Evaluating East Africa’s economic trends and outlook 2024: What should EAC governments do to reduce further hardships?

The East Africa Community is so far the largest economic block, with 7 members states with a vast territory straddling from the Indian ocean coast to the Atlantic Coast, with a staggering population of estimated 283.7 million citizens, 4.8 million square kilometers of land area and a combined Gross Domestic Product of US$ 305.3 billion[1], the EAC region is a big silent economic giant.  As of November, the UNDP estimated the EAC had 489,766,467 million people (6% of the total world population)[2], making it one of the fastest growing regional economic blocs in the world and number 1 in Africa among subregions ranked by population. Despite this potential, the region faces multiple economic and political setbacks.

In 2023, the EAC faced significant economic meltdown, with depreciating currencies, rising costs of living and political unrests, tainting the prospects for 2024. The rising cost of fuel, high costs of transportation and production, exerted high pressure on the cost of living, with inflation hoovering above 6% and reduced the region’s economic growth to around to about 3.3% in 2023. Already, the tight economic hardship has caused general anxiety across the East Africa region and social-political unrests in some countries such as Kenya.  Governments have experienced a crunch on revenue collections and significant reductions in external aid. They have resorted increasing taxation to shelter the governments against adverse effects of depreciating shilling against the dollar and heavy costs of borrowing which have surged over the past one year.

The latest World Economic Outlook report released in October predicts that the world’s economy will remain on a downward trajectory for the rest of 2023 and 2024, with the rate of growth decelerating to 2.9 percent next year, from this year’s 3.0 percent. Although the World Bank has predicted a positive outlook for East Africa, with a projected growth of 5.7%, amongst ordinary citizens, life is difficult and questions are everywhere. Where have governments gone wrong.

The purpose of this webinar is to facilitate public discussion assessing the current economic trend and government economic performance, with a view of influencing policy priorities, and practical economic choices that governments should make now to cushion its citizen against the rising cost of living and future hardships in 2024.  During this webinar our experts will paint an economic slate of the region and the extent to which socio-economic interventions such the Parish Development Model in Uganda and heavy taxation, can be a solution to the current and future economic quagmire facing the region. Most significantly, they will try to answer whether Kenya is headed to lose its economic mantra and Tanzania could emerge as new economic giant in the region

Expert Speakers

Dr Kasirye Ibrahim, Executive Director, Economic Policy Research Centre (EPRC), Makerere University, Kampala: Uganda’s experience: Are government social interventions such as PDM working to shelter the poor and vulnerable against poverty?

Expert perspectives on Uganda’s economy, the government interventions through projects such as the PDM and a quick glimpse of what 2024 could look like and what practical measures the government should take to avert the increasing economic hardships.

 

Mr Kwame Owino, Chief Executive Officer, Institute of Economic Affairs (IEA), Kenya: Can taxation be a solution and should we expect more taxes moving forward?

Perspectives on Kenya’s economy, the government’s economic hardship interventions and a quick glimpse of what 2024 could look like. With a depreciating shilling, dwindling FDI and choking debt are we likely to see more taxation in Kenya and this gradually snowballing across East Africa? Is there a significant risk that Kenya is or could fall from its pedestal as a major economic hub in the near future?  What practical measures should the government take to avert the increasing economic hardships across the country and the East African region.

Dr Mugisha Rweyemamu, Research Fellow, Economic Social Research Foundation, ESRF-Tanzania: Could Tanzania overtake its regional peers as the new regional economic giant?

Expert perspectives on Tanzania’s economy, the government’s economic hardship interventions and a quick glimpse of what 2024 could look like. With major strides made in attracting tourism, FDI and having a significant cache of valuable Minerals such as gold and green or critical minerals such as Nickel, Tungsten etc., could Tanzania overtake its East African peers to become a major economic hub in the near future?  What practical measures should the government take to avert the increasing economic hardships across the country and the East African region.

Hon: Zittto Kabwe, Economist and President of AcT-Wazalendo Political Party, Tanzania:  What is totally wrong-Could we expect economic-political unrest amongst the youth-What should political actors do to avert a near economic catastrophe and social uprising (Azania Spring) similar to the famous Arab Spring. Is an economic inspired Azania Spring inevitable if things don’t change?

Professional perspectives on the current economic hardships and what governments could do to avert further hardships in 2024. What are governments not getting politically or fundamentally right. In some countries such as Kenya we have seen some socio-political unrests over economic times, are we likely to see this ‘Azania economic springs’ in more countries in 2024?

Moses Kulaba, Convener, Governance and Economic Policy Centre

Can the EAC escape the current global economic meltdown, evade social-economic disruptions to remain soaring above its peers as the strongest economic subregion in Africa. What political-economic choices will make it maintain a comparative and competitive advantage against the tide

 

 

 Date: Thursday, 30th November, 2023

Time:  11AM-12:30 PM EAT

Registration and participation link: https://zoom.us/j/94699182519 

Meeting ID: 946 9918 2519

Passcode:  yJC673

 

[1] https://www.eac.int/overview-of-eac

[2] https://www.worldometers.info/world-population/eastern-africa-population/

Energy Transition: Why Africa must focus on Energy Aggregation and Consolidation

Historically, energy transitions have never meant one energy system completely replacing another rather one system reducing quantitatively amount of use in favour of another. The rise of coal ,the steam engine and petroleum did not end the use of traditional sources of energy such as firewood and horsepower.

By Moses Kulaba, Governance and Economic Policy Center

Delivering Charcoal in Uganda (Rod Waddington/CC BY-SA 2.0)

Globally, there is an increasing focus on climate change and energy transition. There is debate on the risks that these portend and an emerging view/ consensus that energy systems must transit gradually to achieve a net zero carbon emission   by 2050. Africa is at a dilemma, caught up in its realities and a myriad of contesting advice on which policy direction it should take.

This article attempts to deconstruct this increasing popular narrative on climate change and energy transition by arguing that it is unrealistic to achieve net zero by 2050 and a complete energy transition for Africa is impossible. Climate change may be real but achieving total decarbornisation by 2050 may be farfetched. I take this posture by looking historically at how previous changes in energy systems happened and Africa’s realities.

Chronologically, energy transitions are not new. They have happened before. Perhaps what make this possible transition quite significant is that it has been linked with the catastrophic climate change and global warming. This transition therefore is viewed as one of the remaining silver bullet to save the planet.  However, an analysis of historical trends and the manner in which the road to decarbonisation is framed and the narrative/view that energy systems must transit by 2050 is therefore problematic.

Historically, energy transitions have never meant one energy system completely replacing another but rather one system reducing quantitatively amount of use in favour of another. The rise of coal and the steam engine did not end the use of traditional sources of energy such as firewood and horsepower.

Between 1780’s to 1860’s whale sperm oil was a dominant source of energy for lighting before being replaced with the discovery of petroleum. This can be considered as the first energy transition after man discovered fire.  However, the two energy sources co-existed into the next century before petroleum became the dominant source. Whale oil did not disappear but retained value as a resource after the discovery of petroleum. In the 20th Century, Whale sperm oil was used for new purposes, including margarine, lubricants soaps, detergents, vitamins D and nitroglycerine, which is still in use today. 

