numbers and potential economic multiplier effects, women only own around 1% of all mining licenses and 6% of artisanal mining licenses in Tanzania. This must be a cause for alarm

Do existent shifts within the mining sector bring a different trajectory to women and artisanal miners?

The global agenda and discussions to mitigate negative effects of Climate Change and keeping global warming under 1.5 degree has brought a major shift towards energy transition, changed the mining landscape and upscaled the role of critical/green or transition minerals in Mining and development global policy discussions.

The shift provides both opportunities and risks not only to specific transition mineral rich countries but to women artisanal miners in particular (Policy Forum, 2022). Informed by the Paris Agreement Cop 21 adopted in 2015, the shift has significantly changed the global demand tending towards cleaner energy where critical minerals are needed as the raw materials. Critical minerals which are also called green minerals contribute to reducing unclean emissions for renewable technologies and are very essential for functioning of modern economies, technologies and industries including electronics, renewable energy, automobiles, aerospace and defense (BMZ,2023).

Moreover, the shift to critical minerals signifies a major change in global demand in minerals by super powers, rushing to secure critical supply chains and quantities needed to drive their clean energy industrial development and to secure their energy and strategic security needs.

For example, the demand for graphite and lithium has surged and the value for copper will increase for the next years to come. While this may be an opportunity, there is a risk that the developed countries are potentially bound to benefit more than supplier countries such as Tanzania.

According to the Geological Survey of Tanzania and Mineral scoping reports (NRGI 2022) , Tanzania has  close to 24 documented Critical Minerals  occurrences and has witnessed a boom in new mining licenses. Over 50% of new mining licences issued between 2015 and 2020 targeted critical minerals. Tanzania has recorded new investments in Nickel and Graphite and exploration for large scale mining of Tungstein and Tantalum are underway. The government has placed attracting new investment in the critical minerals sector at the centre of its strategic investment drive for the next five years. A new or revised mining policy could be coming soon.

Figure 1: Tanzania Critical Minerals Exploration boom 2005-2020 (%TL = percentage of the total number of exploration licenses issued per annum) (Source: Tanzania Mining Commission and NRGI-Tanzania Scoping Study Report 2022)

With the challenges already highlighted above, the new shift will not necessarily bring new unique challenges to artisanal small-scale miners and women in particular, however, on the more optimistic side, with increase in Foreign Direct Investment (FDI) can result into better labor market outcomes in the mining sector, infrastructural investment which will enable women and other ASMs to gain better access to market opportunities.

However, pertinent policy questions remain and solutions must be provided. For example, what specific changes in labor dimensions (e.g wages, decency in employment) are more favorable for women? What specific infrastructural needs are more specific and useful to women? And what do market opportunities look like exactly to women? This needs further dissection so as to cater them accordingly. With formalization of ASMs already underway, there might be a greater pressure by investors to ensure formalized ASMs also have access to legal protection against various forms of violations and more opportunities for skills development that is relevant to the sector. What specific skills distinct from male artisanal miners are needed for women? Being able to answer these questions intentionally would enable a more gendered impact to the envisaged developments without assumptions that positive effects would automatically trickle down to women.

With rising attention to responsible sourcing of critical minerals, there may be more attention to ensuring gender and social inclusion in the sector with standards more heightened. Economic empowerment is another potential area through which gender mainstreaming initiatives potential to the sector could be adopted. This may take a form of setting up women’s cooperatives, offering grants and expanding access to financial services to support women’s entrepreneurship in mining related engagements such as processing equipment(s).

A potential area for gender mainstreaming in mining is implementing mechanisms to support women in caring for their children after returning from maternity leave while working full-time in mining areas. For example, a study in Australia found that the proportion of women in the mining workforce was higher among those under 30 but declined significantly with age. This drop was partly attributed to the lack of a supportive environment, such as inadequate onsite childcare and family support systems (Weldegiorgis, 2022).

While Tanzania will have to balance between this development imperative and Climate Change obligations further risks on environmental, and local populations still remain detrimental. The intersection of women mining and energy transition needs a bigger attention and warrants to be assessed to ascertain specific economic opportunities, challenges and what the overall shift means to artisanal women.

Gaps and risks for missed opportunity

With such spurring potentials, come possible risks too. Most of ASMs and women who have been engaged in mining were operating without formal licenses on lands. Expansion of investment to critical minerals means further displacement by largescale companies where licenses might be granted to larger better resourced companies. This might present a larger land competition and worsen the economic situation of ASMs and poor women in the sector.

Technological divide between smaller and larger mining companies might further exacerbate the marginalization of small-scale miners and women as mining of critical minerals requires higher capital investment and advanced technology.

Environmental and health risks arising from large scale mining operations may cause further impacts on communities leaving women and poor artisanal miners prone to health risks due to their vulnerability and higher dependency on natural resources for livelihoods.

Last but not least, if larger inclusion polices are not carefully inculcated, gender inequalities in the mining sector may be furthered resulting in lesser opportunities for women to be in the formal mining and control of the mining sector and the value it provides.

Yet investment and increase of women in the critical minerals sector value chain has significant multiplier effects to the local economy. According the income expenditure studies, given their caregiving roles and geographical immobility limitations women have 10 times more chances of spending their income locally compared to men. In other words, incomes earned by women will create 10 times more economic benefits to the local economy compared to men.

A study in Zambia of some local businesses (groceries, clothing shops and bars) service in Mapatizya ASM sites indicated that on average, over 50 % of their customers were ASM workers and over 50 % of revenues also derived from ASM operators. The estimated percentage of female customers was 10–80 % with an average estimate of 48 % female customers. Local business owners felt that ASM increases cash flow into the local economy through purchase of largely consumer goods such as food, clothing, soap, kerosene and other essential household items. Studies in Tanzania’s mining areas has also confirmed similar patterns. Women also support other livelihood activities, e.g. farming and establishment of small micro-entrepreneurships and village saving and lending schemes.

With a total around 41,000 women constituting about 25-27% of the informal mining and artisanal sector in Tanzania, increasing this number can create up to 10 times multiplier effect on local household incomes, adding economic value and reducing poverty by significant folds.

Policy and Legal governance aspects

The legal and policy framework should provide the framework through which the government creates an enabling environment to enable a functional minerals’ sector along with ensuring women and artisanal miners’ increased involvement in the sector.  Unfortunately, several literatures highlight the existing gaps in the legal and policy framework that hinder the effective involvement of women.

The legal framework governing the Mining Sector in Tanzania only responds partly to the challenges/barriers that women are facing. Despite the affirmative measures to recognize women in the mining sector through facilitating licensing for artisanal and small-scale miners (women included), the legal framework insufficiently supports the effective participation of women in the mining value chain especially in the most challenging areas namely capital skills and marketing (HakiRasirimali,2021).

The Mining Act of 2010 (amended in 2017) as the primary legislation governing Tanzania’s mining sector also manifests some gaps. Some provisions of the Mining Act was relatively more progressive in terms of ensuring gender parity in mining commission is at least 1/3 of the members must be women. The subsequent amendment in 2017 was rather regressive, where it provided that one out of two knowledgeable members should be a woman (Mjamba,2020). The Act does however not provide gender mainstreaming as a strategic tool of advancing women ownership and control of the mining sector.

The Extractive Industries Transparency Act (TEITA) requires for some disclosures on gender, however the extent to which women and ASM matters must discharged is not comprehensive. Moreover, the TEITA law was enacted with a mindset focus on conventional large scale mined minerals such as gold, tanzanite and diamonds. Critical Green Transition Minerals would be a new purview desiring a second look.

The Mining Act 2010 also includes local content requirements to Tanzanian nationals in employment and procurement however these provisions could be strengthened further by emphasizing the minimum threshold for the inclusion of women in jobs, entrepreneurship and service provision.

The Natural Wealth and Resources (Permanent Sovereignty) Act of 2017; the Natural Wealth and Resources Contracts (Review and Re-negotiation of Unconscionable Terms) Act of 2017; and, the Tanzania Extractive Industries (Transparency and Accountability) Act of 2015 are also not actively seeking to promote gender inclusiveness (HakiRasilimali,2020). These Acts have taken a value neutral approach to women and delegated their care to the state and the general public on ownership and governance matters.

In-terms of Land ownership challenge to women, the Tanzania Land Act (1999) and village Land Act (1999) recognize that women’s participation in mining is closely linked to the access and control over land. In this regard, the Act recognize women’s right to own lease and use land for productive purposes, however, customary practices still limit women’s access and control. Future amendments and reforms should consider incorporating gender aspects more explicitly by also mandating companies to adapt more gender sensitive policies and practices,

By loping women together with their male counterparts, the government assumes that these are equal players. It is oblivious of the historical challenges that women have faced and treats them like equal weights in boxing championship. The fact is that they are not. And should never be in this era of transitional minerals moving forward.

Recommendations to mitigate potential risks

  1. Government must review the existing legal framework with a futuristic woman in transition minerals lens. To ensure a more equitable benefit from this important upcoming energy transitional era, the Minerals legal framework would benefit from incorporating more stringent clauses that promote gender inclusiveness to protect women and artisanal miners in the Transition Minerals sector.
  1. Ring fence some mining licenses for critical green transition minerals to women and promote joint ventures between women miners and new transitional mineral companies.
  1. Formalization of mining licenses should take into consideration historical and structural barriers that small scale artisanal and women miners experience by providing access to financial credit and loans.
  1. Secure and strengthen women participation in transition minerals value chain. Economic empowerment interventions should continuously ensure a through gender impact analysis to asses who benefits more in the value chain and who is more affected negatively by the existent mineral operations. This goes along with identifying and providing relevant technical skills necessary for advancing women within the sector, narrowing the wage-gap, and enhancing markets.
  1. Women must deliberately create and government must support safe spaces for women in Transition Minerals. This must include efforts such as strengthening the Women in Mining Associations, formation of Tanzania Women Congress on Climate Change and Energy Transition and establishment of a dedicated National Symposiums and International Women Climate Conferences (COP) to consistently monitor and evaluate and discuss progress made by women in the critical minerals space.

  2. For us at GEPC the formation and operation of a united women front in the form of a Women Congress on Climate Change and Energy Transition offers the only unique opportunity of breaking the barriers that have undermined the different women movements and mining associations, thereby unlocking the potential of women to influence the climate change and transitional minerals spectrum in a more coordinated and reinforced manner. 

  3. Multinational Mining Companies must establish deliberate polices not to encroach or take over mineral licenses previously owned or occupied by women small scale and artisanal miners. Multinational Mining Companies must deliberately seek to partner with women miners as means for increasing women ownership and control of the Mining value Chain.
  1. Furthermore, enforce the law and practice to ensure larger mining companies do not encroach on women owned mining rights, reduce negative environmental impacts to communities and women in particular.

Conclusion

 The global shift toward critical minerals presents   a significant opportunity from critical or transitional mineral rich countries such as Tanzania. It however significantly creates both opportunities and risks for for women in artisanal mining. The booming demand could create an avalanche of new prospectors and investors targeting artisanal mining areas. Without targeted interventions, existing barriers—such as limited access to land, licenses, and financial resources—may further marginalize women in the sector. To ensure inclusive benefit for women in the critical minerals boom, , policy and legal frameworks must deliberately intentional to promote women’s participation through stronger protection, secured access to resources, and skills development. By addressing these challenges, Tanzania and other supplier countries can empower women artisanal miners and foster a more equitable and sustainable transition minerals sector. The vagaries of climate injustice can be addressed, the tainted history of the mining sector reclaimed and women catapulted into a better green future.

 References

BMZ. (2023). Raw materials for energy transition. https://rue.bmz.de/rue-en/releases/157362-157362

  1. Buss, B. Rutherford, J. Hinton, et al. Gender and Artisanal and SmallScale Mining in Central and East Africa: Barriers and Benefits (2017), GrOW Working Paper No. 2
  2. Onditi. Gender Inequalities in Africa’s Mining Policies: A Study of Inequalities, Resource Conflict and Sustainability, Springer, Singapore (2022)

HakiRasilimali. (2021). Engendering the mining sector: To what extent are women benefiting or losing out on revenue management? https://www.hakirasilimali.or.tz/wp-content/uploads/2021/09/Engendering-the-Mining-Sector-in-Tanzania.pdf

Kondo, H. (2023) An exclusive look at Tanzanian women in mining xxxxxxxxxx. https://www.sciencedirect.com/science/article/pii/S2214790X24000595

Majamba, H. I. (2020). The gender gap in Tanzania’s mining sector. Tanzania Journal of Development Studies, 18(1), 29-40.

Pact World. (2023). Artisanal miners: A hidden but critical force in the global economy. https://www.pactworld.org/blog/artisanal-miners-hidden-critical-force-global-economy

Policy Forum. (2022). Critical minerals and energy transition in Tanzania: A new dance, maybe?https://www.policyforum-tz.org/blog/2022-06-14/critical-minerals-and-energy-transition-tanzania-new-dance-maybe

The Citizen. (2023). How to bridge the gender gap in mining. https://www.thecitizen.co.tz/tanzania/magazines/woman/how-to-bridge-gender-gap-in-mining-4549718

United Republic of Tanzania Ministry of Minerals. (2024). Transforming Tanzania’s mining sector with strategic minerals on cards. https://www.madini.go.tz/page/e8a4201d-286f-4409-9db0-719311652336

Weldegiorgis, F (2022). Women and the Mine of the Future: A gendered analysis of the Employment and Skills in the Large-Scale Mining Sector -Australia

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Left Behind in Climate Change and Justice: Social Economic Impact of Climate Change on Indigenous Communities: A case of Hadzabe Indigenous people of Tanzania

A lot of climate change coverage and advocacy in defense of indigenous communities is largely focused on other parts of the world such as the Amazonian and Andean communities yet little attention is given to African indigenous communities. Without immediate action, we warn, the Hadzabe livelihoods and communities could gradually be wiped into extinction.

Author: Eva Kihupi, Junior Associate, Governance and Economic Policy Center

(Featured photos sourced from: Africa 101 Last Tribes online website-https://www.101lasttribes.com/tribes/hadzabe.html)

1.0 Introduction to Climate Change and Indigenous Communities

Africa has a lot of indigenous groups critically exposed to the dangers of climate change with little support. These constitute the left behind in climate governance and the quest for climate Justice. This short analytical study and brief highlights the relevance of taking action to mitigate the problems created by climate change on African indigenous communities, with a focus case on the Hadzabe indigenous communities of Tanzania.  

Amidst a world transformed by climate’s embrace, Indigenous communities bear the deepest scars. Their ancestral lands, rich in spirit, face unprecedented challenges. In their resilience lies a profound wisdom, urging us to unite for a future where all thrive in harmony. 