According to Yale Professor, Paul Sabin, the discovery of petroleum is often cited as an example of an energy transition, where one fuel completely displaced another.  Yet this argument is totally flawed because the discovery of petroleum actually made it possible to hunt whales at a massive scale. The fossil driven ships could travel and conquer deep seas than before and stay their longer as merchant anglers trapped, caught and killed and stored whales in their thousands.[1]  There could not have been modern whaling before fossil fuels were readily available.

While the demand for whale oil declined after the discovery of petroleum, its demand continued to rise. By the 20th Century, sperm whale catch peaked in the 1960s to over 250,000 tones before declining in the 1970s and 1980s. Numerically, it took almost over 100 years between 1850 and 1980 for this gradual decline to happen.

Indeed, recognizing the pace at which the whales were fished for their sperms and other products to near extinction, in 1986, the International Whaling Commission (IWC), established in the 1940s,  banned commercial whaling because of the extreme depletion of most of the whale stocks. Even with the IWC ban in place, to date whales are still-hunted and killed for their sperms and other products, as was the practice during those mediaeval times. Japan left the IWC in 2019 and now hunts whales without any international restriction.

Moreover, historical data shows that the advent of both coal and petroleum as new energy sources  did not take animal powered energy systems out of the market. When goods carried by the coal fired steam engine train locomotive at the station, one needed horses to haul it to the final destination.  In the United States animal power increased with the number of horses and mules rising from 4.3 mln in 1840 to 27.3mln in 1920.

To date animal power continues to exist and still forms a major source of motorization in many parts of the world. Even with the advent of the advanced petroleum, based engines, in some parts of Africa, when goods arrive by bus, truck or lorry at the nearby road terminal one requires animal power (cow, horses, mules or camels to carry them the next mile to next village destination.

This suggests that different forms of energy systems are complementary to each other rather than antagonistic. One fuel has always added to another expanding both the energy supply and energy mix. The fossil-based systems will therefore continue to serve side by side with the clean energy systems.

In my Country, the two-wheeler petroleum powered motor cycle (Boda Boda) is slowly replacing the cow and donkey horsepower as major form of transportation linking the main road to the rural interior.  However, the cow, donkey and horse power are not going away too soon. In some areas the human power is still largely used with people carrying their heavy loads on their head or pulled carts.  The electric car is yet to arrive and will take long to dominate our major roads in the city and perhaps another 100 years to make it to the final mile into our villages. For Africa, therefore energy shift from animal and human-based power to fossil-based energy is just midway. It will therefore take many decades to leapfrog to a total clean energy system.

 Since the Paris Declaration, there has been an upscale in clean energy sources compared to the previous years. However, the pace at which clean energy is being deployed is too low to overtake fossil-based sources by 2050.There is evidence that not only Africa is doing badly on this front.

In its 2023 report, the IPPC experts warned that we have already reached the catastrophic point of no return (keeping global temperatures under 1.5 degrees and on a clear path to miss the net zero target by 2050. Green House gas emissions continued to increase. Policies and laws addressing mitigation have consistently expanded since  the Paris declaration but theses are yet to cause a dent in global carbon emissions . Global GHG emissions in 2030 implied by Nationally Determined Contributions (NDCs) announced by October 2021 make it likely that warming will exceed 1.5°C during the 21st century and make it harder to limit warming below 2°C. There are gaps between projected emissions from implemented policies and those from NDCs and finance flows fall short of the levels needed to meet climate goals across all sectors and regions, the IPCC report states.

Since the climate problem is defined as too much greenhouse gas emissions, rather than too little energy, this historically suggests that only a solution that actually limits carbon dioxide emissions will work. However, when the climate problem and decarbonisation is defined with targets this way, there is a serious problem.

Factually, Africa is energy poor. The IEA World Energy Outlook, however, shows that close to 600 million people remain without access to electricity in sub-Saharan Africa. Over 80% of Africa’s population depends on biomass as a source of fuel.  The electrification stands at around 40% and use of clean sources such as solar stands at a mere 4%. The net zero is barely 30 years from now and how Africa can turn these statistics around is quite impossible.

With the current statistics and demographics, decarborization (or net zero) is in many ways unprecedented as it means or suggests eliminating the use of a currently viable and profitable fuels and replacing this with another.

Globally, fossils are too dominant and producing countries are too reluctant to let them go without proper substitutes to replace them.  Yet dominant fuels have major characteristics that make them difficult to be easily replaced. These include; having large market share, economic dominance/ascendance, political dominance, established institutional structures to support and cultural influence on the users.  All these take time to be built and embedded into the energy system. Yet an energy transition reflects a change in the balance between fuels and a shift in their characteristics.  That clean energy system will take over the characteristics of the current fossil-based systems in the next 27 years is quite an uphill task.

The recent global events have shown that the world can reach a net zero emission in 2050 is over exaggerated and practically impossible to achieve. The simple disruption in petroleum supply chains by the Russia-Ukraine war in 2022 showed us this realty. Barely two months into the war, had developed countries such as German turn around on fossils to fire up their coal-based plants to generate energy.

Indeed, one EU leader remarked that all along Europe was wrong on coal as source of energy and that European economies could survive without fossil-based energy. German, Austria, France, and the Netherlands fired up their coal plants to save gas. Coal exports from Africa to Europe boomed and new coal investments in the US increased. The energy transition even in developed countries is happening but not without significant setbacks.

Since the 2015 Paris agreement, the 2050 net zero deadline has been a moving target.  India has said it would turn net zero only by 2070, while China has set a target of 2060. Russia and Saudi Arabia amongst major economies, have also set 2060 as their net zero targets. Some African governments such as Ghana have suggested 2060 as their deadline. The reality is that this net zero target, where the world is so clean and devoid of any carbon emissions may never be reached.

For Africa, therefore the answer to this conundrum of what direction the continent should take lies in energy aggregation and consolidation. This is where by new energy systems are layered on to existing systems and gradually scaled up as, they become technologically advanced, cheaply available and affordable,  to meet the continent’s sustainable energy needs. There has to be no rush for Africa to transit by 2050! Africa does not have to pay heavily to secure a net zero and a just transition by 2050.

 Africa’s future  is safe by developing hybrid energy systems that can at the same time sustain the fossil based systems, while clean energy systems are aggregated and consolidated on an incremental basis for the next long-term future.  What is required for now therefore is;

  1. Research and developing technologies that can reduce the toxic levels and carbon intensity in the petroleum based sources of energy so they can continue to be used in a clean future.
  1. Developing alternative products that could continue to be useful in support of the fossil industry, even with its diminished existence in the next 100 years. As earlier mentioned, while whale sperm oil stopped its usefulness as a dominant source for lighting, it continues as a key ingredient used to produce other high valued products.
  1. Developed countries appreciate that the journey will be a long one before our energy systems can significantly decarbonize. Even with the increased uptake in solarisation and other cleaner systems, biomass will continue to play a dominant portion as a source of energy to the bigger population in Africa.
  1. Our policies have to be pragmatic but less ambitious to avoid pitfalls in implementation and application, achievement of their intended objectives. Africa is not devoid of policies. It is a graveyard of policy implementation.
  1. Africa has to define its own energy transition pathway that is aligned to its practical realities and deficiencies. It is likely that fossils will continue driving Africa’s energy system past 2050.