Current studies show a positive correlative evidence of climate change’s impacts on increased temperatures and declining biodiversity in sensitive nature ecosystems. This makes indigenous groups the first group to be directly affected and more disadvantaged by the negative impacts of climate change due to their direct reliance on the natural environment. Moreover, the impacts of climate change are more severe, long lasting, socially disruptive on indigenous communities than other population groupings.

According to the United Nations “Indigenous communities, peoples and nations are those which, having a historical continuity with pre-invasion and pre-colonial societies that developed on their territories, consider themselves distinct from other sectors of the societies now prevailing on those territories, or parts of them.

Indigenous people are therefore distinct social and cultural groups that share collective ancestral ties to the lands and natural resources where they live and occupy.  By nature, the indigenous people are heavily reliant on their natural environment and local ecosystems for livelihoods and survival.

The UN further estimates that the total net impact of climate change on indigenous communities is in billions of dollars and intergenerational. Despite being the least polluters, the indigenous communities are paying heavily for the climate change crimes and damages that they never caused. Their lands, dwellings, livelihoods and cultures are being disrupted and wiped out. Their future generations may never exist or even live to enjoy their cultural heritage.

While the impacts of climate change on indigenous communities are almost similar, a lot of global climate change coverage and advocacy in defense of indigenous communities is largely focused on other parts of the world such as the Amazonian, Andean and pacific communities.

Little attention is given to African indigenous communities. Yet Africa has a lot of indigenous groups critically exposed to the dangers of climate change with little support. In our assessment, these constitute the left behind in climate governance and the quest for climate Justice.

2.0 Why Indigenous Communities Matter in Climate Change Justice

Indigenous peoples comprise less than five percent of the global population but protect more than 80 percent of its biodiversity. Indigenous people play a great importance in climate solutions alongside their need to have access to resources[1].

When the rights of Indigenous peoples are recognized, secured, and protected, rates of deforestation tend to be lower and carbon stocks tend to be higher than in forests managed by other actors. Secure rights for community forest guardians can also improve ecosystem integrity, protect biodiversity, and enhance public health

Climate change exacerbates the difficulties already faced by indigenous communities.  This includes social and economic marginalization, loss of ancestral land for hunting, gathering and water resources for livelihood. Encroachment from external actors aggravating, human rights violations and discrimination based on cultural differences. 

By addressing the critically climate change problems and concerns facing indigenous communities equally, governments and the world can strike a double win of achieving long lasting solutions to climate change and at the same time contributing to securing the unique cultural diversity and livelihoods of indigenous communities for future generations.

3.0 Climate Change and the Hadzabe People of Tanzania

Hadzabe Homeland Map: Source- Africa 101 Last Tribes

The Hadzabe people reside in a 4000 km2 area around the shores of Lake Eyasi in Northern Tanzania, East Africa. The total small population size of approximately 1000 to 2,000 individuals, has shown no major disruption during the past 100 years. According to the 2015 National Census report the Hadzabes range between 1,200 to 1,500 but this number has been dropping.

Only around 150 to 200 individuals of these, however, currently practice a predominantly hunting and gathering way of life, meaning that the bulk of their diet is derived from wild plant foods and game animals.  Because of climate change related factors, many have been either displaced or forced to abandon their ancestral lands and culture and escaped to urban centers in search for better livelihoods.

The Hadzabe are more prone to the impacts of climate change than any other community because they are very highly dependent on the environment and climate compared to other social groupings in Tanzania.

Over the years, the Hadzabe’s have been facing the vagaries of climate change head-on and yet very little efforts are made to highlight their plight and address the climate change risks that they face.  The risks are socio-economic, health and cultural in nature yet have serious human rights and justice violations connotations that are silently overlooked.

Their livelihood is entwined with the climatic environment where they live, and therefore it is important to have appropriate means to tackle the impacts of climate change and its adverse effects on these indigenous people. 

 Environmental degradation and livelihoods

Firstly, the rising temperatures and extended droughts have resulted in a loss of vegetation and negatively impacted gathering and hunting activities undertaken by the Hadzabe people. Their hunting and eating habits have changed as they now have to turn to unconventional hunting methods and eating of endangered animal such as monkeys, baboons and rare bird species to compensate for the dwindling plant and animal species that previously provided food.  Increasingly the Hadzabe are gradually becoming a danger to the animals and an ecosystem that they protected for many generations earlier.

 Health and morbidity risks

Moreover, the health of the Hadzabe indigenous people is deteriorating as they no longer get their livelihood from nature.  The Hadzabe’s are very well known to feed on meat from wild game, honey, and plants, including tubers, berries, and baobab fruit[1].  For the Hadzabe, the phrase “food is medicine” is applicable and yet the increased climate impacts like heat waves, storms and flash floods have wiped out their food sustenance. Because of climate change, the flower bearing trees are rare and the bees are dying or migrating to distant places in search for green forest cover.

The already inadequate access to health facilities such as hospitals amidst declining immunity has caused more danger for the indigenous people who live in the wilderness and have to roam deeper in search for food.  According to medical reports from the nearest medical facilities such as the Haydom Lutheran Hospital, the morbidity and mortality rates amongst this small Hadzabe community in Yaedachin Valley has increased.

The level of alcoholism and substance abuse has increased as they look for alternative ways to survive the harsh living conditions in a changing natural environment. The leading causes of death are malaria, respiratory diseases, anemia and cardio-circulatory disease and maternal mortality rates amongst the women and children.[2]

Limited supportive infrastructure, social services and opportunity

Furthermore, lack of supportive social infrastructure such as clean water sources have increased vulnerability to the negative impacts of climate change. The water streams have dried up and the few surviving are shared with wild animals, increasing the risks of contamination and disease.  Women and children have to walk long distances in search of water and this has disrupted their traditional family settings, learning and increased to exposure to gender-based violence.

 Enhanced climate induced emergencies affecting for Hadzabe

Figure 2: Percentage of Natural Resource disasters from 1980-2022 in Northern part of Tanzania

The increased droughts and erratic rainfalls have increased vulnerability and occurrence of natural climate driven disasters such as flush floods affecting the Yaedachini Valley where the Hadzabe live. According to the Tanzania Prevalence of Natural Disasters Report (1980-2022), Northern Tanzania now suffers from recurrent floods and droughts, and the frequency (and severity) of events has been increasing. 

The adjacent pie chart shows the percent share by type of natural disasters recorded in Northern Tanzania between 1980-2022. According to this statistics floods and drought account for more than 71% of the total disasters recorded. This proves that the impacts of climate change are affecting the drier part of Northern Tanzania, where the Hadzabe live more than any other parts of the Country.

The Hadzabes live in Yaedachini Valley on the floors of the Eastern Rift Valley Escarpments located in Babati, Hanang, Haydom, Mbulu districts corridor of Manyara region which have become more susceptible to drought and flash floods.

The recent examples of enhanced climate induced emergencies were the flash floods and mudslides which affected Babati and Mbulu district in 2023 killing hundreds and living thousands homeless[1].  During these last flash storms and floods, it is estimated that at least 60% of the Hadzabe dwelling places in the Yaeda valley were affected and many left without food and shelter.   The consequences to their livelihoods were more severe as they are directly more reliant on the natural environment than any of their neighboring social groupings. Yet very little national and global coverage and attention was provided.

The Natural disasters reports from Tanzania’s Prime Minister’s Office confirms, the severity of climate change related disasters such as floods has been increasing in the country. For example, the heavy rains and floods  that occurred in Tanzania between 28th March and 28th April 2024   claimed around 155 lives. This was so far the highest number of flood related deaths ever recorded in the country[2].  The damages were more severe in drought prone regions such as Manyara region. If not addressed therefore, the Hadzabes and other indigenous groups in these disaster-prone areas could be wiped out.

 Climate Injustice implications to the Hadzabe

Further, climate change has significant human rights and justice implications on indigenous groups. The indigenous Hadzabe people are facing numerous injustices and violations of their socio, economic and cultural rights due to climate change. Their socio-economic rights are not guaranteed, and their indigenous lands are not protected, putting them at risk of extinction.  They are also facing threats to their right to food, shelter, and ancestral lands, as they may be forced to leave their traditional lands in search of alternative livelihoods.

Climate induced migration and cultural injustices

The Hadzabe’s culture is being adulterated by new communities such as the cattle keeping and farming Datoga tribes who are moving into Hadzabe lands in search for pasture and new settlement. The numbers of new comers are increasing while their Hadzabe numbers are dwindling, making them increasingly a minority and vulnerable[1]. Their location in hard-to-reach areas and lack of access to education and formal skills has increased their economic marginalization as an indigenous group and limits their opportunities to employment and a better future. 

In the midst of all these, there are critical policy and governance actions that must take and the international community must support to bring the Hadzabe from the behind to the front. From near extinction to future survival.

4.0 Recommendations for action

  1. Tanzania government must recognise Hadzabe as an indigenous group for protection by both national and international mechanisms against climate change and extinction. Despite voting in favor of the UN Declaration of the Rights to Indigenous peoples, Tanzania does not recognize the existence of any indigenous peoples in the country and there is no specific national policy or legislation on indigenous peoples per se. The absence of such makes protection of the Hadzabe with in the ambits of national and international frameworks weak. On the contrary, a number of policies, strategies and programs that are misaligned to the interests of the indigenous peoples in terms of access to land and natural resources, basic social services and justice are continuously being developed, resulting in a deteriorating and increasingly hostile environment for both pastoralists and hunter gatherers[2].   In a recent move in 2022 and 2023, the government relocated hundreds of Masai and Hadzabe families from the Loliondo Ngorongoro area to Tanga, hundreds of kilometers away from the ancestral land[3]. This was to pave way for expansion of private game hunting grounds of a Dubai based firm.  This move was widely condemned by Human and Land rights defense organizations, as reflective of the risks that indigenous groups face in Tanzania. Despite global condemnations, the government did not change its decision.
  1. Tanzania government must establish a dedicated fund towards climate change mitigation and adaptation measures targeting the Hadzabe. The Tanzanian Government and parliament must allocate a special vote in its national budget to cater for climate change mitigation, adaptation and protection of indigenous communities at frontline of climate change. While the government funds climate change and disaster related activities through line Ministries, Departments and Agencies such as the Prime Minister’s Office, the Vice President’s Office- Environment, Ministry of Tourism and Natural resources etc., it is evident that such funding lines can be conflated and blurred due to over competing priorities. The net consequences have been that less dedicated funding is reaching the extremely vulnerable and left behind in climate change such as the Hadzabe who desperately need it for survival. Tanzania is yet to establish a fully-fledged National Climate Fund and the current climate change related funding has been largely foreign sourced and quite unsustainable[4]. 
  1. The UN and other international agencies must dedicate percentage of the Loss and Damage Fund to cater for indigenous groups including the Hadzabe in Tanzania. During the COP27 in Egypt, the United Nations committed to setting up a climate loss and damage fund. While as the details of this Fund are still unclear, the framework for access of these funds is still being developed. This provides an opportunity for putting guard rails as to how indigenous groups such as the Hadzabe will benefit. Reports from climate champions indicate that a very small fraction of funding is currently directed towards Indigenous Peoples and Local Communities (IPLC) for securing land rights and managing forests in tropical regions. Over the past decade, a minimal portion of the resources designated to support IPLC’s land rights and forest management actually involved an IPLC organization. This accounts for an insignificant share of the overall climate change assistance. Additionally, from the financial commitments made during the COP26 IPLC Forest Tenure Pledge for the period between 2021 and 2025, only a minor percentage of those funds has been utilized[5].
  1. Tanzania government must provide adequate infrastructure and social services like health, water services, and education for future sustainability. The Tanzanian government in collaboration with other state actors or non-state actors such as CSO, community-based organization must provide supportive social-economic infrastructure[6] such as wells, boreholes, and water tanks to the Hadzabe communities. This will help provide the Hadzabe with access to clean and reliable sources of water and opportunities for learning and acquiring new skills to confront climate change. Alternative means of food must be equally provided to complement the dwindling wild sources.  
  1. Scale up indigenous conservation and tame nugatory land grabbing of indigenous lands. The government ministries and departments responsible for environment, conservation and lands must address the persistent land grabbing and encroachment on ecosystems that support indigenous groups such as the Hadzabe. Since the indigenous people heavily rely on the natural environment to sustain themselves it must be a priority to preserve and even promote indigenous conservation of their natural environment. Proclaiming more places as conversation areas and restricting deforestation or intrusion and allowing access for the indigenous communities to live and enjoy the natural habitats, such as Yaeda Chini valley will be a game changer in ensuring continued existence of the Hadzabe[7].
  1. Create space at the table for the Hadzabe, to directly speak and advocate for their interests at both national and international levels. Creating forums and opportunities for the Hadzabe to sit at the table as active participants in national climate change dialogues spaces would help raise awareness of the magnitude of their plight at national level. Having the Hadzabe constitute part of the National Delegations to international forums like the forthcoming COPs, is essential in highlighting their concerns at international level and creating international consensus. Direct representation in forums like parliament and the United Nations would amplify their voices and influence suitably tailor-made solutions to their needs. This will empower the Hadzabe to advocate for effective climate change mitigation policies and support based on their firsthand experiences.

 References and notes

  1. IMF (2023), ‘Building Resilience to Climate Change’. Country Report No 23/154. https://doi.org/10.5089/9798400241772.002
  2. The Water Supply and Sanitation Act, 2019 (s. 4). Available at https://tanzlii.org/akn/tz/act/2019/5/eng@2019-02-22
  3. Khatibu, F. A., Msami, J., Mchallo, I and Gontako, J (2022, June). ‘Climate Finance Availability and Access in Tanzania’ (Issue Brief No 04/2022) :https://www.repoa.or.tz
  4. https://education.nationalgeographic.org/resource/the–hadza–of–tanzania/
  5. 29 No. 1 (2022): ‘Tanzanian Journal of Population Studies and Development’. https://doi.org/10.56279/tjpsd.v29i1
  6. Laltaika, E. & Parmello, S. (2012). ‘International Work Group for Indigenous Affairs: Indigenous Peoples in Tanzania’. https://www.iwgia.org/en/tanzania/897-update-2011-tanzania
  7. Race to Resilience. ‘Indigenous Peoples and The Race to Secure Self-Determined Finance’: https://climatechampions.unfccc.int/system/indigenous-peoples-finance/
  8. National Geographic, (2023): ‘Evolution of Diet – The Hadza of Tanzania’. https://education.nationalgeographic.org/resource/the-hadza-of-tanzania/
  9. National Library of Medicine (2018). ‘Cause-specific mortality patterns among hospital deaths in Tanzania, 2006-2015’. https://doi.org/10.1371%2Fjournal.pone.0205833
  10. Association of Member Episcopal Conferences in Eastern Africa (2023). ‘TANZANIA: TEC Sends Humanitarian Aid and Condolences after Deadly Mudslide Hits Hanang Manyara’. https://communications.amecea.org/index.php/2023/12/08/tanzania-tec-sends-humanitarian-aid-and-condolences-after-deadly-mudslide-hits-hanang-manyara/
  11. Lasteck, A., (2024). ‘Tanzania floods and landslides kill more than 150’. BBC News 25 April https://www.bbc.com/news/world-africa-68896454
  12. Karashani, B (2022). ‘Tanzania spends millions to move, build new life in Tanga for Loliondo Maasai’ The East African. https://www.theeastafrican.co.ke/tea/news/east-africa/tanzania-relocates-loliondo-maasai-to-tanga-3860046
  13. Dave, ‘The Hadzabe of the Yaeda Valley’ A Step Ahead. https://www.astepahead.es/the-hadzabe-of-the-yaeda-valley/

 

[1] Tanzanian Journal of Population Studies and Development, Vol. 29 No. 1, 2022: 44-64

[2] https://www.iwgia.org/en/tanzania/897–update–2011–tanzania  

[3] https://www.theeastafrican.co.ke/tea/news/east-africa/tanzania-relocates-loliondo-maasai-to-tanga-3860046

 

[4] https://www.repoa.or.tz/wp-content/uploads/2022/10/Climate-finance-availability-and-access-in-Tanzania-.pdf

[5] https://climatechampions.unfccc.int/system/indigenous-peoples-finance/

[6] Section 23 of the water supply and sanitation act, 2019 

[7] https://www.astepahead.es/the–hadzabe–of–the–yaeda–valley/  

[1]https://communications.amecea.org/index.php/2023/12/08/tanzania-tec-sends-humanitarian-aid-and-condolences-after-deadly-mudslide-hits-hanang-manyara/

[2] https://www.bbc.com/news/world-africa-68896454

[1] https://education.nationalgeographic.org/resource/the-hadza-of-tanzania/

[2] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6209209/  

 

[1] https://climatechampions.unfccc.int/system/indigenous-peoples-finance/

 

The Nexus of Climate Change and Energy Transition on women in Tanzania: Why and how government must address gaps

While Tanzania has made some progress in addressing climate change, significant policy and governance gaps to leverage women power still exist. Addressing these gaps requires putting in place a Climate Change policy, strengthening institutional capacity, enhancing coordination, improving legal frameworks, promoting transparency, and ensuring women inclusive decision-making processes backed with sustainable funding. An organ similar to a National Women in Climate Change and Energy Council, could be an ideal vehicle for channeling and championing women participation in climate change and energy transition in Tanzania. Conducting periodic women congresses on Climate Change, Gender and Energy Transition would propel this even further.

Author(s):  Gloria Shechambo, Researcher and Moses Kulaba,  Governance and Economic Policy Centre

Featured Photo: Courtesy of Pastoral Women Council, Tanzania (Africa Climate Adaptation Centre)

As covered in  the first part of this analytical brief, Tanzania has made some progress in addressing climate change by putting in place a number of frameworks. While these frameworks provide a foundation, more targeted policies integrating gender considerations are essential to promote women’s participation and leadership of climate change and energy justice driven initiatives. To date, significant governance gaps still undermine efforts to address climate change and energy concerns in Tanzania.           

 In Tanzania, the main policy and governance gap is that the Country does not have a single comprehensive Climate Change Policy to guide the governance of the sector. As a consequence there are significant coordination and risks for duplicated efforts spread across different documents and institutions, with little synergy.

Moreover issues of  women concern in climate change and energy are not tackled as an independent urgent contemporary issue but has been mainstreamed in this labyrinth of policy and regulation framework.

The problem with this mainstreaming approach is that when a critical issue such as gender is mainstreamed, it fades into depth of elaborate policy texts and loses the core urgency that it deserves. In fact, instead of getting mainstreamed, the issue gets out streamed and gradually loses core attention.

For example, while the National Climate Change Response Strategy 2023 is keen on Mainstreaming Gender, it does not provide a distinct organ through which women can channel their opinions on matters related to climate change and energy. Similarly, the National Strategy for Mainstreaming Gender in Climate Change (NSMGCC) is weak in this area. A part from providing guidance on how gender considerations should be made in policies and budgeting matters, the document does not create a distinct forum for women.  

The National Energy Policy 2015 (NEP 2015) is awkwardly silent on gender in energy sector and therefore does not provide and pivots on which a compressive engagement of women in energy can be built.  The LPG promotion plan and the National Gas Utilisation Master Plan have largely remained an implemented and the recent clean cooking gas initiative is an attempt to put this into action[1].

The government acknowledges that despite significant progress from the above efforts by the government and other stakeholders, there remain needs for increased mainstreaming of gender at all levels of climate change interventions including in policy, programs, strategies and activities using appropriate gender lens and mainstreaming instruments. Approaches such as gender analysis, gender audit and gender budgeting using gender disaggregated data in M+E and reporting on all climate change responses should be enhanced[2].

Moreover, the financing of women led and targeted climate change and just energy transition initiatives has been low and unsustainable. While the Clean Cooking Initiative in Tanzania is commendable, the downside of this is that it is largely donor funded, private sector driven and thus its long-term funding and wide scale affordability is largely unguaranteed.

Tanzania has set a target of achieving 50% renewable energy generation by 2030, however, budgetary allocations to support climate change mitigation and adaptation have generally focused on sectors like agriculture, water, and forestry, which are highly vulnerable to climate change. However, overall allocation specifically targeting climate change mitigation and adaptation remains relatively low compared to the needs identified in national strategies. According to a Research Report by REPOA, climate financing sources do not meet the expectations as by 2020 a total of TZS 24.7 trillion equivalent to USD 10.7 million were mobilized during FYDP II, which was only 3.6% of the targeted amount[3]

According to Africa Enterprise Foundation (AEF), the Tanzania Clean Cooking Project (TCCP) is a US$3.75 million three-year project, funded largely by the Government of Sweden, that aims to catalyse the clean cooking sector through enhanced private sector participation. The project will provide matching grant financing and technical assistance to small and growing businesses working in clean cooking. The financing aims to de-risk companies to venture into underserved markets and enhance the affordability and accessibility of clean cooking solutions for at least 60,000 beneficiary households.

By requiring or expecting the poor women in rural areas to switch from free firewood and biomass to paid cooking gas (LPG), the initiative places poor women directly into the market place driven energy cash economy which may be expensive and unsustainable to afford. According to the Ministry of energy, so far only 50% of rural women enrolled on to this initiative have continued[4]. For this initiative to succeed, the issues of reduced cost, increased household incomes and sustainability of supply must be addressed.

Generally, essential milestones need to be covered. These include lack of a comprehensive policy  coordination fragmentation, limited institutional capacity, inadequate or duplicative legal frameworks, weak enforcement mechanisms, and insufficient participation of women in designing, championing and leading initiatives that affect their welfare (Nachmany, 2018).

Why engaging women in Climate Change and Energy Matters:

Engaging women in climate change and energy transition decision-making processes is crucial and pays dividends. According to the UN and documented evidence in development, empowering women bears lasting solutions and can a be a multiplier factor in addressing climate change and achieving sustainable development.

Women make up nearly half of the agricultural labor force in developing countries. When provided with the same access to resources as men, women can increase their agricultural yields by 20 to 30 percent. This boost in productivity not only improves total agricultural output by 2.5 to 4 percent, but it can also help reduce world hunger by 12 to 17 percent.

Empowering women especially in rural areas in agriculture can also have a positive impact on climate adaptation. By providing appropriate technology and resources, we can promote more sustainable farming and conservation practices. And by reducing poverty, we can help individuals better adapt to the effects of climate change.

When it comes to building climate resilience in communities, involving women is crucial. In fact, the UN reports that communities are more successful in resilience and capacity-building strategies when women are part of the planning process. Moreover, by improving access to clean energy, women death due to toxic fumes and related disease can be reduced by half.

It is therefore essential that climate change mitigation and adaptation strategies adequately take into account women considerations, addressing gender inequality, reduced harms from climate injustice[5] and effective participation at the national and global climate change discussion tables.

Recommendations for engaging women in climate change and energy matters:

 While Tanzania has made some progress in a climate change, significant policy and governance gaps still exist. Addressing these gaps requires strengthening institutional capacity, enhancing coordination, improving legal frameworks, promoting transparency, and ensuring women inclusive decision-making processes backed with sustainable funding. An organ similar to a National Women in Climate Change and Energy Council, could an ideal vehicle for channeling and championing women participation in climate change and energy transition in Tanzania. Conducting periodic women congresses on Climate Change, Gender and Energy Transition would propel this even further.

 Some of our identified and recommended approaches include:

  1. Develop a comprehensive Climate Change Policy for Tanzania to address some of the gaps that exist.  Currently, Tanzania doesn’t have and are fragmented in different  documents such as the National Adaptations Programs, National Climate Response Strategy and the National Strategy for Mainstreaming Gender in Climate Change (NSMGCC). The absence of a comprehensive climate change policy constitutes a huge lacuna that Tanzania must bridge
  2. Creating and convening safe spaces for women dialogue on climate change and energy transition matters is fundamentally urgent. This includes establishing women’s groups, organizing consultations, and ensuring women’s representation in policy dialogues and negotiations at all levels. Women Must talk. It is for this reason that we (GEPC) advocate for a hosting periodic Women National Pan African Congresses on Climate Change and Energy Transition and a Women COP on Climate Change and Energy Transition in the nearest future.
  3. Support and Facilitate Women’s inspired and led participation in Climate Change and Energy transition: This includes encouraging and supporting women’s leadership in climate change and energy sectors by providing mentorship, networking opportunities, and skills development at all levels. In this regard we (GEPC) advocate for establishment of a National Women in Climate Change and Energy Council as a vehicle to advance women concerns and interests in climate change and energy matters. Existing studies support that women’s representation in decision-making bodies, advisory committees, and project management teams is crucial for better resource governance, conservation outcomes, and disaster readiness (Brixi et al., 2022). Moreover, effective participation of women will reduce climate and energy related vulnerability and death by thousands
  4. Promoting Education and Training: Investing in education and training programs to enhance women’s capacity in climate change adaptation, renewable energy technologies, sustainable agriculture, and natural resource management. We advocate for tailored vocational training on climate adaptation and energy transition solutions, workshops on business and enterprise development, and awareness campaigns as essential skills and tools measures to meet women’s specific needs and interests.
  5. Provide access to resources: Government and Private sector must ensure equal and cheap access for women to financial resources, technology, land, and other productive assets necessary for their participation in climate change and energy initiatives. This involves providing dedicated financing lines, affordable microfinance services, facilitating access to clean energy technologies, and promoting resource rights for women. The gaps and vulnerability scores as per current reports (Tanzania Demographic Health Survey and Malaria Indicator Survey TDHS-MIS, 2022) are significantly large and have remained tilted against women.
  6. Promoting and implementation of Gender-Responsive Policies: We advocate for going beyond the integration of gender considerations into climate change and energy policies, programs, and projects. Conducting gender analyses, integration of gender concerns as a distinct feature into project design and implementation are first steps monitoring, evaluating and learning from the gender impacts of interventions and renewed action is essential.
  7. Raising Awareness and Changing Attitudes: Conducting awareness-raising campaigns to emphasize the importance of women’s participation in climate change and energy matters. Challenging stereotypes and social norms that restrict women’s involvement in decision-making processes or limit their access to resources and opportunities is crucial.
  8. Promote Women in Green Entrepreneurship: Encouraging and supporting women entrepreneurs to develop and scale up businesses that promote climate resilience and sustainable energy solutions. Private sector initiatives such as Jasiri Green Bonds is a positive initiative, however the simplicity, affordability and onboarding of more women has to be improved and scaled up purposefully for women. Additionally cheap training, technical assistance, and access to markets must be undertaken to help women establish and grow their enterprises in sectors such as renewable energy, eco-tourism, and sustainable agriculture.
  9. Provide a collaborative and facilitative environment for Civil Society and NGOs to engage: Government, Private Sector and Donors must support, partner and collaborate with Civil Society and NGOs that work on Women and Climate Change and Energy Transition. Over the last years, the civic space and financing for climate rights-based organisations has been constrained.  Research suggests that leveraging on their expertise and networks as allies can enhance women’s engagement in climate change and energy initiatives can deliver more dividends (Nachmany, 2018).

By implementing these strategies and fostering collaboration across sectors, Tanzania can empower women to play a significant role in addressing climate change and driving sustainable energy transitions.

Conclusion:

This policy brief underscores the critical importance of addressing gender disparities in climate change and energy transitions in Tanzania. Both part 1 and 2 of the brief highlights the effects that climate change and energy injustice have on women and the inherent policy, governance and financing gaps that exist in Tanzania’s climate and energy transition space. The brief concludes that  despite the efforts, women are still at the periphery and their active engagement in the current climate change and energy discussions and decision-making processes is imperative to ensure climate change and energy transition interventions are inclusive and effective. By prioritizing gender equality and women’s empowerment, Tanzania can enhance resilience to climate change, address energy injustice, reduce climate change vulnerability and advance sustainable development.

References:

Agora Portal for Parliamentary Development. (n.d.). Climate change, energy, and gender. Retrieved from https://agora-parl.org/resources/aoe/climate-change-energy-and-gender

Brixi, H., Das, J., & Doss, C. (2022). People and planet together: Why women and girls are at the heart of climate action [Blog post]. World Bank Blogs. Retrieved from https://blogs.worldbank.org/en/climatechange/people-and-planet-together-why-women-and-girls-are-heart-climate-action

Energia. (2020). Gender and energy country brief for Tanzania. Retrieved from https://www.energia.org/assets/2021/02/Country-brief-Tanzania_Nov2020_final

Fadhila H.A Khatibu, Razack B. Lokina (2023). A Review of Tanzania’s Fiscal Regime for Climate Action. https://www.repoa.or.tz/wp-content/uploads/2024/03/A-Review-of-Tanzanias-Fiscal-Regime-for-Climate-Action.pdf

Nachmany, M. (2018). Climate change governance in Tanzania: Summary policy brief. Grantham Research Institute on Climate Change and the Environment, London School of Economics and Political Science.

National Climate Change Strategy (2021-2026). Tanzania Government.

National Strategy for Mainstreaming Gender in Climate Change (2023). Tanzania Government.

Tanzania Demographic Health Survey and Malaria Indicator Survey TDHS-MIS. (2022).