In the climate justice space, perhaps Africa should be advocating for a Just Energy Aggregation and not a mere Just Energy Transition!

[1] Richard York: Why Petroleum did not save the whale; socus sociological research for a dynamic world , December 2017

 Disclaimer: This blog article is produced as part of our ongoing policy discussion series on climate change political economics and energy transition.  The discussions and briefs  therefrom are intended to share dissenting views and provoke intelligent debates ahead of major climate spaces such as COP28. The views contained herein may not necessarily fully represent those of the Governance and Economic Policy Centre (GEPC) but aired in support of intellectual democracy and geared towards securing a continental consensus.

Securing Tanzania’s clean energy future: How Tanzania can harness its renewable energy opportunities

With a high wind potential that covers more than 10% of its land and a solar power potential estimated to be 31,482 TWh for CSP technology and 38,804 TWh for PV technology and a global horizontal radiation of 4–7 kWh/m2/day , Tanzania is a step away from becoming a reckonable power giant in clean renewable future

By Moses Kulaba, Governance  and Economic Analysis Centre

@climate change, energy transition series

Tanzania, like other developing countries,  has perennial energy shortages and striving to find different ways of ensuring affordable and accessible energy supply to its citizens and economic development needs.

In order to secure affordable and accessible energy in the country, renewable energy is viewed as a viable alternative energy source. It is readily available,  environmentally friendly and if harvested,  produced and utilized in a modern and sustainable manner, it can help to eliminate Tanzania’s energy problems.

Tanzania’s power sector is dominated by state-owned TANESCO (Tanzania Electricity Supply Company Limited). TANESCO owns most of the country’s transmission and distribution network, and more than half of its generating capacity. The grid faces acute shortages and power outages due to excessive demand and a dilapidated infrastructure, making reliance on the current fossil and hydro based energy generation systems impossible to cope with the country’s energy demand.

Tanzania’s electricity generation comes mostly from natural gas (48%), followed by hydro (31%), petrol (18%) with solar (1%), and biofuels (1%). The traditional dependence on hydropower combined with the droughts that are affecting the country, often result in power supply shortages[2].

According to reports, Tanzania has a lot of renewable energy sources such as biomass, solar, hydropower, geothermal, biogas, wind, tidal, and waves. These sources are important for decentralized renewable energy technologies, which are ideal for the isolated nature of the settlements and are environmentally friendly. Despite their necessity, renewable energy sources are given low priority by both government and Households[1].

The World Economic Forum (WEF) reported the total sum of global investment into renewable energy has increased. This was supported by a 28% annual increase in investment from the United States (U.S), in 2019 totaling $54.6 billion[3]. Renewables cannot totally replace fossils such as oil, but increased investment shows increased potential contribution in the energy mix.  The International Energy Agency (IEA) estimates annual clean energy investments will more than triple by 2030.

With its vast resources and location, there are opportunities for Tanzania to investment in its abundant solar and wind energy potentials. Perhaps, it is argued, the country can leverage its strategic position to scale up investment to generate more and at the same time position as a major supplier and user of renewable energy sources. So far, in Tanzania, solar energy is used as a source of power by 24.7% of the households with access to electricity.

Tanzania’s Solar Energy potential

A study by Ahmed et al in 2017 suggested that Tanzania has an annual technical solar power potential in Tanzania was estimated to be 31,482 TWh for CSP technology and 38,804 TWh for PV technology. Potential solar energy resources are found in the central parts of the country[10] [1]. There are high solar energy levels ranging from 2800 to 3500 h of sunshine per year and a global horizontal radiation of 4–7 kWh/m2/day [1,70].  

According to the World Bank, Tanzania has a solar energy potential greater than that of Spain and wind energy potential greater than that of the US State of California. With such great potential for solar energy resources, Tanzania is naturally appropriate for producing solar energy as a feasible alternative source for modern energy supply and rural electrification.

The solar energy market in Tanzania has drastically grown and increased over the last few years. Currently, the potential solar energy resources in Tanzania are used in different parts such as solar thermal for heating and drying and photovoltaic for lighting, water pumps, refrigeration purposes, and telecommunication. Solar energy is used mostly in rural areas with about 64.8% compared to urban areas with only 3.4%. The regions of Lindi, Njombe, Mtwara, Katavi, and Ruvuma lead in the use of solar power electricity in Tanzania[11]. Despite the increasing market for solar energy applications, there are fewer signs that the government is expecting to include solar PV in the national electricity mix in any substantial way in the future.

Tanzania’s Onshore Wind energy potential 

Tanzania has areas of high onshore wind potential that cover more than 10% of its land[5]. This is equivalent in size to Malawi and has greater potential than the US state of California, as reported by the World Bank report. There are areas with annual average wind speeds of 5–8 m/s[6] . These exist along a coastline of about 800 km with predominant surface winds, moving from south-east to northeast.

Based on the current research works, Tanzania has a lot of wind energy resources in the areas of Great Lakes, the plains, and the highland plateau regions of the Rift Valley. Wind energy evaluation indicates that areas such as Makambako (Njombe) and Kititimo (Singida) have sufficient wind speed for grid-scale electricity generation, with average of wind speeds 8.9 m/s and 9.9 m/s at the height of 30 m, respectively[7]. Small-scale off-grid wind turbines along the coastline and in the islands also possess great potential in Tanzania.

By 2017, at least four companies had expressed interest in investing in wind energy in Tanzania to build wind plants with a capacity of more than 50 MW. These companies included Geo-Wind Tanzania Ltd in Dar es Salaam,  Wind East Africa in Singida, and Sino Tan Renewable Energy Ltd. and Wind Energy Tanzania Ltd in Makambako.

It was further reported that wind farms with capacities of 100 MW in Singida would be constructed under the corporation of the Six Telecoms Company in Singida, financed by the International Finance Corporation and Aldwych International in London, the United Kingdom. The project would cost US$286 million[8].

But generally, the uptake of investments in wind energy is still low. Compared to other renewable energy resources that attract investment, most  projects have tried with little success to produce utility scale electricity from the wind energy. Tanzania’s renewable energy sector remains dormant with potential.

Recently, the government has indicated plans to review its national energy master plan with a view of integrating its energy mix with  renewable sources. This provides an opportunity for government to be intentional and focused on scaling its renewable sources from solar and wind.

What is stopping Tanzania’s renewable energy sector 

There are efforts and greenfield wind projects such as  the Mwenga project , the first wind farm to ever be built in Tanzania was completed in 2020. According to the project directors, Camco Clean Energy, the 2.4MW project – which received a $1.2m loan from the UK Government-funded Renewable Energy Performance Platform (REPP) – was supposed to be connected to an existing grid network, providing energy security to communities across the country. However, there are gaps such as financing, infrastructure, storage, and government facilitation which potentially limit investment, scale up, use and benefiting from this potential.