UN Women. (n.d.). Fact Sheet: Women, gender equality and climate change. United Nations. Retrieved from https://www.un.org/womenwatch/

UNDP Tanzania. (n.d.). Bridging the gender gap: Empowering women in the agricultural sector. Retrieved from https://www.undp.org/tanzania/news/bridging-gender-gap-empowering-women-agricultural-sector

UNECA. (n.d.). Support for land use planning sees over 2000 women farmers in Tanzania become landowners. Retrieved from https://africa.unwomen.org/en/stories/news/2023/02/support-for-land-use-planning-sees-over-2000-women-farmers-in-tanzania-become-land-owners

[1] https://www.thecitizen.co.tz/tanzania/news/national/roadmap-for-clean-cooking-energy-to-target-rural-masses-3921536

[2] National Climate Change Strategy, 2021-2026

[3] https://www.repoa.or.tz/wp-content/uploads/2024/03/A-Review-of-Tanzanias-Fiscal-Regime-for-Climate-Action.pdf

[4] https://www.thecitizen.co.tz/tanzania/news/national/roadmap-for-clean-cooking-energy-to-target-rural-masses-3921536

[5] https://genderclimatetracker.org/sites/default/files/Resources/Gender-and-the-climate-change-agenda-212.pdf

Analysis of Climate Change and Energy Transition impacts on women in Tanzania: Policy and governance gaps

Climate Change and Energy Transition are pertinent issues in contemporary global development challenge facing the world yet women are still at the periphery. Moreover there is a varied difference in how poor rural versus urban women experience the climate change and energy transition effects. The situation in Tanzania is not different.

Author(s):  Gloria Shechambo, Researcher and Moses Kulaba,  Governance and Economic Policy Centre

Climate Change and Energy Transition are pertinent issues in contemporary global development challenge facing the world yet its impacts on women and their practical engagement have remained nuanced and camouflaged in of volumes of endless winding texts and UN resolutions, with less significant impact. Women are still at the periphery and there is a varied difference in how poor rural versus urban women experience the climate change and energy transition effects .  Despite attempts, the situation in Tanzania is not different and warrants immediate consistent and purposefully intentional attention.

The world is one place yet  climate change and energy transition problems facing women are distinct because of their economic and social vulnerabilities and traditional care giving roles compared to men. 

Because women face a higher level of economic and social vulnerability compared to men, the meta question in climate change and energy transition must not remain how can the world and particularly developing countries be better positioned to be more adaptive, resilient and responsive but rather why is it a concern for women in particular? How and why should poor women be at the center of these discussions? In Tanzania this is even more critical given that women are disproportionately more affected than any other group.

 In fact, and justifiably, the demand for more women engagement in climate change and energy transition is not a feminist ask but a development imperative that must be addressed. 

This policy brief examines the intersection of gender, climate change, and energy transitions in Tanzania, emphasizing the importance of engaging women in bridging the disparities to inclusive actions and successful interventions for sustainable development. The brief highlights the disproportionate impact of climate change and energy-related disasters on women due to their caregiving roles and limited access to resources and efforts in place.

 By prioritizing gender justice and equality, Tanzania can strengthen resilience to climate change, reduce energy injustice gap and advance sustainable development.

Nexus of Climate Change and Energy injustice on women in Tanzania

Women often play key roles in food production and household food security yet climate change and energy significantly impact agriculture and productive sectors in Tanzania. Women, who constitute a substantial portion of the agricultural labor force, face heightened vulnerability to climate-related disasters and energy insecurity due to various social, economic, and cultural factors[1].

UNDP reports that more women than men (67 percent of the country’s total female labor force versus 64 percent of the male labor force) are engaged in agriculture.

Tanzania’s recent Agricultural Transformation Strategy known as Agenda 10/30 emphasizes the role of women in facilitating the sector’s growth to 10% by 2030[2] and thus places women in direct confrontation with the effects of climate change on agriculture and food production.

Additionally, in terms of energy; data from Gender and Energy country briefs for Tanzania indicates that by 2020 only 8.1% of households used clean energy sources and in 92% of households it is merely women who are vested with the responsibility to cook and collect firewood for use and thus affecting their health and time productivity (Energia, 2020). There are wider gender disparities when it comes to the impact of climate change and energy-related disasters in terms of vulnerability, resilience, and adaptation spread across a short and longer term.

Women often face disproportionate health impacts from climate change due to their roles as caregivers and their biological vulnerability. For example, during natural disasters or heatwaves, pregnant women and those with reproductive health issues may face increased risks. 

Both rural and urban women face systemic gender inequalities that limit their access to resources, education, and decision-making processes, exacerbating their vulnerability to climate change impacts. However, it is undeniably also true that poor rural women are more disproportionately affected due to their higher dependency on natural resources, their heavier involvement in agriculture, lower access to clean energy and more limited access to technology and information.  

On the other hand, urban women face more exposure to heat waves and poor air quality; they are more exposed to energy poverty particularly in low-income households; urban women are also more prone to working in sectors that are particularly affected by climate change or the energy transition, such as retail, hospitality, or informal sectors; urban women are also more likely to face affordability reliability and quality issues related to energy services.

Climate change-induced changes such as droughts or floods can impact agricultural productivity, potentially leading to food shortages and malnutrition, which disproportionately affect women and children. Climate-Induced changes can lead to increased burden for women such as traveling longer distances to obtain water for household use in turn causing higher chances of GBV (National Climate Change Strategy, 2021-2026).

Additionally, poor women’s ability to adapt and mitigate climate and energy-related impacts is limited by their limited access to resources such as land (33% women vs 47% men sole land ownership and 25% women vs 30% men joint land ownership)[3] 

Other crucial reasons that place women’s involvement in these discussions high on the agenda include the income disparities between women and men when it comes to dealing with the aftermath of disasters. According to UN Economic Commission for Africa, Women in Tanzania are one and a half times more likely to be unemployed at 12.3 per cent than men at 8.2 per cent with implications for household income disparities[4] (UNECA, n.d.)

Women’s disproportionate position in disastrous situations is fueled by the different gender roles played by women and men, for example in caregiving during and after disasters, collection of household water, and managing household sanitation; underrepresentation of women in decision-making processes related to climate change mitigation and adaptation. Women especially in rural areas experience lower access to information about adaptation technologies, cropping patterns, and weather events.

The net costs of climate change on women are staggeringly high yet the current climate change and energy transition debates and response measures have not adequately augmented, rallied and addressed the significant concerns facing women.

According to UN reports, particularly in developing countries, the consequences of climate change can increase the burden for rural women and girls, for example, causing them to travel further to obtain daily supplies such as firewood and biomass, leaving less time for paid work and potentially exposing them to greater risk to their personal safety[5] Climate change has exacerbated gender violence and injustice against women and drop out of young girls from school in search for water, food water and energy.

Moreover, the constant use of biomass as source of energy for cooking increases exposure to toxic fumes leading to high respiratory, cardiovascular diseases, cancers and death. According to medical reports, Cardiovascular and respiratory diseases were the top two leading cause of women’s deaths in Tanzania with the occurrence of cancerous cardiogenic diseases being more likely in urban women and respiratory diseases being more likely in rural areas due to indoor air pollution. These two accounted for 92.84 and 82.58% of all deaths per 100,000 in 2019, overtaking Maternal and Neonatal disorders. [6]

Pulmonary experts at Muhimbili National Hospital estimate that about 33,000 people, mostly women, die annually in Tanzania due to the use of charcoal, firewood and biomass for cooking[7]

Clearly there is a nexus between climate change, energy and deaths amongst women and that is why it is very important to engage women and consider the gender dimensions of climate change and energy injustice on women from planning interventions to implementation such that interventions address inequalities, are efficient, effective and sustainable.

Existing frameworks or mechanisms for women in climate change and energy in Tanzania

 Tanzania has developed various policies and strategies to address gender issues within climate and energy contexts. Key instruments include among others  the National Climate Change Response Strategy (NCCRS) 2021-2026 and the National Strategy for Mainstreaming Gender in Climate Change (NSMGCC) 2023 with the overall objective of ensuring that gender considerations are mainstreamed into national policies, programs and strategies related to climate change. The government is a signatory to a number of Multilateral Instruments on climate change.

In 2015 the government passed the Tanzania Sustainable Energy for All (SE4All) Action Agenda (2015). The goal of this agenda is to ensure access to modern energy, preferably clean energy; improvement of energy efficiency; and increase share of renewable energy in the global mix. The Government of Tanzania fully embraces the SE4ALL objectives. This includes recognising the fact that access to modern energy services is a necessary precondition for achieving development goals that extend far beyond the energy sector, such as poverty eradication, access to clean water, improved public health and education, women’s empowerment and increase food production. Further, the government passed the LPG promotion plan and the National Gas Utilisation Master Plan, aimed at increasing the use of gas as a clean fuel.

The National Guidelines for Mainstreaming Gender into Climate Change Adaptation-related Policies, Plans, Strategies, Programmes and Budgets (2014) Tanzania has mainstreamed gender into a number of national development frameworks and ratified international and regional gender instruments. Some of these frameworks include the National Development Vision 2025. Moreover, in 2022, the government convened the first national clean cooking conference and in 2024 launched The National Clean Energy Cooking Strategy 2024-2034.   The strategy aims at scale up the use of clean cooking gas as a source of energy.

According to Dr Dotto Biteko, the Deputy Prime Minister and Minister for Energy/ the Ministry of Energy, the government expects that by the year 2034, 80% of Tanzanians will be using clean energy to cook and therefore reducing on the amount of carbon emissions and exposure to toxic fumes by women[8].

Currently, the government is implementing a project funded by the Government of Sweden, to support market-based approaches for clean cooking in the United Republic of Tanzania. This intended to scale up use of  clean cooking gas amongst rural households.

To back this up, during the COP28 in the UAE, President Suluhu Samia Hassan launched the Africa Women Clean Cooking Support Program (AWCCSP. This program encompasses promotion of use of gas cooking stoves and gas cylinders in Africa and Tanzania in particular by fostering energy and policies changes to cater for the earth’s prosperity, will cut carbon emission significantly.  President Samia acknowledges that women and girls bear the brunt of lack of sustainable energy cooking solutions and clean cooking energy is about mitigation, women empowerment and welfare.

Despite these efforts, there are significant policy and governance gaps that exist. In our second part of this brief we will bring you the policy and governance gaps and how government can address them. Keep on the look out and visiting this site for the next part of this brief.

Unlocking Non-Tariff Barriers (NTBs) in Regional Agricultural Trade in East Africa: An Analysis of Sanitary and Phytosanitary (SPS) Regime for Horticultural Products in Tanzania and Its Effects on International Trade.

Generally, Non-Trade Measures (NTMs) are good for safe and ethical international trade; however, when poorly regulated and applied irregularly, they transform into Non-Tariff Barrier (NTBs) and can be harmful to trade. Our short analytical study shows that Tanzania is both a perpetrator and victim of irregular SPS measures and could be losing billions in international trade and revenue foregone from its horticultural sector

By Jacob Mokiwa, Researcher , Governance and Economic Policy Centre

(Featured  top image, Courtesy of UNDP-Tanzania, Kizimba Project, Itete Ifakara Youth) 

Sanitary and Phytosanitary measures (SPS) are standards and regulations put in place as Non-Tariff Measures (NTMs) to ensure the safety and quality of food, as well as to protect humans, animals, and plants from risks associated with diseases, pests, and contaminants based on science. SPS decisions are supposed to be science based. These measures are integrated into Tanzania’s regulatory framework, including through legislation, policies, and adherence to international agreements like the WTO SPS Agreement and the International Plant Protection Convention (IPPC) IPPC.

Also, the normative framework governing East African Community (EAC) SPS measures include but are not limited to Article 108 (c) of the EAC Treaty; Article 38 (1C) of the Customs Union Protocol, EAC SPS Protocol, SPS Information Sharing Platform, etc.).

This short policy brief analyzes Tanzania’s Sanitary and Phytosanitary (SPS) regime for horticultural products, assessing their impact on international trade and concludes with recommendations for enhancing SPS policy measures to ensure safety, compliance and a facilitative smooth international trade in Tanzania horticultural products. It emanates from our economic governance work on regional economic cooperation, trade and investment, with multiple aims of creating awareness about SPS as a major regulatory tool in regional and international trade that small traders and aspiring international horticulture exporters must know.

State of Horticultural Products

Faraha Salim sells vegetables in the market in Lushoto thanks to a small loan from a community savings and lending group-VICOBA.

Tanzania is a largely an agricultural producing and exporting country with its horticulture sector becoming a rapidly expanding sector with a huge potential to contribute to Tanzania’s economy through employment, trade and export foreign income earning. The country has large chunks of arable land, water bodies and favorable climate for horticulture in many regions across the country.

Tanzania’s horticultural sector encompasses various products, including fruits, vegetables, flowers, and spices.

In recent years, Tanzania has registered impressive export performance of different horticultural products, and this presents an advantageous opportunity to the smallholder farmers to increase their production. Despite this huge potential, the horticultural sector still suffers multiple challenges, including financing, regulation and export standardization. 

The local market infrastructure  conditions are still poor. The cold storage chain for horticultural products from the gardens to the market is limited. Horticulture products are transported in hot trucks, sold in open markets damaging quality  and export standards. The net effect is that Tanzania’s export share of the regional and global horticultural trade has been growing but remains low, compared to its neighbors such as Kenya. According to Ministry of Agriculture statistics, the horticulture sector has become the second largest growth driver of the entire agricultural sector, after food crops contributing about 25% of the sector but has remained stagnant in  growth at 11% annually.

According to the Tanzania Horticultural Association (TAHA) and the BoT Monthly Economic Review (MER), for the year ending in December 2023, the value of horticultural crops’ exports grew to $417.7 million (Sh1.044 trillion) as compared to $290.1 million (Sh725.25 billion) recorded in 2022. This shows that exports grew by $127.6 million (Sh319 billion), which is equivalent to 43.9 percent. The growth in exports comes after a decline from $384.9 million (962.25 billion) reported in 2021 to $290.1 million (Sh725.25 billion) in 2022. The decline accounted for a total of $94 million (Sh237 billion), which is equal to 24.4 percent[1].

This data if extrapolated for the last five years indicates that the Horticultural sector can be a major game changer in Tanzania’s international trade exports, serving as a major source employment to the bludgeoning unemployed youthful population of foreign revenue through increased investment in horticulture and export trade.  Moreover, the sector can leap frog Tanzania to a regional competitor, outpacing its neighbors and rivals in the horticultural sector.

However, the limited awareness, selective and uncoordinated application of SPS standards by both export and importing partners in intra-regional and international trade has gradually turned them from being Non-Tariff Measures (NTM) to become Non-Tariff Barriers (NTBs) to trade in Horticultural products amongst others.

According to Land O Lakes Trade of Agriculture Safely & Efficiency (TRASE) report, the East African Community (EAC) represents one of the fastest growing regional economic communities in the world. And yet, trade of agricultural products from and within this region has been hindered by Sanitary and Phytosanitary (SPS) issues 

SPS Measures Regime in Tanzania

Tanzania’s SPS regime consists of several legal frameworks articulated and differentiated under the three SPS functions of animal health, food safety and plant health. This involves the Plant Health Act, 2020 with the mandate of issuing phytosanitary certificates, among other functions, Standards Act No. 2 of 2009 with the mandate of regulating and developing mandatory standards and responsible for inspection and certification). 

The regulatory institutions include the Ministry of Agriculture and Livestock, Ministry of Trade and Industry, Tanzania Pesticides and Plant Health Authority (TPPHA) established under the Act No. 04 of 2020 with a mandate to comply with the requirements of International Plant Protection Convection (IPPC) on sanitary and phytosanitary measures[2].  The other regulatory institution is the Tanzania Bureau of Standards (TBS) established under Act No. 3 of 1975 as the National Standards Institute and subsequently renamed Tanzania Bureau of Standards under Act No. 1 of 1977. On 20th March 2009, the Standards Act No. 3 of 1975 was repealed and replaced by the Standards Act No. 2 of 2009.

The Bureau was established as part of the efforts by the government to strengthen the supporting institutional infrastructure for the industry and commerce sectors of the economy. Specifically, TBS is mandated to undertake measures for quality control of products of all descriptions and to promote standardization in industry and commerce[3]. So far, the regime has been quite robust, enabling Tanzania to enforce its SPS measures, however faces multiple challenges that would benefit from improvement.

Challenges

The agricultural sector already faces multiple challenges but the SPS regime in Tanzania adds another layer of complexity, potentially hindering Tanzania’s ability to invest in the horticultural sector, produce, export and compete effectively in the global market. For instance, some stringent SPS requirements cannot be met by small farmers in Tanzania due to the limited resources required for modern agriculture and consequently hinder the export of horticultural products, as meeting the standards can be costly.

Additionally, inconsistent enforcement of SPS regulations across different institutions and regions within Tanzania creates confusion and delays in trade processes and hence affects the competitiveness of Tanzanian products in international markets.

Furthermore, procedural framework for SPS regulation has shortcomings in the institutional framework and that, as a result, application of the existing legislations is impaired. There is limited capacity for speedy and quality testing and certification facilities. This lead to bottlenecks in the export process, delaying shipments and increasing costs for exporters.

Other challenges are; limited funding to attract and retain high quality talent, lack of transparency in certification, duplication of regulatory functions, poor coordination among the various SPS control agencies, lack of mutual confidence between enforcement agencies in different countries and non-existence of arrangements and mutual recognition agreements signed to facilitate trade.

Impact on regional and International Trade

 The effectiveness of Tanzania’s SPS regime significantly influences its international trade in horticultural products and therefore, there is a need to balance regulatory practices for health protection with trade facilitation. However, if not addressed, the regime may, and for purposes of enforcement of SPS controls, create trade constraints such as;

  • Market Access Restrictions: Non-compliance with SPS measures restricts access to lucrative international markets that is with stringent regulations, the production costs for horticultural producers may increase and making Tanzanian products less competitive compared to those from other countries. Kenya, Tanzania’s immediate horticultural competitor has been successful in meeting the standards at lower costs and thereby dominating the regional and international market of horticultural products.
  • Loss of Revenue: Inability to meet SPS standard leads to rejected shipments, financial losses, and diminished competitiveness in global markets, affecting the revenue generated from horticultural exports and thus undermines economic growth potential in the horticultural sector.
  • Diminished Reputation: Persistent challenges in meeting SPS standards tarnish Tanzania’s reputation as a reliable supplier of safe and high-quality horticultural products, thereby reducing consumer confidence and market demand.
  • Market Diversification: Strict regulatory requirements may incentivize Tanzanian exporters to explore new markets where compliance costs are lower or where there is greater alignment between domestic and international standards.
  • Quality Perception: Adherence to rigorous quality and safety standards can enhance the perception of Tanzanian horticultural products in international markets, positioning them as premium offerings valued for their quality and reliability. This could open up opportunities for niche markets and premium pricing strategies.

Policy Recommendations

Addressing challenges in Tanzania’s SPS regime for horticultural products is crucial for unlocking the sector’s full export potential, facilitating more investment and fostering sustainable economic growth. By implementing the recommendations outlined in this brief below, Tanzania can overcome SPS-related barriers to international trade and position itself in the global horticultural market as a reliable supplier of high-quality horticultural products and maximize the benefits of international trade for the citizens and economy. The following recommendations are proposed:

  1. Improve coordination among regulatory agencies and investing in digital platforms for documentation and compliance verification to simplify and accelerate SPS certification procedures for horticultural products and this will cut costs, reduce trade barriers and enhance market access.
  2. Strengthen enforcement mechanisms by putting in place an enabling legal framework to create effective and expeditious administrative mechanisms and provide clear administrative redress mechanisms for handling trade complaints and disputes. Also, the framework should provide for coordination of the various SPS control agencies to avoid overlaps and duplication. The current regime lays a solid foundation for further improvement.
  1. Improve infrastructure by allocating resources for upgrading SPS-related infrastructure including laboratories, inspection facilities and cold chain logistics that will enable producers and exporters to meet international standards and capitalize on emerging market opportunities. Tanzania has a deficit of cold storage capacity and its location along the equator exposes horticultural products to heat waves and vulnerability rapid quality deterioration and waste.
  1. Recruit and retain high quality staff with the of international testing and certification requirements. This must also be followed by addressing administrative limitations and sealing off opportunities for corruption.
  1. Prioritize capacity building, awareness and improve dissemination of information on SPS particularly for producers, small-scale traders, exporters and raising initiatives for regulatory agencies, on legislation and regulations, processes, procedures, standards, best practices, and technological advancements to enhance competitiveness in global markets.
  1. Foster partnership between public and private sector stakeholders to develop and implement SPS-related programs, training, research & development, technology adoption and technical assistance so as to address common challenges and promote innovation in the horticultural value chain. This must be backed by scaled up SPS technical assistance, going beyond the implementing institutions but also extended to horticultural farmers.
  1. Advocate for harmonization of SPS standards with international norms and regional trade agreements to streamline trade procedures and facilitate market access for Tanzanian horticultural products. Horticulture farmers and exporters still complain of disharmony in application and enforcement between Tanzania and its trading partners such as the Tanzania-South Africa Avocado case in 2021[4].
  1. Establish and empower the National SPS Committee to address and resolve technical SPS issues faced by traders and increase transparency on SPS requirements. Moreover, the committee should also be the main source of information on new SPS regulations, including measures introduced by trading partners.
  1. Constantly review to ascertain the extent to which Tanzania’s SPS regime is aligned to the EAC SPS protocol and its application is consistent and facilitative of international trade. There are cases of selective application and enforcement even among EAC member states.

References

Ministry of Agriculture. (2022). “National Horticulture Development Strategy.” Retrieved from Online:    https://www.kilimo.go.tz/uploads/books/Mkakati_wa_Kuendeleza_Horticulture.pdf

Tanzania Bureau of Standards (TBS). (2022). “Sanitary and Phytosanitary Measures for Horticultural Products: Regulations and Compliance Guidelines.” Retrieved from Online: https://www.tbs.go.tz/uploads/files/LIST%20OF%20COMPULSORY%20TANZANIA%20STANDARD%20AS%20OF%20JULY%20%202022.pdf

Trade of Agriculture Safely and Efficiently in East Africa (TRASE) (2021). “Assessment of SPS Legal/Regulatory Frameworks in the EAC Partner States”. Retrieved from Online: https://storcpdkenticomedia.blob.core.windows.net/media/idd/media/lolorg/publications/assessment-of-sps-legal-systems-in-eac-partner-states-4th-june-2021.pdf

Trade of Agriculture Safely and Efficiently in East Africa (TRASE) (2021). “Assessment of SPS Systems in the EAC Partner States”. Retrieved from Online:  https://storcpdkenticomedia.blob.core.windows.net/media/idd/media/lolorg/publications/assessment-of-sps-systems-in-eac-partner-states-18th-march-2021-print-file-4th-june-2021.pdf

TradeMark East Africa: (2021). Standards, Quality Infrastructure, and SPS Programme: Project Brief: Retrieved from Online: https://www.trademarkafrica.com/project/standards-quality-infrastructure-and-sps-programme/

Food and Agriculture Organization of the United Nations (FAO). (2021). “Good Practices for Strengthening National Plant Protection Organizations.” Retrieved from Online: https://www.fao.org/3/i6677e/i6677e.pdf

 [1] https://www.thecitizen.co.tz/tanzania/magazines/what-44-percent-rise-in-horticulture-exports-means-to-tanzania-4510004

[2] https://www.tphpa.go.tz/

[3] https://www.tbs.go.tz/pages/historical-background

[4] https://www.theeastafrican.co.ke/tea/business/tanzanian-avocado-exports-poised-to-grace-sa-tables-3506248

Debt Budgets: A post budget political economy analysis of EAC Countries 2024/25 budget priorities, viabilities, risks and how governments can restore public confidence

Economists have always asserted that you know a country’s priorities from its budget while political scientists further suggest that a state and government’s health is reflected by the budget it makes and implements. In short, show us a good budget and we will show you a prosperous nation!

By Moses Kulaba, Gloria Shechambo, Robert Ssuuna, Dorine Irakoze, and Boboya James Edimond

Governance and Economic Policy Centre

@GEPC_TZ

The budget is an essential social contract that establishes the relationship between the government and its citizens, and the only one renewed annually, yet budget making in East Africa is becoming an exercise in futility.

This brief uses a political economy and trend analysis of the budget allocation priorities and estimates for 2023/4 and 2024/2025 as a basis to evaluate the extent to which East Africa Community (EAC) Countries budget policies and priorities are viable, fit into the local and global context but at the same time promote equity and reduce the economic burden on ordinary citizens.  We exposes the embedded risks, misalignments and further highlights the magnitude of the debt burden plaguing all EAC countries and its likely impact on budget viability and future macro-economic targets. We rekindle the need for an evaluation of budgeting processes in EAC, a revival of citizens participation in budgeting and repositioning the budget at the Centre for public policy. Our final conclusion is that there are malignant risks. Governments must budget better, tax wisely, address debt and strengthen public participation to revamp citizens confidence and trust in the national budget processes.

The 2024/25 Budget Context

The 2024/25 year’s budgeting was met with insurmountable obstacles and political economy pressures never anticipated before. East Africa is undergoing extreme budgetary pressures amidst a hectic political cycle. Governments are experiencing constantly, dwindling foreign aid, high indebtedness, a restless population, apathy to more taxation, ahead of a sensitive election period in many EAC Countries. The years 2024 to 2027 will be election years in Rwanda, South Sudan, Tanzania, Uganda and Kenya. 

Normally election budgets tend to be quite generous as the incumbent regimes seeking re-election avoid taking drastic measures that alarm citizens and discourage their courted voters.   The 2024/25 financial year’s budgets however came at a time of increasing economic hardships, outcries over taxation, violent tax protests, a persistent global economic slowdown and jobless growth. This complicates the budget choices that governments can take and whether the desired budget goals can be achieved.

According to the Africa Development Bank, East Africa and Africa’s is expected to record an economic growth of 3.4% in 2024[1] but we project that this growth could be staggered by a myriad of externalities such as the ongoing tax protests, conflict, climate change hazards and a general slowdown in global economic growth.

Moreover, there is increasing uncertainty about the impact of the continuing Russia-Ukraine war and an escalating and endless Israel-Palestine war on the global economy by exerting political pressures and extracting resources away from development. Besides disruptions in international trade and commerce, the wars have devastating economic impacts on EAC country’s traditional donors such as the United States, the United Kingdom and the European Union.

These traditional donors are constrained with multiple domestic political, social and economic challenges to finance at home.  There is uncertainty about foreign policy shifts. For example, the outcomes of the United States (US) Presidential election may determine a major shift in US foreign policy and therefore the future US-Africa foreign policy cannot be guaranteed.

The European Union (EU) has witnessed a resurgence in nationalistic tendencies and drastic swing to the right with increasing demands for inward looking policies to secure Europe’s future. The EU faces huge political and social challenges such as immigration to tackle. All these constrain EU budgets for external aid assistance and their continued support for Africa is jeopardized.

Faced by such unpleasant realities, EAC governments are obliged to make national budgets that can realistically be achieved, balancing economic and political targets at the same time, while reducing the economic burdens on ordinary citizens. However, a quick review of the 2024/25 national budgets passed by EAC countries indicates that this year’s budgets were a major gamble and fumble. 

Some countries such as Kenya has already failed to pass the test.  Others muddled through however their expectations look ambitious, plans misaligned, over burdened with debt. Precisely, the political and economic budgeting terrain is quite murky and tenacious and end of year collection out turns for 2024/25 financial may never be achieved.  

Yet in recent years, the budget exercise has become of less interest to ordinary citizens, viewed as quite top-down executive driven exercise, led by technocrats with less consideration of citizens views[2]. Questions are asked how can governments in the future balance between political and economic expediency, debt financing and development most significantly restore public confidence in the budget process as means of raising legitimate public money and delivering public goods. In this analysis, we explore and share commentary perspectives to answer this question and what citizens and governments can do.

Aligning EAC Budgeting to Regional and Global Context

The regional and global economic trajectory and potential outlook shows a zig zag pattern or mixed bag of hits and misses.  Globally there are signs of a general economic slowdown and inequitable growth. 

According to the OECD’s latest Economic Outlook, the global economy is continuing to growing at a modest pace, The Economic Outlook projects steady global GDP growth of 3.1% in 2024, the same as the 3.1% in 2023, followed by a slight pick-up to 3.2% in 2025[3]. The International Monetary Fund (IMF) baseline forecasts the world economy to continue growing at 3.2 percent during 2024 and 2025, at the same pace as in 2023. The IMF notes that a slight acceleration for advanced economies—where growth is expected to rise from 1.6 percent in 2023 to 1.7 percent in 2024 and 1.8 percent in 2025—will be offset by a modest slowdown in emerging market and developing economies from 4.3 percent in 2023 to 4.2 percent in both 2024 and 2025. The forecast for global growth five years from now—at 3.1 percent—is at its lowest in decades[4]. Even some spikes of growth in some insular countries such as Rwanda, Senegal and regions like Asia will not catapult the global economies to the desired targets of about 7% consistent economic growth over the next three years.