  • High investment costs: The cost for initial investment is high and the returns on investment are slow. With the dominance of TANESCO as a monopoly and absence of readily available Power Purchase Agreements for independent producers, project financing for renewable energies is still difficult.
  • Misaligned government priorities; Government efforts have largely emphasized hydropower projects. Other renewable energy sources such as solar, thermal, wind, biomass, and biogas are under-prioritized so far due to different socioeconomic and political reasons
  • Institutional and regulatory barriers; These are one of the main difficulties of developing renewable energy projects in the country, stakeholders say. According to Camco managing director Geoff Sinclair  “It’s very difficult to get a bankable PPA signed, offtaker creditworthiness remains an issue, and tariffs are regularly and somewhat randomly reduced to levels that undermine commercial viability.
  • Unmatched political will : The political will and support towards renewable energy over the past ten years has been on and off. After a major push in 2013 , the momentum appears to have dwindled.  Many projects stalled and such as the 150 MW Singida Wind Power project are yet to be fully delivered. In 2013, the Vice-President of China Daliang International Group, Mr Xu Youliang, told  Tanzania’s Prime Minister, Hon Mizengo Pinda,  that this project would be ready and start generating power by 2015. To date this has not materialized. Similar projects such as the Same Wind projects are still on their drawing boards and political support has been waning. Despite the energy resources available in the country and the government’s pledge to invest in renewable energy, foreign investors feel discouraged from  scaling up investments in  Tanzania’s renewable sector.
  • Overriding dissenting views on power of renewables in Africa: Further, this lukewarm and unpredictable stance towards renewable energy such as wind and solar seems to be a general  attitude  across the African continent. African governments have been slow to take on largescale renewable projects.  Some of African political leaders, such as Uganda’s President Yoweri Museveni, have argued that renewable energy is not sustainable to meet the future global population energy demands. It cannot even meet or drive Africa’s development agenda. 
  • Unreliability and lack of technology for storage: Renewable energies such as solar and wind are largely dependent on whether and climatic factors and therefore unreliable as a source of power. The technology for storage has not advanced enough to guarantee continuous supply whenever needed 
  • Potential of land grabing and conflicts: Moreover a solar farm requires huge tracts of land, and this can or may potentially spark off a new wave of land grabbing by solar energy investors, triggering land conflicts across the continent. Africa could is a bystander in renewable energy technology. For Africa to benefit, investment in technologies and production of equipment, such as solar panels and wind turbines must be on the continent.

CSOs such as power shift Africa , Anti Coal Coalition[4] and others however argue that investment in renewable energy is economically viable, and can  create jobs and increase access to energy to the poor and rural areas where access to the national grid is difficult. Significantly, investment in renewables will help Tanzania achieve its domestic transition and unlocking the country from a fossil future.

What can be done?

  • Moving forward, therefore the mysteries surrounding renewable energy and Tanzania’s potential must be unlocked 
  • Government, along with other renewable energy stakeholders, should complement existing policies and strategies to address issues related to renewable energy development to ensure timely and sustainable utilization of the available resources.
  • There is the need to provide a sound business and investment environment to local and foreign people who can provide capital towards renewable energy technologies and development.
  • There should be more training and awareness made available to the public about how to invest and use renewable energy.

Tanzania can and must benefit from the energy transition by upscaling its potential by starting to roll out implementation. Stalled renewable projects should be implemented.

[1] Obadia Kyetuza Bishoge: The Potential Renewable Energy for Sustainable

Development in Tanzania: A Review, 2018 accessed at : https://www.mdpi.com/2571-8797/1/1/6/pdf#:~:text=Tanzania%20has%20a%20lot%20of,are%20environmental%20friendly%20%5B1%5D.

[2] https://www.trade.gov/energy-resource-guide-tanzania-renewable-energy

[3] https://www.weforum.org/agenda/2020/06/global-clean-energy-investment-research/

[4] https://www.theguardian.com/world/2022/aug/01/african-nations-set-to-make-the-case-for-big-rise-in-fossil-fuel-output#:~:text=African%20nations%20expected%20to%20make%20case%20for%20big%20rise%20in%20fossil%20fuel%20output,-Exclusive%3A%20leaders%20expected&text=Leaders%20of%20African%20countries%20are,documents%20seen%20by%20the%20Guardian.

[5] Tanzania Invest. Tanzania Has High Potential For Renewable Energy Projects, US Consulting Firm Indicates. TanzaniaInvest. 2015. Available online: https://www.tanzaniainvest.com/energy/tanzaniahas-high-potential-for-renewable-energy-re-projects (accessed on 15 April 2018).

[6] Kasasi, A.; Kainkwa, R. Assessment of wind energy potential for electricity generation in Setchet, Hanang, Tanzania. Tanz. J. Sci. 2002, 28, 1–7.

[7] Energy Charter Secretariat. Tanzanian Energy Sector under the Universal Principles of the Energy Charter. 2015. Available online: https://energycharter.org/fileadmin/DocumentsMedia/CONEXO/20150827- Tanzania_Pre-Assessment_Report.pdf (accessed on 8 May 2018)

[8] The Minister of Energy. The Speech of the Ministry of Energy and Minerals on the Estimates of the Revenue and Expenditure for Financial Year 2018/2019. 2018. Available online: https://www.nishati.go.tz/hotubaya-bajeti-ya-wizara-ya-nishati-kwa-mwaka-2018-19/ (accessed on 15 January 2018)

[9] The Economist. A World Turned Upside Down—Renewable Energy. 2017. Available online: https://www. economist.com/briefing/2017/02/25/a-world-turned-upside-down (accessed on 4 May 2018).

[10] Sarakikya, H. Renewable energy policies and practice in Tanzania: Their contribution to Tanzania economy and poverty alleviation. Int. J. Energy Power Eng. 2015, 4, 333. [CrossRef]

[11] https://www.thecitizen.co.tz/News/33pc-of-Tanzanians-have-access-to-electricity–report/1840340-3900298-9elccaz/index.html

TAXING E-COMMERCE IN A RAPID EXPANDING DIGITAL ECONOMY: Managing the delicate balance between DRM, and Employment in East Africa-How do we get right?

Taxation of e-commerce is an emerging area of challenge in tax policy and administration and yet the rapidly expanding digital economy has recorded a proliferation of technological innovations in the form of online business platforms, employing hundreds of youths and women, generating millions of revenues through innovation and e-commerce in Tanzania and East Africa generally.

Many research findings consistently suggest that a deeply integrated and competitive digital market among the EAC countries alone can boost the GDP by about $2.6 billion and create up to 4.5 million new jobs[1].  In Kenya alone, the digital economy is expected to add KSh 1.4 trillion or 9.24% of the GDP to Kenya’s economy by 2025 according to the Accenture, Africa iGDP Forecast. It is one of the fastest-growing sectors in the country with Kenya leading other African countries in terms of the digital economy’s contribution to the GDP at 7.7%, followed by Morocco and South Africa at 6.82% and 6.51% respectively[2]. The online industry contributed Ksh810 billion to Kenya’s GDP (7.7%) in 2020.

Some of the major businesses driving the online industry in Kenya are E-commerce firms such as Copia and Jumia, Fintech products like MPESA, and MShwari, HealthTech platforms like Daktari Africa, and Food-delivery startups. With an emerging army or tech talent and online trading platforms, the trend is upward in all the other East African countries.

And yet online businesses and e-commerce has been found to be a conduit for tax avoidance, evasion, and thus thwarting the government’s Domestic Resource Mobilisation (DRM) efforts.