Moreover, multiple reports indicate that over 60% of Africa’s GDP is spent on debt serving and this significantly affects resources available to spend on development and real economic growth. According to the Economic Commission for Africa, the average debt-to-GDP ratio for the entire continent was projected to rise to 63.5% in 2023. The Commission warns that escalating debt levels in Africa are prompting concerns that repayment may not only constrain economic performance but could become virtually impossible for many African countries.

The AfrexExim Bank reports that Africa’s debt burden has grown significantly in the past 15 years surging by 39.3 percentage points between 2008 and 2023, resting at 68.6% of GDP in 2023[5].  At the current interest rates, less developed countries will never wean themselves off external debt and many countries defaulting in the near future is real.

The EAC governments therefore need to be extremely cautious and trend with maximum care on the economic their targets and priorities they make. The following guard rails are essential must be considered in advance planning of the budgets in the current obtaining and foreseeable context.

  • Avoid over taxation and stifling of nascent businesses by taking a precautionary facilitative approach verses ambitious revenue collection targets. Spare disposable incomes in the pockets of citizens and small business could stimulate both consumption, production and growth
  • Addressing economic stagnation, inflationary pressures and jobless growth
  • Addressing climate change and transition to clean energy by encouraging investment and financing of green businesses
  • Harnessing natural resources such as critical minerals to maximize benefits and revenues during the current and future envisaged boom
  • Weaning off the exorbitant external debt pressures and addressing persistent distortions in the global financial lending architecture
  • Designing and setting of long-term goals and tax policies which can drive politics, investment and trade into the future
  • Funding agriculture to support food security, create jobs and agriculture-based industrialization and value addition

An analysis of the budget statements indicates that these critical elements were largely missed by many governments’ economic planners. The net effect of the year’s (2024/25) budget processes is that the midterm and long-term targets in most EAC countries may never be fully gained and economic hardships could remain a persistent future moving forward.

Summary Analysis of EAC Countries Budget Priorities: A detailed Country Analysis of each is available via: xxx

Country Budget Allocation Summary Commentary
Tanzania Allocated Tsh49.35 Tln . Prioritized debt servicing (27%) and infrastructure (11%) with moderate funding of social-economic development sectors. Sectors such as Preoccupied on financing legacy infrastructure projects and continuity, missed revenue targets by 2% over the last two years raising concerns over budget sustainability. Limited citizen participation and budget reliability and credibility of have been flagged by studies and development partners under the FISCUS PEFA report 2022.
Uganda Allocated a budget of Ush72.139 Tln up from up from an initial Ush 58.34Tln (increase of Shs14.050 trillion) proposed in May 2024 and Shs 52.74 Tln in the financial year 2023/24, representing a 36% increase over the last year’s resource envelope. Debt servicing accounts for 57.8% of the total budget allocation with Human Development following at a paltry 14% A quite ambitious budget, overtaking Tanzania’s total budget allocation for the first time in history. Given the economic growth, missed revenue targets and tax protests, it is not clear how those resources will be raised. Moreover, wide spread corruption and over expenditure on political organs and projects has raised concerns, reducing credibility and interest among citizens.
Rwanda For the fiscal year 2024/25 Rwanda passed a budget of Frw 5,690.1 billion (USD4.3bln). Has prioritized Economic transformation pillar (59.6%), social transformation (26.6%) and Transformational Governance (13.8%) Despite stellar economic performance, Rwanda faces constant external threats such as the war in the neighboring DRC and a tainted image from UN accusations of Rwanda as a regional destabilizer.  Over reliance on agriculture is a risk too.
Burundi Allocated 4.4 trillion Burundi francs ($1.5 billion) in the 2024/25 representing an increase of 15% from previous years. Prioritised funding public service and agriculture. Public debt rose from 68.4% of GDP in 2022 to 72.7% in 2023.Has an international credibility issue to regain. Opportunities in Burundi’s critical minerals sector could offer a major breakthrough.
Democratic Republic of Congo (DRC) 2024 budget data is scanty, reports indicate DRC prioritized funding defense against the war in the Eastern Part of DRC and public service. Social development sectors and infrastructure are still underfunded DRC Faces serious instability in the East, and public management challenges, a debt problem. Potential from its mineral wealth but a risk of expensive resource backed loans is real
South Sudan Failed to pass the 2024/2025 national budget. In the FY 2023/2024, allocated a budget of South Sudanese Pounds2.105 trillion (USD1.32bln). Prioritized infrastructure (22%). Other social development sectors took less than 10% each. South Sudan has a huge external debt estimated at over USD $ 2,051,335,901 The government’s petroleum revenues have suffered from the ongoing conflict in Sudan, stifling its economy and ability to raise revenue. Many public servants and essential social delivery are yet to be paid. The ongoing conflict amidst reports of corruption and a huge national debt will affect the country’s future economic possibilities.
Kenya Failed to pass a budget of Ksh3.99Tln    and reverted to using the Finance Bill 2023 to raise revenue. The country has witnessed wide spread violent tax protests, forcing the government to backdown on major tax measures.  The government is under siege and not able to tax. With a bludgeoning external debt, a government under siege and restless population opposed to more taxation, Kenya’s economy is at its weakest.  Kenya was downgraded to Junk status making it more expensive to borrow and raise external capital.  A risk of an economic meltdown is real.

Risks to EAC Countries National Budget Priorities, Viability and Success

In the final Analysis we identify the following risks to the 2024/25 budgets and budgeting generally in  East Africa

Debt Risk: Huge public debt risk is real and if unchecked will literary transform EAC governments into debt collectors on behalf of their lenders. At the current rates, over 50-60% of tax collected by EAC governments in the next 2-3 years will be spent on debt servicing, effectively locking the region into a permanent cycle of debt payment and slow progress. As observed by Uganda’s legislator, Hon Semuju Nganda, “Next financial year (2024/25) Uganda will spend Shs 34 trillion (close to half) on debt servicing  and yet the country thinks it is processing a budget.” The debt risk is significant.

Political and Democracy risks.  Politics and governance in EAC are driven with political alliances and favoritism.  As governments head towards elections there is an increased risk of proposing ambitious budgets that are unviable and could be misaligned with citizens demands. Moreover, large proportions of the budget are being spent on politicians (large cabinets, large parliaments, political advisors, Governors, MCAs etc) and political enterprises such as subsiding political parties. Political parties with representation in parliament have become state enterprises funded by public resources. This is a risk

Credibility risks– The national budgets are losing credibility as statements of macroeconomic policy and social contracts between the governments and citizens. Citizens are increasingly getting detached from the budget with stronger perceptions that their views do not matter- The tendency is never to understand government incentives and plans. If unaddressed will drive constant apathy and resistance against taxation and revenue collection strangling public expenditure.

Economic growth and equity risks: Caused by among others persistent jobless growth, misaligned priorities, unfulfilled earlier economic promises, global economic slowdown and shifting economic policies that may have significant impacts on the EAC countries and region’s growth. The risk is that Budgets may not create tangible economic impacts on ordinary people.

Conflict and Distress risks- This risk is aggravated by the ongoing internal protests against taxation and civil wars such as in the ones in Somalia, Sudan, South Sudan and the DRC. The risk is that available resources will continue being channeled towards war. Further, the international conflicts such as the Ukraine-Russia war will disrupt global supply chains of essential such as grain and redefine geo-economics’ alignments affecting volumes and direction flow of supportive development linkages to the EAC Countries.

Climate Risks: Unpredictability of whether patterns affecting heavily agricultural reliant countries and economies such as Burundi, Uganda and Rwanda. Affecting food supplies and foreign revenues from agricultural sources.

Corruption and Public Management risk– Rising opulence and failure to tame corruption, place and enforce guard rails to mismanagement of public expenditure, exacerbating resistances or rebellion against taxation and budgets generally.

Forward looking, Restoring National Budget Credibility and Public Confidence

  1. Develop and pass realistic national budgets with less ambitious and white elephant projects to be funded in the next few years
  2. Leverage on existing natural resources such as critical minerals and the abundant blue economy as new levers to driver the economy further
  3. Mitigate expectations of large streams revenues from fossil-based projects such as Oil and Gas, factoring in the climate change global pressure to decarbonize and how this could impact on fossil-based revenues in the future
  4. Repurpose investment in young people (the Gen-Z) with jobs created in non-traditional fields and professions such as technology, e-commerce, content creation and redistribution of economic opportunities and wealth beyond the political class
  5. Re-channel heavy investment into agriculture, as a ‘go back to basics’of agriculture as the backbone of our economies, given its potential and ability to cushion other sectors of the economy, including providing food security and incomes to millions of citizens. Remember a hungry person will always be an angry person. Addressing agriculture and food constraints can radically address the spiraling costs of living and desperation that we are currently experiencing in the region.
  6. Tax rationally, modestly, and spend less on nugatory public finance expenditures, tame corruption and malfeasance of public resources. Clearly punish the corrupt and reward the best performers.
  7. Ramp up a global campaign against debt and reform the shylock global lending system which is designed to largely constrain and drain more resources from less developed countries. 
  8. Avoid mistakes in Tax policy and administration that we experienced this year. Be consultative, listen to the views and concerns of stakeholders with mutual respect and consideration. No one wants more demonstrations and violent tax protests next year.

 

NB: The full policy brief and individual country analysis reports for Tanzania, Uganda, Kenya, DRC, Rwanda, Burundi and South Sudan  will be published soon

 

[1] https://www.afdb.org/en/news-and-events/press-releases/41-african-countries-set-stronger-growth-2024-keeping-continent-second-fastest-growing-region-world-african-development-banks-economic-outlook-71384

[2] https://theconversation.com/kenya-protests-show-citizens-dont-trust-government-with-their-tax-money-can-ruto-make-a-meaningful-new-deal-234008

[3] https://www.oecd.org/newsroom/economic-outlook-steady-global-growth-expected-for-2024-and-2025.htm#:~:text=The%20global%20economy%20is%20continuing,up%20to%203.2%25%20in%202025.

[4] https://www.imf.org/en/Publications/WEO/Issues/2024/04/16/world-economic-outlook-april-2024

[5] https://media.afreximbank.com/afrexim/State-of-Play-of-Debt-Burden-in-Africa-2024-Debt-Dynamics-and-Mounting-Vulnerability.pdf

Political Risk and Investment in EA: An Expose of violent tax protests and political risk on Trade and Investment in East Africa

In our previous brief on Tax and Fiscal governance in East Africa, we observed that with dwindling foreign aid, it appears the governments in East Africa have resorted to squeezing everywhere to raise some dime.  We cautioned that Taxation may be good however, when the extremes are beyond reasonableness, governments are bound to break their break the back of the economies they aspire to build[1]. The recent and ongoing tax protests that have rocked the East African regions, with violence and vandalism spiraling out of control in Kenya, clearly underscore this point. A failed tax administration and an irate society.

By Moses Kulaba, Governance and Economic Policy Centre

@taxjustice @politicalrisk

Freedom of expression, the right to picket and demonstrate and resist punitive taxation has been established over the years.  The doctrine of no taxation without proper representation was long established by the Romans, Greeks and Americans during the famous Boston Tea Party 1773) and American war of independence, The French Revolution and the English, paving way into the famous Magna Carta.

This was further advanced by Adam Smith in his legendary Canons of Taxation asserting that generally, a good tax system must be underlined by proportionality and ability to pay[2] and political scientist Harold D Laswell’s tax law of who pays, what and when, and each individual or group should “pay their fair share. These principles that tax liability should be based on the taxpayer’s ability to pay is accepted in most countries as one of the bases of a socially just tax system and generally citizens are duty bound to reject a system that is regarded as unfair and disproportionally beyond their means[3].

However, when peaceful protests and demonstrations strategically drift towards violence, vandalism and murder like the ones we saw in Kenya, then these effectively transform into high level political risks to trade and investment.

According to multiple sources a political risk is a type of risk faced by investors, corporations, and governments that political decisions, events, or conditions will significantly affect the profitability of a business actor or the expected value of a given economic action. In simple terms, a political risk is the possibility that your business could suffer because of instability or political changes in a country: conflicts and unrest, changes in regime or government, changes in international policies or relations between countries, as well as changes that occur in a country’s policies, business laws or investment regulations[4]. Examples of political risks include; unilateral state decisions, war, terrorism, and civil unrest

By their nature, these risks are expensive to be insured against and constitute a major determinant factor for business in deciding where to invest or do business. Highly political risk countries experience sharp declines in investment and may attract low new trade and investments flows.

According to Trade and Investment experts such as Pierre Lamourelle, Deputy Global Head of Specialty Credit within Allianz Trade for Multinationals, the interconnected nature of the global economy makes it very possible that a political risk in one country may affect many businesses across the globe.

“What has changed in the 25 years since I started in this business is that we are living in a more connected world today,” says Pierre. On the upside, that means business is easier to conduct on a global scale. Almost everybody now has the ability to reach out to emerging countries or to conclude a contract and secure a sale in a foreign country.

On the downside, this means that when something goes wrong in one part of the world, you can feel the impact halfway around the globe – directly, if you are dealing with the country in question, or indirectly because of your diverse supply chain. Remember when the 20,000-ton container ship “Ever Given” got stuck in the Suez Canal in March 2021, shutting down international trade for a week?

In today’s increasingly interconnected world, “just-in-time” supply chains, global internet connection, and smartphones give SMEs the ability to conduct business in a global arena. This means the possibility for great opportunities, but also that every business is just steps away from political risk.

Persistent violent tax protests can make it difficult and unpredictable for the government to raise enough tax revenue to finance its obligations, including servicing of sovereign commitments such as paying off its debts and makes the economic environment very unpredictable. This can lead  global economic and financial institutions to flag or down grade the Country’s economic status as risky , making difficult and more expensive for the country and companies to raise external capital for investment.

Moreover, the violent protests occurred or are happening at a critical period of the year when East African Countries such as Kenya record the highest number of tourist arrivals into the Country for the summer holiday. Before the protests, national parks, hotels and beaches in Kenya’s tourist hot spots had already recorded high tourist bookings and were expecting a bumper harvest this season as the global economies and travelers rebound from the COVID 19 lock down.  Reports from multiple travel agents and hoteliers already indicate that most tourists have either cancelled or postponed their decisions to travel to Kenya and East Africa generally. Indeed, some already in the Country were gripped with fear of uncertainty and have left.

The burning image of an old plane at Uhuru Park did not send a good image either as most people around the world, unfamiliar with Kenya, thought Jomo Kenyatta International Airport was attacked and planes on the tarmac set on fire.  A recorded video clip that trended on social media of passengers crammed up at JKIA with a voice note indicating that many were fleeing the country added salt to the pinch suggesting Kenya was not safe anymore!

Similarly, travel advisories have been issued to foreigners in country and intending to travel to Kenya, to do that if it is essential and be vigilant of their security as safety during this violent period cannot be guaranteed. With all these at play, Kenya may remain a blacklisted destination among some foreign tourists for some period to come, denying the country the much-needed foreign revenue and jobs in its service sector. At least a number of high conferences that were planned for Nairobi were cancelled.

The net effects of the demonstrations therefore go beyond having the bill rejected but have long-term economic effects on Kenya’s economy. The violent Gen-Z’s may have to reconsider their approach to avoid a full economic meltdown.

Of course, there are legitimate concerns that some current established large business and investments were already not providing benefits to the young people. Multiple reports have shown that some businesses were tax dodgers while others belong to the politically connected who used their political connections to shove deals and amassing wealth on the backbone of the majority Kenyans. Moreover, given the current loopholes in the governance systems, new trade and investment opportunities would not support or create many new economic opportunities either.

However, when these arguments are advanced, it is also imperative to look at the broader picture of the net effect that violent protests can have on Kenya’s economy and future that the Gen-Z seeks to address. Kenya’s economy is extensively connected and dependent on the global economy with most global business having chosen Nairobi as a regional financial hub.  Violent demonstrations and disruption of such a magnitude can have significant long-term impacts.

With a government under siege and  constrained with a debt tinkering on the margins of default and  unrelenting rancorous youth roaming and burning the streets of Nairobi armed with negative social media, Kenya’s economy could slide into a free fall and recession, whose impacts on everyone could be far reaching.

Taxation and a strong tax system may contribute to improved governance through 3 maximum channels. Taxation establishes a fiscal social contract between citizens and the taxing state. Tax payers have a legitimate cause to expect something in return for paying taxes and are more likely to hold their governments to account. Governments have a stronger incentive to promote economic growth when they are dependent on fair taxes.

In this regard, we suggest the following;

  1. Resistance demonstrations and protests for tax rights must be expressed with limitations and restraint from both sides- The state and citizens alike
  1. Government must be rational when imposing taxes. Tax policies must be clear and predictable.  Clearly, imposing taxes on bread and blanket exemption of choppers is a sign missed priorities.
  1. Government communication apparatus must be robust enough to explain to the citizens the justifications for taxation and the political class must lead by example demonstrating frugality in public expenditure.
  1. There must be distinction between private, public and national critical infrastructure, whose destruction may or can affect Kenya’s national security interest and state existence. Lest we forget, Kenya has been a victim of terrorism and still faces extensive threats from both internal and external elements, whose interests to harm Kenya has never wavered. Attacks on its critical infrastructure exposes the Country and Kenyans further to major threats.
  1. Re-engineering of Kenya’s governance and economy to address the contemporary needs for the Gen-Z. Times have changed and the Gen-Z who now constitute an overwhelming majority will effectively from 2027 be forever a major determinant of East Africa’s political future. Women will no longer be a game changer in electoral politics and outcomes but the Gen-Z will be.
  1. There is need for both political and social sobriety. East Africa needs good leadership and peace!

[1] Tax and Fiscal Governance: Is VAT milking the broken tax cow dry? An analysis of tax trends and impacts on EAC small traders, with a case of the recent traders’ demonstrations and boycotts in Uganda:

[2] Adam Smith, in his book, The Wealth of Nations, 1776

[3] Schronharl, K,  etal; Histories of Tax Evasion , Avoidance and Resistance; https://library.oapen.org/bitstream/id/346cfc5f-6001-40e3-8a3b-fe46405df8c2/9781000823882.pdf

[4] https://www.allianz-trade.com/en_US/insights/what-is-political-risk.html#:~:text=Political%20risk%20is%20the%20possibility,country’s%20policies%2C%20business%20laws%20or

Digital Currencies and Future Monetary Policy in EA: How Governments can address the downside of cryptocurrency to advance financial inclusion in East Africa

In discussing the merits and de-merits of cryptocurrency reminds us of the simple high school definition of money. Money is what money does. In other words, anything that is widely acceptable as medium of exchange can become money. Most cryptoprenuers in East Africa just want regulation.

By Moses Kulaba, Governance and Economic Policy Centre

@mkulaba2000 @cryptocurrency @monetary blog @teamMonetary

In our first policy brief we explored and untangled the socio-economic and macro-economic risks associated with Crypto currencies. We concluded that the skepticisms and scrutiny of crypto currency is well deserved but noted that the underlying technology behind it could be used to drive future monetary policy and financial inclusion. In this second part of our digital economic governance and monetary policy analytical series, we explore how governments can or may navigate around these latent risks to formalize and make cryptocurrencies safe and vehicle towards inclusive digital and financial economies. We suggest that regulation is required instead of total bans which are difficult to enforce and could be denying governments potential dividends.

Evolution of Money, currency and monetary policy in East Africa

In discussing the merits and de-merits of cryptocurrency reminds us of the simple high school definition of money. Money is what money does. In other words, anything that is widely acceptable as medium of exchange can become money. In monetary history, the definition and nature of money has always evolved based on the trust and what it can do.  The emergency of crypto currencies in the 21st century perhaps unleashes yet another moment in history when money and monetary policy will be redefined for the future.

Just some few decades ago, the cowrie shell was the recognized legal tender and medium of exchange and trade along the East African coast. Europeans, Arabs and Portuguese used cowries as currency to control the valuable African trade routes and markets, along the coastline and its interior

Between 13th to the 20th century, Europeans, Arab traders and their African collaborators used Cowrie shells to buy services and precious goods such as salt, ivory, iron and gold and human beings as slaves. There are no records to show that minting machines existed and it is likely that these cowrie shells were perhaps picked along the coastline of the Indian oceans as these merchants landed to transact their business.  Clearly, the cowrie shells were not regulated by any central bank or backed up with any valuable item such as gold, as we know today yet they continued to be a means of exchange and facilitated commerce in East Africa for more than 1000 years!

Potential dividends from blockchain and crypto currencies

There are many downsides to cryptocurrencies and the experience has so far not been good always but behind any technological innovation there could be some opportunity.

According to technology experts some of the rapidly evolving technology behind crypto, however, may ultimately hold greater promise. A new kind of multilateral platform driven by blockchain and crypto could improve cross-border payments, leveraging technological innovations for public policy objectives.  

According to Forbes, the advantages of cryptocurrencies include cheaper and faster money transfers and decentralized systems that do not collapse at a single point of failure. Investors just need a computer or a smartphone with an internet connection to use cryptocurrency. There’s no identification verification, credit check, or background to open a cryptocurrency wallet. It is way faster and easier compared to old financial institutions. It also allows individuals to effortlessly make internet transactions or send funds to someone.[1]

With these advances, new payment technologies including tokenization, encryption, and programmability could define the future of monetary policy and public financial transactions.

Moreover, the private sector keeps innovating and customizing financial services. The public sector too just needs to match this pace by leveraging this available technology to upgrade its payment infrastructure and ensure interoperability, safety, and efficiency in digital finance.  

Just a few years ago, the mobile money transfer and payment system-MPESA was none existent.  When it was introduced by Safaricom, there was skepticism on the use of MPESA as money transfer and payment platform in Kenya and in East Africa yet over the last 20 years the MPESA mobile payment system has become the biggest financial technological innovation of the 21st century.

Today, MPESA is the largest mobile money platform, transacting billions of shillings per day and reaching millions of people across the continent.  The system has been expanded to other service sectors such as health, education and food.  They key takeaway from this technological breakthrough is that financial evolution is a continuous process and the concept of money will evolve for many years to come.

Is the imperative for crypto and a new monetary policy inevitable?

According to Amb Prof Ndemo Bitange[2], a renowned economist and Kenya’s Ambassador to Belgium & EU, contrary to the beliefs of sceptics, the penetration of crypto, development and adoption of Central Bank Digital Currencies (CBDCs) is an inevitable shift already underway.

This transformation is driven by changing business models and the increasing preference for alternative modes of payment over traditional cash. Reports from the Bank for International Settlements (BIS) affirm this trend and shed light on the ongoing efforts to shape the future of monetary policy and finance.

A CBDC is a digital or virtual form of a country fiat currency (such as USD, EUR and TZS) issued and regulated by a central bank. Their value is based on the government’s ability to maintain its value by controlling supply and demand, are used as a medium of exchange in transactions, and are considered legal tender within their respective countries.

Therefore, when issued, CBDC becomes a legal tender, analogous to physical notes and coins. Based on the literature, CBDC is thought to offer a range of benefits to the economy.

Central banks from various countries, including Canada, the European Union, Japan, Switzerland, England, Sweden, the Board of Governors of the Federal Reserve, and the Bank for International Settlements, play a crucial role in developing the foundational principles and core feature of CBDCs.

These institutions have conducted extensive research and produced valuable reports on key aspects of CBDC implementation. They acknowledge that the evolution of money is inevitable given the increasing digitalization of economies, rapidly changing user needs and the transformative impact of innovation on financial services.

Furthermore, the use of cash for transactions is declining in many jurisdictions, while non-bank private sector entities are introducing new forms of digital money, such as stablecoins. These developments highlight the need for central banks to adapt and explore how they can fulfil their public policy objectives in a rapidly changing financial landscape.

Prof Ndemo cautions however cautions that while preparations for CBDCs are underway in the global north, discussions and plans for adopting digital currencies in the south are still frozen. This disparity could lead to capacity issues and challenges for countries in the south as they try to catch up with the rest of the world during CBDC adoption.

Trends towards crypto regulation and future monetary policy in EAC

Regulation and regularization of cryptocurrencies in East Africa has been a basket of mixed goods, ranging from caution, total bans to a move towards regulation and potential new monetary policy covering digital currencies.

Tanzania currently does not have specific regulations or legislation governing digital currencies. The use of cryptocurrencies is still relatively banned, and the only accepted legal tender is the Tanzanian Shillings.

However, in January 2023, the Bank of Tanzania adopted a phased, cautious and risk-based approach to adoption of CBDCs, [3] setting in motion a potential road towards a new monetary policy terrain in the country.

This followed among others recognition despite the restrictions, mining and transacting in crypto currencies was popular widely used amongst many youths in Tanzania. The Bank of Tanzania had been researching and exploring potentiality of issuance of its CBDC. At this research stage, the Bank of Tanzania had formed a multidisciplinary technical team to examine practical aspects of CBDC and building capacity to the team in various ways.

The key considerations during this research stage involved choosing a suitable approach to CBDC adoption based on Tanzania context. This included type of CBDC to be issued (wholesale, retail or both), models for issuance and management (direct, indirect, or hybrid), form of CBDC (token-based or account-based), instrument design (remunerated or non-remunerated) and degree of anonymity or traceability.

 A particular attention was paid on risks and controls associated with issuance, distribution, counterfeit and usage of currencies. The outcome of the research at this point revealed that more than 100 countries in the world are at different stages of the CBDC adoption journey with 88 at research, 20 proof of concept, 13 pilot and 3 at launch. Analysis of these findings indicate that majority of central bankers across the world had taken a cautionary approach in the CBDC implementation roadmap, in order to avoid any potential risks that can disrupt financial stability of their economies.

Further, it was observed that, 6 countries had cancelled their CBDC adoption mainly due to structural and technological challenges in the implementation phase. The structural challenges included dominance of cash in making transactions and existence of inefficient payment systems, high implementation cost and risk of disrupting existing ecosystem.

Accordingly, to the government, the Bank of Tanzania would continue to monitor, research and collaborate with stakeholders, including other central banks, in the efforts to arrive at a suitable and appropriate use and technology for issuance of Tanzanian shillings in digital form.

Tanzania’s announcement was a pioneering move in a region whose governments have remained both non-committal but largely hostile in equal measures towards digital currencies.

In Kenya, cryptocurrency is technically legal, with no specific laws or regulations prohibiting its use or possession. However, it is not recognized as legal tender or an asset. The Central Bank of Kenya has issued warnings without specified penalties and has expressly forbidden financial institutions and payment service providers from doing business with Web3 businesses that ‘trade cryptocurrencies.’ Existing regulations are not well-communicated, and a clear legal framework is lacking.

Despite the warnings, transacting in crypto thrives and there is appetite amongst young people and online investors. Media reports suggest that overall, there are an estimated 2.7 million to 4 million cryptocurrency owners in Kenya, representing approximately 5% to 9% of the country’s populations.

On Umoja Lab’s BRAF (Blockchain Regulatory Assessment Framework), Kenya is rated a 40.63 out of 100, indicating that it is a “Developing Regulatory Environment” that is becoming clearer on where blockchain technology and cryptocurrency should go with regards to the need for regulation and expected compliance measures for crypto companies.

In 2023, the government found difficulties in prosecuting the directors of an online cryptocurrency company called One Coin. OneCoin company was accused of transacting illegally millions of Kenya shillings and duping Kenyans with a pay of Ksh7000 in exchange for their eye iris scan and biodata.

The company promised participants, among others, opportunities for making a fortune thereafter in crypto assets, a promise that never was. According to the Central Bank of Kenya, Onecoin was never registered to operate in Kenya yet it registered thousands and transacted millions without detection. 

Its co-founder, Karl Sebastian Green Wood also known as the ‘Cryptoqueen,” was arrested and sentenced to 20 years in prison for his orchestration of the massive OneCoin fraud scheme in the US and globally. Her co-founder Ruja Imatova disappeared since 2017 and it is not clear whether she is dead or alive. The Kenyan Onecoin case is not fully settled yet, bringing to light the importance of proper regulation.

Kenya Case law as cited by Justice M.W Mungai under the case of Wiseman Talent Ventures vs. Capital Markets Authority of Kenya (2019) has placed regulation of crypto currencies by the Capital Markets Authority under the ambits of  Section 2 & 11 of Capital Markets Act

Uganda does not recognize crypto-currency as a legal tender and in October 2019 the Minister of Finance, Planning and Economic Development issued a public statement to that effect.

However, in recent years there has been increasing calls from stakeholders for the country to regulate digital currencies. According to a USAID funded research by the Collaboration on International ICT Policy for East and Southern Africa (CIPESA), as technology continues to reposition itself around societal needs, at a fast pace, more countries around the globe are embracing and creating avenues for the use of cryptocurrencies within their local environments. Uganda should not be caught at the tail end of this drive and neither should it wait out the process of strategically positioning itself in the electronic commerce domain[4].