With crunching national budgets and dwindling external aid, there is a reinvigorated push for governments to ramp up DRM efforts by expanding the tax bases through targeted new sources such as e-commerce.

Clearly, given the economic context at play, suggest that taking this trajectory as a new targeted area of taxation appears to be a delicate one that should be approached with caution.  Revenues should be collected but business and employment must be created and protected. Therefore, there is a need for a balance between the government’s imperative of maximizing DRM and promoting business and job creation for tech nerds, hundreds of digital entrepreneurs, and a bulging unemployed youth.

How can we manage this balance to be met without losing the gains achieved so far, by promoting fair taxation, DRM, and business opportunities to support innovation, business entrepreneurship, employment, and livelihoods required to meet the national development goals? What advances have been made by tax bodies, challenges so far, and concerns from digital entrepreneurs?

Our distinguished speakers at this webinar will dissect this subject with the purpose of creating a space for sensitization and public dialogue with key stakeholders such as Tax authorities and practitioners, private sector and digital entrepreneurs, Financial institutions, Civil Society Organizations, Africa’s economic diplomats, Government Officials and Agencies, development partners, and other interest groups.

They will help us understand the challenges facing this new area of taxation, including tax evasion, avoidance by transboundary online multinationals, and how the governments have integrated fiscal regimes in this year’s National budgets but significantly how do we get it right moving forward?

Our distinguished speakers will be:

1. Ms. Edna Gitachu,  Associate Director and Tax Policy Lead, PWC, Kenya: Budgets of Tough Times; An expert overview of digital taxation in Kenya’s National Budget 2023/24 and practical recommendations of fiscal measures that East African governments could take.

 

2. Ms. Leah Karunde, Tax Expert and Consultant, Tanzania:  Taxing the Invisible Red Hering: Practical Experiences in tackling online businesses and works of art such as television content, online content, marketing, sports betting, transportation, music, etc.

 

 

3. Mr. Francis Kairu, Policy Advisor, Tax Justice Network Africa; The Buffalo in the tent:  Tackling Tax avoidance, evasion, and illicit financial flows by Online Multinationals through e-commerce

 

 

4. Moses Kulaba, Convenor

Date and Time:  Wednesday, July 19, 2023 12:00 PM Nairobi , 11 AM CET and 9AM West Africa Time

Meeting ID: 99027631281   Personal Meeting ID: 321 806 9582

Pass Code:

Registration Link: https://zoom.us/j/99027631281

 

[1] https://www.trademarkafrica.com/news/east-africas-need-for-a-unified-digital-economy/

[2] https://kenyanwallstreet.com/kenya-to-earn-ksh-1-4-trillion-from-digital-economy-by-2025/

 

Financing of the Green Economy and prospects for Africa-Can Green Banks offer a viable alternative?

Achieving Green Economies and a just energy transition for Africa cannot be achieved without financing. It is said there is sufficient liquidity and capital to finance climate change and green economic revolution in Africa. Unfortunately, much is not reaching the African continent. In East Africa, access to financing of clean renewable energy such as solar is limited and expensive for many rural communities and poor households. There is potential for solar energy but the existing government policy, legal and financing have gaps limiting cheap financing and solar uptake for rural communities.

The US experience show successful green and clean energy financing models through Green Banks which can be adopted and replicated in East Africa.  Large and small financial institutions on the African continent have leveraged instruments and facilities towards financing the green economy, but these are largely unknown. Governments such as Tanzania are considering carbon trading mechanisms while others look towards imposing carbon taxes to raise the necessary financing for the next green economy. What are the viable options?

The problem

African countries still face significant challenges in financing their climate transition. While investment needs resulting from NDCs are estimated at $2.8 trillion by 2030, funds invested on the continent still represent a limited share of global green finance flows, and the share covered by the private sector remains limited[1] Governments, local financial institutions and communities find it difficult to mobilise or access financing. Large private sector players are reluctant to invest due to the high cost of capital, small scale of projects and inhibiting policy terrains that make it difficult to attract capital and financing into the green economies. Much of the available financing is not yet reaching the communities and thus scantly creating lasting change.

Viable options?

Green banks have been so far lauded as one of the most innovative policy developments that can be used to support and deployment of clean energy[2]. Green banks are financial institutions established primarily to use innovative financing to accelerate the transition to clean energy and fight climate change[3]. They mix commercial, public, and philanthropic approach to capital making it cheaper to finance new clean energy projects that otherwise couldn’t be built. They are a good vehicle for leveraging finance and directing investment to areas which are needed to scale up the green economy.  They are good tools for driving or achieving public policy with a social enterprise angle[4].

An assessment by the African Development Bank and the Climate Investment Funds revealed the potential of Green Banks in six African countries, namely Benin, Ghana, Mozambique, Tunisia, Uganda, and Zambia.

“The assessment revealed that green banks have significant potential for attracting new sources of catalytic funds when supporting low-carbon, climate-resilient development through blending capital and mobilising local private investment for green investments in Africa,” the AfDB reported.

Multilateral development banks and international financial institutions had a crucial role in enabling local financial institutions to develop a green pipeline of projects and ease their access to resources. It is for this reason that the AfDB has established the Africa Green Bank Initiative (ABI).

The AfDB’s Green Bank Initiative (AGBI) is described as a powerful tool for reducing financing costs and mobilising private sector investments in climate action in Africa. The African Green Bank Initiative will be backed up next year by a $1.5 billion trust fund due to close in 2025. The initiative will bolster the capacity of local financial institutions to build a robust pipeline of bankable green projects, while de-risking investments and entrenching long-term investor confidence toward climate-resilient and low-carbon projects in Africa.  “It will do so through investing in sectors such as energy efficiency and renewable energy, climate-smart agriculture, resilient infrastructure, and nature-based solutions, AfDB states.

According to Akinwumi Adesina, the AfDB President, the establishment of a green finance ecosystem could generate $3 trillion in climate finance opportunities on the continent, while over the period 2020-2030, the financing gap to address climate change is estimated at between $100 billion and $130 billion per year.

Moreover, there are other financing options that are or can be pursued. These include green bonds, green loans, and carbon trading mechanisms.

Coincidentally, all these financing mechanisms have upsides and downsides, which  upon evaluation climate financing justice advocates such as  the CSO network, Pan African Climate Justice Association (PACJA) and government officials like Ms Isatou  Camara of the Gambia are now calling out financial institutions  for a total re-engineering and redesign  of climate financing to ensure that more is structured in the form of grants than loans and that at least 70% of this funding reaches the communities. The loans are expensive, Africa is over indebted and yet investment in renewable energy is an expensive affair for African governments to pursue alone[5]

At national level access to green finance should be relatively cheap, driven by a combination of less profit maximisation goals and more social enterprise imperatives and back by enabling legislative and regulatory framework.

Purpose of the webinar

This webinar is the second in a series of the different webinars that GEPC plans to conduct this year on the different elements on economic governance and climate economics, with anticipation that we can contribute towards expanding knowledge, public discussion, and engagement in these spaces.

But more significantly creating opportunities for business economic opportunity in country, including space for youth and women led young businesses to benefit from the emerging context.