While back in 2011, Cyber-related legislation was passed to cater for the emerging digital landscape in Uganda. This failed to cater for crypto-currencies, despite recognizing a huge volume of online financial transactions.

CSO demand for clarity on the government position on use of cryptocurrencies; and suggests that Uganda should work with regional and international partners on establishment of an international treaty, as well as international collaborative measures in addressing cryptocurrencies.

In Rwanda, the government has banned banks from facilitating crypto transactions, however many locals are hopeful that Rwanda’s crypto scene will blossom on the back of a digitalizing economy.

Despite the bans, many young Rwandese are still cracking the webs to mine the crypto dimes and the appeal for regulation instead of criminalization and total ban is equally on.

Generally, we are yet to see some shifts towards regulation or regularization of cryptocurrencies in the other East Africa countries such the DRC and Somalia. Both policy and regulation are still blurred, exposing many to the risks but equally government missing out on the potential dividends that come with crypto and block chain-based technologies. It is for this reasons that a new monetary policy and regulation is required across the EAC.

Key policy recommendations to address cryptocurrency risks and future monetary policy

# Governments through Ministries of Finance and Central Banks must map existing crypto platforms and extent of penetration.  Kenya and Tanzania are so far reported as having the largest number of crypto entrepreneurs and transaction volumes in East Africa. These statistics are however not official. Like in Uganda and Rwanda, governments are yet to determine the detailed extent of penetration and impact in the form of self-employed jobs.

# Governments must assess the potential economic contributions to the economy in the form of financial inclusion, employment and facilitation of investment. Nigeria was the first to launch the e-naira but so far, no concrete assessment has been done to establish its success and why it failed. Government let studies on the potential economic benefits from crypto are non-publicly existent.

# Set up clear regulation (Policy and legislative)-To avoid ambiguities, fraud, money laundering for criminal enterprise, tax evasion and disruption of the formal financial systems. In our (Governance and Economic Policy Centre) interviews with crypto entrepreneurs, genuine traders who transact legitimate business exist, and just want to be regulated not banned.  The IMF and other institutions can offer support to EAC governments on building secure platforms while governments build their capacities to regulate and monitor transactions.

# Institutionalization of CBDC trading and clearing houses for crypto currencies. Tanzania may have taken a positive stride; however, this has to be followed with other supportive infrastructure such as a policy ambit and platforms for trading and exchange. A concomitant supportive monetary policy can go a long way in addressing some of the challenges and lacunas currently faced by both government and digital currency entrepreneurs.

# Explore, scaleup and leverage the opportunities that blockchain and crypto technology can offer in other sectors such as health, education and governance. In Kenya, it was reported that blockchain technology was used to secure the 2022 general elections voting and election results systems.

As global reports show, the penetration of cryptocurrency continues to take shape and without regulation the risks and exposure to the criminal abuse could increase. It is imperative that the public and private sectors work together to ensure that users can transact safely, and that criminals can’t abuse these new assets. So far the regulatory framework exists that can be used as a basis towards a new monetary policy and proper regulation and regularization.

With surging unemployment rates and a bulging tech-savy and connected youth population, online financial trading in digital currencies could increase financial inclusion, cause a digital economic revolution and penetration in the EAC countries, producing dividends in the form of jobs, employment and incomes. That is why future monetary policy must be aligned to the current and future technology and currency trends.

 

[1] https://www.forbes.com/advisor/in/investing/cryptocurrency/advantages-of-cryptocurrency/

[2]  Amb Prof Ndemo Bitange; Exploring the future of banking with CBDCs,  a blog post on his personal Linkedin page, July 15, 2023

 

[3] https://www.bot.go.tz/Adverts/PressRelease/en/2023011413181519.pdf

[4] https://cipesa.org/wp-content/files/briefs/Crypto_Currency_Regulation_and_Implications_on_CSOs_in_Uganda_Policy_Brief.pdf

Disruptive digital economies and Monetary Policy: Re-Exploring Blockchain , Crypto Currency and monetary policy in East Africa-Are governments running late?

 The pressure to digitalize our economies and adopt a new generation of monetary policies may be legitimate but the risks are also real. How can governments navigate this delicate balance between digital economy penetration, financial inclusion and monetary policy? Can governments in East Africa continue riding behind the tide?

By Moses Kulaba, Governance and Economic Policy Centre

@digitaleconomies @cryptocurrencies @financial inclusion @mkulaba2000

Globally, there is a debate and desire for the adoption of blockchain technology and cryptocurrency as medium for financial transactions yet in East Africa, government uptake and regulation are moving at a snail’s pace. In this first of a two-part series of our short analytical economic policy and governance policy briefings, we re-explore and unpack the future of blockchain and crypto currency penetration and the risk considerations shaping debate and monetary policy terrain in East Africa. We will later discuss how the EAC governments can leverage monetary policy and regulation to harness the dividends of blockchain and cryptocurrencies to advance financial inclusion in the region.

Generally, there is limited understanding of blockchain and crypto currency technology. The debate on the risks that these new digital currencies portend to the public and national economies is ongoing. So far there is no consensus amongst citizens, economic policy makers and central banks on which directions governments must take. The common view is that adopting block chain and crypto as a form of legal currencies should be approached with utmost care and heavy regulation. It is argued that the risks are high if crypto is adopted as legal tender as some African Central Banks have attempted to do. Moreover, if crypto assets are held or accepted by the government as means of payment, it could put monetary policy and public finances at risk.

Despite, these reservations trading in crypto currencies has continued alongside the formal currencies and could become a major part of our global financial system in the future.

All over East Africa, digital currency platforms exist, despite the bans and young digital entrepreneurs have signed up, traded and transacted in crypto with some success, while others have equally horrendous stories to tell of failure, and counting losses.  According to global reports, so far Kenya, Ghana, Nigeria and South Africa are leading with Tanzania following closely along.

The driving factors crypto adoption and penetration among young people is widespread unemployment and joblessness pushing mostly young people and new unemployed graduates to look for a living online. For speculative investors the driver is that digital currencies have provided a seemingly a good alternative store of speculative value than local African legal tenders, as they experience inflationary and forex exchange pressures. Between 2020 and 2021 transactions increased by 567 percent to $15.8 trillion between before declining in 2022 after the largest crypto exchange FTX crush in 2022.

Despite the loses, the appetite to transact in crypto still continues. According to the online financial reporting resource, Statista, the Cryptocurrencies market in Tanzania is projected to grow by 10.36% (2024-2028) resulting in a market volume of €4.97m by 2028. With this trend, there are suggestions for governments to regularize and formalize crypto currencies as part of a new generation of monetary policy promoting digital economies, and advancing financial inclusion rather than banning their total use all together.

What is blockchain technology and cryptocurrency.

As a way of kicking off and unpacking this further, we will re-explore what is blockchain technology and crypto currency. Blockchain technology is an advanced database mechanism that allows transparent but secure information sharing within a business network. A blockchain database stores data in blocks that are linked together in a chain. Blockchain is a method of recording information that makes it impossible or difficult for the system to be changed, hacked, or manipulated and therefore provide the infrastructure on which crypto currencies are transacted.

The oxford online dictionary defines crypto as a digital currency in which transactions are verified and records maintained by a decentralized system using cryptography, rather than by a centralized authority. The Reserve Bank of Australia has defined cryptocurrencies as digital tokens. They are a type of digital currency that allows people to make payments directly to each other through an online system.

Cryptocurrencies have no legislated or intrinsic value; they are simply worth what people are willing to pay for them in the market. This is in contrast to national currencies, which get part of their value from being legislated as legal tender.

Cryptocurrency (or “crypto”) is therefore a digital currency that can be used to buy goods and services or traded for a profit. There are four major types of cryptocurrencies and these are; Payment cryptocurrency, Utility tokens, stablecoins and Central Bank Digital Currencies (CBDC). Bitcoin and Ether are the most widely used cryptocurrency.

How Cryptocurrency transactions operate.

Cryptocurrency transactions occur through electronic messages that are sent to the entire network with instructions about the transaction. The instructions include information such as the electronic addresses of the parties involved, the quantity of currency to be traded, and a time stamp. The transactions are run across multiple systems of computers using a blockchain technology, where data is stored in blocks linked together and securely shared across interlinked business networks for connected ‘miners’ to transact and trade.

How large is crypto in Africa and East Africa?

According to China Analysis reports, by 2022 Africa was one of the fastest-growing crypto markets in the world, with crypto transactions peaking at $20 billion per month in mid-2021. Kenya, Nigeria, Ghana and South Africa had the highest number of users in the region, with other countries following closely.  So far, some people have used crypto assets for commercial payments. It is not clear yet whether this number has increased since 2022 after the large crypto currency crush. However, it is evident that new platforms and mediums of exchange have emerged including the Tether USDT accepted by China and other major buyers.

The Tether (USDT) also known as a “Stablecoin” is a cryptocurrency designed to provide a stable price point at all times. The USDT cryptocurrency was created by Tether Limited to function as the internet’s Digital Dollar, with each token worth $1.00 USD and backed by $1.00 USD in physical reserves.  According to crypto traders, despite the controversy, Tether has become more popular because it is pegged to the dollar and fluctuating in value with the U.S. dollar and backed by Tether’s dollar reserves.

Who owns crypto in East Africa?

In 2021 market or financial research institutions estimated that the number of crypto owners in East Africa currently was almost 12 million.  A Singaporean cryptocurrency research firm, Tripple-A, estimated that 11.7 million East Africans owned cryptocurrencies. Out of these 6.1 million were in Kenya, 2.3 million in Tanzania and two million in the Democratic Republic of Congo.

The numbers are potentially higher given that many crypto owners and users are unreported or documented. The clampdown on crypto currency owners and traders in some countries pushed many under and away from advertising and transacting publicly. Bitcoin accepting points of sale closed shop and transactions became discrete.

Potential for new monetary policy in EA?

In 2017 the East African Community members were against digital currencies even as their appeal grew across the world. Kenya, Tanzania and Uganda governments said trading in cryptocurrencies like Bitcoin was illegal, for reasons ranging from whether they are commodities or money to being pyramid schemes that could plunge investors into losses. The Kenyan and Ugandan governments issued warnings.

The Bank of Tanzania said dealing in cryptocurrencies was tricky because they are not regulated and it was not clear who controls the market.  However, the Tanzanian government appears to have softened its stance when in 2023 announced a phased approach towards adoption of a Central Bank Digital Currency (CBDC).

A CBDC is a digital or virtual form of a country fiat currency (such as USD, EUR and TZS) issued and regulated by a central bank. Their value is based on the government’s ability to maintain its value by controlling supply and demand, are used as a medium of exchange in transactions, and are considered legal tender within their respective countries.

Therefore, when issued, CBDC becomes a legal tender, analogous to physical notes and coins. Based on the literature, CBDC is thought to offer a range of benefits to the economy and its adoption has been slowly garnering interest in many countries around the world.

What are monetary policy and socio-economic risks of crypto currencies?
  1. Lack of transparency and proper regulation and a high-risk potential for disruption of the financial system.

The International Monetary Fund (IMF) warns that crypto currencies expose users to cyber-risks such as hacking and loss of their assets. Governments are exposed to lack of transparency around issuance and distribution of crypto assets and this can be disruptive to managing monetary policy.

  1. Susceptible to fraud, and tax evasion as captured in the Nextflix true story documentary-Bitconed.

Cryptocurrencies can be conduits for fraud, tax evasion and illicit financial conduct. Because of their volatility their value is difficult to predict and store. In 2022 it was estimated that at least 12 million people in East Africa lost billions of dollars in the cryptocurrency market crush and a contagious series of ‘Bitcoin get rich’ schemes whose value disappeared overnight. The susceptibility to fraud and sudden fall from temporary economic opulence that may arise from crypto currencies has been well captured by Netflix in a true story documentary-Bitcoined.

  1. Potentially used for money laundering and terrorism financing:

Crypto currencies can be vehicles for money laundering and criminal financing. A report by American cryptocurrency market research firm, Chaina analysis says laundering of stolen funds through cryptocurrencies and scamming of users were the highest crimes in 2021 and 2022, accounting for over half of the illicit transactions. Moreover, a Reuters investigation report claimed that the world’s largest crypto exchange by volume was used by drug lords, hackers and fraudsters to move illicit cash.  According to Reuters, cryptocurrency-based crimes hit a record high in 2021, with illicit transactions rising 79.4 percent to $14 billion, from $7.8 billion in 2020.

Other crypto crimes that increased included financing of terrorism, ransomware, money laundering of child abuse material funds, cybercriminal administration and fraud shops. The US cryptocurrency exchange, Binance, was flagged out as one of the platforms used by criminals to lauder at least Sh274.4 billion ($2.35 billion) across the world in five years.  Binance has since denied the claims but the negative image of cryptocurrencies and some associated crypto exchange companies as conduits for crime still hangs on.

  1. Crypto contributes to climate change environmental damage:

Cryptocurrency activities have been associated with contributing to emissions affecting climate change and have come under criticism from climate change and environmental activists. As indicated cryptocurrency transactions and mining occurs across multiple computer systems running on blockchain technology constantly over time, using energy and emitting heat.

The environmental effects of bitcoin are significant. Bitcoin mining, the process by which bitcoins are created and transactions are finalized, is energy-consuming and results in carbon emissions as about half of the electricity used is generated through fossil fuels.

According to environmental reports by the University of New Mexico, an average of every $1 of bitcoin mined between 2015 and 2021 resulted in $0.35 of climate change damages.  Further studies show that the cryptocurrency industry, swiftly outpaced many of the traditional top-emitting sectors and significantly contributing to climate change.

The Cambridge Bitcoin Electricity Consumption Index, which tracks the real time impact of Bitcoin, in their short history shows that, Bitcoin mining alone had emitted nearly 200 million tons of carbon dioxide equivalent (CO2e). From an environmental perspective therefore scaling up wider use of blockchain technology and crypto is a danger to the environment and climate change, the report concluded.

Despite the risks and potential down side, a United Nations University (UNU) report suggests that the negative view could change as blockchain technology and cryptocurrencies percolate across from developed economies into Africa. The monetary policy and regulative landscape is evolving and governments must be aware and leverage the benefits of technology[1].

According to a commentary by the Brookings institute, indeed, many cryptocurrency fortunes have already evaporated with the recent plunge in prices.  But whatever their ultimate fate, the ingenious technological innovations underpinning them will transform the nature of money and finance.

Are East African governments running late? In the next issue we discuss how EAC can address the downside of the crypto economy, leveraging its monetary policy to harness its dividends.

[1] https://unu.edu/press-release/un-study-reveals-hidden-environmental-impacts-bitcoin-carbon-not-only-harmful-product