Our distinguished speakers will dissect this subject and help us understand Financing of Green Economy in the context of climate change and transition to clean energy: Prospects for Green banks and other financing mechanisms in East Africa with a view of

Objectives

  1. Increase awareness and knowledge about the current Climate Economics and Financing the Green Economy in Africa
  2. Provide an opportunity for stakeholders to interrogate financing structures, national policy terrains, initiative potential opportunities and inhibitors to success.
  3. Influence key stakeholders such finance institutions and potentially state parties to hasten reforms for success.
  4. Generate a potential opportunity for non-state actors, communities, and small entrepreneurs to benefit from existing financing plans.

Our distinguished speakers will be:

1. Ms Isatou F. Camara, Ministry of Finance and Economic Affairs, The Gambia, Least Developed Countries Group Climate Finance coordinator:  Restructuring of the global financing architecture for green economies-what financial institutions must do.

2. Ms Audrey Cynthia Yamadjako, Africa Green Banks Cordinator, African Development Bank (AfDB)

3.Ms Grace Mdemu, Capital Markets FSD Africa, former Business Development Officer at Africa Guarantee Fund (AGF): Leveraging of capital and opportunities to finance Green Economies in East Africa

4.    Dr Elifuraha Laltaika, Senior Lecturer of Natural Resources Law, Faculty of Law, Tumaini University Makumira, Tanzania:   Leveraging financing to poor and indigenous communities in Tanzania

5. Ms Cynthia Opakas,  Senior Legal Counsel, Green Max Capital , Kenya: Practical experiences on financing the green economy in Kenya and global best practices

6. Moses Kulaba, Convenor

Date and Time:  Wednesday, June 14, 2023 12:00 PM Nairobi , 11 AM CET and 9AM ACCRA Time

Pass Code:059752

Registration Link:  https://zoom.us/j/94532314396 

[1] https://www.afdb.org/en/news-and-events/african-development-bank-launches-model-deploying-green-financing-across-continent-56903

[2] Richard Kauffman, Yale School of Management, Financing Clean Energy Technology

[3] http://coalitionforgreencapital.com/wp-content/uploads/2019/07/GreenBanksintheUS-2018AnnualIndustryReport.pdf

[4]https://gepc.or.tz/make-it-happen-how-green-banks-acceleration-can-light-up-rural-hamlets-in-uganda/

[5] Her Excellence Dr Samia Suluhu Hassan, President of United Republic of Tanzania during her address to African leaders at a side event on the Southern Africa Power Pool (SAPP) organised during the CoP27 in Egypt

AfCFTA: Dissecting the world’s largest Free Trade Area: Challenges and Opportunities for East Africa. Is AfCFTA a window of opportunity or a fallacy?

The AfCFTA entered into force on May 30, 2019. Despite the speed at which this new Africa continental trading block is unloading, there is very limited knowledge amongst ordinary citizens, particularly youth, women, and small business.  There is a fear that AfCFTA may be built on a weak ground, set itself for an uphill task and potential failure

The Africa Continental Free Trade Area (AfCFTA) is so far the world’s largest Free Trade Area bringing together the 55 countries of the African Union (AU) and eight (8) Regional Economic Communities (RECs). The overall mandate of the AfCFTA is to create a single continental market with a population of about 1.3 billion people and a combined GDP of approximately US$ 3.4 trillion. The AfCFTA is one of the flagship projects of Agenda 2063: The Africa We Want, the African Union’s long-term development strategy for transforming the continent into a global powerhouse[1].

As part of its mandate, the AfCFTA is to eliminate trade barriers and boost intra-Africa trade. It is to advance trade in value-added production across all service sectors of the African Economy. The AfCFTA is expected to contribute to establishing regional value chains in Africa, enabling investment and job creation. The practical implementation of the AfCFTA has the potential to foster industrialisation, job creation, and investment, thus enhancing the competitiveness of Africa in the medium to long term.

The AfCFTA entered into force on May 30, 2019, after 24 Member States deposited their Instruments of Ratification following a series of continuous continental engagements spanning since 2012. By end of February 2023, 54 member states had signed up and 46 already deposited their ratification instruments, paving way for effective implementation of AfCFTA.

The problem

Despite the speed at which this new Africa continental trading block is unloading, there is very limited knowledge amongst ordinary citizens, particularly youth, women, and small business.  There is a fear that AfCFTA may be built on a weak ground, set itself for an uphill task and potential failure.   AfCFTA aims to create a supra regional economic block in an environment where previous efforts to trade and economic  integration  under frameworks such as the Economic Cooperation of West Africa States (ECOWAS), Preferential Trade Area and Common Market for Eastern and Southern Africa (PTA- COMESA), Southern Africa Development Cooperation (SADC) and East Africa Community (EAC)  have struggled to survive and fully benefit member states , particularly in expanding opportunities for small businesses, jobs and free movement of labour. Trade barriers still exits and overlapping regional configurations, with multiple membership of states to more than one block have exacerbated problems in implementation and held back member states and citizens from enjoying the benefits of regional economic integration.

From an academic perspective, there is a continuous debate on the role of regional integration and commercial diplomacy as instruments of economic diplomacy on trade export flows among African states. A study by the European University in 2016 show that bilateral diplomatic exchange is a relatively more significant determinant of bilateral exports among African states compared to regional integration. The study found a nuanced interaction between these two instruments of economic diplomacy: the trade-stimulating effect of diplomatic exchange was less pronounced among African countries that shared membership of the same regional block. Generally, this could mean that there exists a trade-off between regional integration and commercial diplomacy in facilitating exports or a lack of complementarity between these two instruments of economic diplomacy[2].

AfCFTA is therefore viewed in some analytical circles as potentially counterproductive, as may potentially open the continent to stiff external competition.  Further, cynics view AfCFTA as a potentially well-orchestrated tactical move suitable for developed economies, to open up Africa as a single market. With AfCFTA in place, its alleged, it will be cheap for large RECs such as the European Union (EU) to easily access Africa’s markets with minimal hinderance, as it may now be easy for large and well-established trading blocs such as the EU to negotiate preferential trade deals with one major African block and not with independent states. This had proven problematic in the past negotiations for trade deals such as the controversial Economic Partnership Agreements (EPAs).

Window of opportunity?

None the less, the AfCFTA is here, providing potentially a land shade moment for Africa to reclaim itself, unlock its trade potential and to take its well-deserved position in the community of nations as an economic giant.

The whole existence of the AfCFTA is to create a single continental market for the free movement of goods, services and investments. The AfCFTA Agreement covers goods and services, intellectual property rights, investments, digital trade and Women and Youth in Trade among other areas. The Secretariat, therefore, works with State Parties to negotiate trade rules and frameworks for eliminating trade barriers while putting in place a Dispute Settlement Mechanism, thereby levelling the ground for increased intra-Africa trade. Could this be a reclaimed window of opportunity for Africa?.

Purpose of the webinar

The purpose of this webinar is to dissect AfCFTA create a space for sensitisation and public dialogue with key stakeholders such as Civil Society Organizations, Africa’s economic diplomats, the Private Sector, Government Officials and Agencies, Partners, and other interest groups; in a bid to create awareness about the AfCFTA Agreement and the potential opportunities it offers, thus, securing their active support in the implementation of the Agreement.

This webinar is a first in a series of the different webinars that GEPC plans to conduct on the different elements of AfCFTA, with anticipation that we can contribute towards expanding knowledge and engagement with AfCFTA in the region and propelling its effective implementation.  But more significantly creating opportunities for business economic opportunity in country, including space for youth and women led young businesses to benefit from this new continental arrangement.

This webinar will be held ahead of marking the 4th Anniversary since the AfCTA came into force on 30th May 2023. The webinar will therefore be a major point for reflection on the aspirations and progress made and in generating views and which can potentially influence its future direction.

Our distinguished panelist speakers

  1. Ms Treasure Maphanga, Chief Operating Officer (COO), Africa E-Trade Group and Former AU Director Trade and Industry
  2. Mr Deus  M. Kibamba, Lecture Tanzania Centre for Foreign Relations
  3. Mr Elibarik Shammy, Programs Manager, Trade Mark  Africa
  4. Ms Jane Nalunga, Executive Director, Southern and Eastern Africa Trade Information and Negotiations Institute (SEATINI)
  5. Mr Robert Ssuna,  Tax and Trade Expert and Consultant
  6. Mr Moses Kulaba, Tax Law expert and Economic Diplomat (Convenor)

Tentative Dates: Wednesday, 10th May 2023

Time: 12-13:30 Hrs-EAT/ 11AM CET and 9:00 am Accra Time

To participate please register via: https://zoom.us/meeting/register/tJIsc-ispjwiGdVn1y4w9Jks-h-zs5i9QEzV

Meeting ID: 96141487831. Passcode: 391843

[1] https://au-afcfta.org/

[2] Afesorgbor Sylvanus Kwaku (2016) Economic Diplomacy in Africa: The Impact of Regional Integration versus Bilateral Diplomacy on Bilateral Trade, European University Institute, EUI Working Paper MWP 2016/18

Make it Happen: How Green Banks acceleration can light up rural hamlets in Uganda.

For this action, I propose following actions. First, the Commissioner of renewable energy to review existing policy to provide for green bank financing mechanisms. Secondly, review and provide an enabling law for operation of green banks. Thirdly, provide an established and operational finance fund to capitalise green banks and finally, conduct public awareness on the importance of green banks.

By Moses Kulaba, Yale University , FDCE 2023

Access to financing of clean renewable energy such as solar is limited to many rural communities and poor households in Uganda. There is potential for solar energy but the existing government policy, legal and financing have gaps limiting solar uptake for rural communities. The US experience show successful solar energy financing models through Green Banks which can adopted and replicated in Uganda.

What are green banks?

Green banks are financial institutions established primarily to use innovative financing to accelerate the transition to clean energy and fight climate change[i].  Experiences from the United States (Connecticut, New York etc) show that Green banks are viable and play a significant role in expanding access to clean energy to places and people who could not afford them.

According to American Coalition for Green Capital, there were at least 21 green banks operating in the US in 2021 and cumulatively caused $676 million in investments into the clean energy space, increasing energy access to hundreds of communities, who could not afford and helping states achieve their clean energy deployment targets. Backed by an enabling law, (The National Climate Bank Act 2019) and the National Climate Bank is now federally capitalised.

Yet the existing policy and legislative gaps in Uganda have made it difficult for private sector to inject large sum capital into clean energy and hence denying millions opportunity for access to affordable energy and lighting.

 The dire situation

In Uganda, over 60% people lack access to electricity from the national grid.  26% lived in households connected to the national power grid. Only 18% of rural households were connected to the national grid. Poor citizens and residents in rural areas and in the Northern region are least connected[ii]. 33% of the population use solar technology country wide with a small percentage of rural households connected to solar[iii]. About 94% of total primary energy consumption is from biomass such as firewood (78%), charcoal (5.6%) and kerosene (4.7%) and only 1.4% from electricity. Electricity is costly for rural communities (at $0.176 per kWh for households compared to global average of $0.136[iv]) and in 2014 Uganda was ranked highest in East Africa[v]. Solar is cheaper compared to grid electricity and therefore saves the rural poor extra money which can be spent on other critical needs of the family[vi].. Thus, the socio-economic benefits from expansion and access to cheap solar connections for households is enormous.

The solution

Expansion of green banking will increase access to clean energy with corelating positive benefits to the economy and health in the form of solar or green business, improved health from reduced toxic biomas, improved lighting and quality education with more extended time for children learning.

Financing is essential and Green Banks leverage access to this financing. Green Banks are mission-driven institutions that use innovative financing to accelerate the transition to clean energy and fight climate change[vii]. They mix commercial, public, and philanthropic approach to capital making it cheaper to finance new projects that otherwise couldn’t be built. The result is more clean energy being deployed at lower cost.

Uganda’s solar potential

Uganda’s location at the equator, provides it with a large potential to invest and extend its use of solar power. The average solar radiation is 5.1 kWh/m2/day and high throughout the year with a yearly variation (max month / min month) of only about maximum 20% (from 4.5 to 5.5 W/m2) due to its location along the equator. The insolation is highest in the dryer area in the north-east[viii].  Despite this potential, solar penetration has remained low. Only 33 % of the total population currently use solar power. The solar penetration in rural areas is even lower estimated at under 20%.

Financing and policy gaps

Financing is a limiting factor to rural households who need it but cannot afford. The current Energy Policy 2002 and the Renewable energy policy 2007 sought to increase use of modern renewable energy, from 4% to 61% by 2017 but have gaps, which have limited this to happen. It does not provide for Green banks as a financing model.  Moreover, Uganda Energy Capitalisation Trust, a credit facility, to realise this policy expired and has never been renewed. Uganda lags in meeting its policy targets as only 10 solar projects had been completed by 2022.

Initiatives for Green banks in Uganda

Since 2021 efforts by eleven banks[ix] to scale up green bank models and their developed financing solution instruments are not yet refined.  Government is yet to realise their potential[x] Governments and Citizens are yet to harness from the immense transformation that can be leveraged by Green Banks. They are not backed by an enabling policy and law. Yet, the current participating banks and financial institutions are partially driven by a profit margin than a philanthropic approach. The later approach is a success factor for Green Banks in the US.

By creating a favourable policy and legal environment, as a government ‘green light’ signal, coupled with community mobilisation and public expansion, the Green Banks can be a game changer. Solar energy costs will come down, support and uptake will increase, rural penetration will expand, and millions of livelihoods uplifted.

Proposed recommendations

To make this happen, I propose that government, through the commissioner for renewable energy and the parliamentary committee on energy, to accelerate green banks in Uganda, as a viable alternative approach to financing access to clean and renewable energy in marginal and rural areas by instituting the following measures.

  1. Firstly, review and orient the existing renewable energy policy to actively recognise, promote and facilitate operation of green banks in Uganda.

 

  1. Secondly, review the current laws to allow existing and registration of new financial institutions to operate as not for profit institutions in support of lending or financing green enterprise and renewable energy. The successful US model so far shows.

 

  1. Exert pressure on the government to re-capitalise and continuously capitalise the defunct Energy Capitalisation trust fund. This will provide a stable source of funding and risk cushioning measure to the Green Banks to cause new investments in clean and renewable energy such as solar. The Connecticut Green bank model can be adapted to Uganda and replicated.

 

  1. Conduct public awareness and promote successful projects to relevant sector players, potential investors, and resistant rural communities on the viable potential of solar and existence of low-cost financing for solar technology through green banks.
  2. Make access to financing for Solar energy cheap and accessible to the poor communities and rural households. Organise communities to pool funds which can be used to pay off the initial investment costs of solar connections and maintenance. This can be through introduction of Village Solar Saving and lending Societies.

 

References

End notes

[i] http://coalitionforgreencapital.com/wp-content/uploads/2019/07/GreenBanksintheUS-2018AnnualIndustryReport.pdf

[ii] https://www.afrobarometer.org/wp-content/uploads/migrated/files/publications/Dispatches/ad441-despite_hydropower_surplus_most_ugandans_lack_electricity-afrobarometer_dispatch-14april21.pdf

[iii]https://www.researchgate.net/publication/356075202_Adoption_of_solar_photovoltaic_systems_in_households_Evidence_from_Uganda/link/61af1287c11c103836974406/download

[iv]https://www.globalpetrolprices.com/Uganda/electricity_prices/#:~:text=Uganda%2C%20December%202021%3A%20The%20price,of%20power%2C%20distribution%20and%20taxes.

[v] https://energypedia.info/wiki/Uganda_Energy_Situation#Energy_supply

[vi] https://energypedia.info/wiki/Uganda_Energy_Situation#Energy_supply

[vii] http://coalitionforgreencapital.com/wp-content/uploads/2019/07/GreenBanksintheUS-2018AnnualIndustryReport.pdf

[viii] https://energypedia.info/wiki/Uganda_Energy_Situation#Energy_supply

[ix] https://www.renac.de/projects/current-projects/green-banking/green-banking-uganda

[x]https://www.ugefa.eu/news/unlocking-capital-green-economy-uganda

End to false promises: Why COP27 must be a true African COP

 

Climate Change and Energy Transition negotiations should be about people.  A just transition cannot be achieved if the majority already affected by climate change and are likely to be affected by the energy transition as a mitigation measure are not heard on the negotiation table

By Moses Kulaba

The 2022 United Nations Climate Change Conference, more commonly referred to as Conference of Parties (COP), was held from 6 -18 November 2022 in Sharm El Sheikh, Egypt. This year’s COP was branded as the African COP since it  happened on the African continent.

Interestingly, this was not be the first COP on the African continent (Africa has hosted other COPs before in Morocco, Durban and Nairobi) and if going by the precedent set by past COPs, climate change commitments and targets were never honored especially by the world leading countries in terms of carbon emissions even after the Paris Agreement. The COP26 promised funds which never came.

In most cases the African political leadership was often disjointed in terms of a common position grounded on the realities of the continent’s people, livelihoods, and economies as the least contributors to the climate crisis.  Furthermore, the people’s voices and grievances are often excluded in the negotiations and processes thereafter. The net result has been a technical process which has led to a potentially slow but catastrophic climatic journey to oblivion, with Africa bearing the brunt of climate shocks and stress.

Despite being the least polluter, Africa faces the worst vagaries of climate change and energy transition risks. Previous IPCC reports indicate that Africa is experiencing more rises in temperatures and sea levels than anywhere else in the world. In the next decade, Africa will experience intense heat waves of up to 5 times more than ever recorded, more uncertain rainfall, droughts etc. Africa is facing significant total disruptions and mitigation and adaptation is required to reduce overall risks of climate change.

Currently, East and Horn of Africa is experiencing the worst drought in over 40 years, with between 22 million to 50 million facing starvation and over 3.4 million children already malnourished. The March to May rains were the lowest in 70 years which has resulted in multiple cycles of crop failure and loss of millions of livestock which are essential sources of livelihood.

For Africa, the potential risks of global warming and climate change are everywhere and daily risk that we face. With a total Forest cover of about 7,13,789 sq km which is 21.71% -24.6% of the geographical area of the country, Tanzania is one of the largest remaining carbon sink. Tanzania’s forests contain more than 2,019 million metric tons of carbon in living forest biomass. Yet, it is estimated that between 1990 and 2010, Tanzania lost 19.4% of its forest cover, or around 8,067,000 ha. At this rate, we could lose half of our forest cover by 2030.

A sudden rise in the Ocean Sea levels by around 3 feet is enough to partially submerge Zanzibar. National Geographic scientists estimate that the islands of Zanzibar and Mafia are likely to disappear under water by 2100 due to a rise in sea level triggered by global warming. Globally, sea level has risen about eight inches since the beginning of the 20th century and more than two inches in the last 20 years alone. Every year, the sea rises another .13 inches (3.2 mm.) New research published on February 15, 2022, shows that sea level rise is accelerating and projected to rise by a foot by 2050.

It was this reason that I argued for CoP27 and any future negotiations on Climate Change and Energy Transition negotiations to be meaningful, they should be about people.  A just transition cannot be achieved if the majority already affected by climate change and are likely to be affected by the energy transition as a mitigation measure are not heard on the negotiation table.  Tangible results for Africa can only be achieved by;

Making climate change technology available

Make climate change technology available and cheap on the African continent. The unit cost of several low emission technologies has fallen since 2010 and innovation policy packages have also enabled the costs to go down. Both innovation systems and policy packages have helped to overcome the distributional, environmental, and social impacts potentially associated with global diffusion of low technology. Unfortunately, this investment and technological advancement are not evenly distributed. They are scantier in less developed countries and Africa in general.

As that transition is happening, Africa is being left behind, but it is rushed and expected to catch up at a similar pace like its developed counter parts. Therefore, a just transition in real sense is required that allows or enables Africa to benefit in the ongoing climate change technological advancement.

Africa should not only be a market but also a producer of climate change mitigation technology. As a matter of essence and fairness, let production of these be based on the African continent to make use of existing technology input resources, adding values, and creating jobs.

Harnessing Africa’s Oil Gas and Coal, without locking into a fossil future

Allow Africa to exploit its fossil resources in the short term as it gradually transits. Africa has vast deposits of coal and is largely an emerging producer of oil and gas. There are different views on the continent on the future of gas as a source of energy. The question that is often asked is whether gas can be described as ‘a clean’ fossil. But based on its energy poverty status, growing population and sustainable development goals. It is evident that Africa will continue to rely on oil as a source of energy for a longer foreseeable future than its developed counterparts.

The emerging African political leadership consensus appears to support the continued investment and use of gas as a transitional source of energy to bolster their energy mix plans to meet increasing energy demand required to propel Africa into the future. It is true that statistical data shows investment and deployment of clean and renewable energy has been increasing globally however the pace has not yet reached a tipping point to overtake fossil based sources on the African continent.  It is therefore imperative to have a balance that allows Africa to use its gas for development but is careful not to lock itself into a non-sustainable gas or fossil future.

Africa has vast deposits of coal. The recent Russia Ukraine war showed that despite earlier predictions, the use of coal as a source of energy may now have a longer lifetime than earlier predicted, as European Countries such as Germany planed to re-fire their coal plants as a way of diversifying away from reliance on Russian gas, meeting current energy demand and securing their future energy security. This therefore meant that perhaps this can allow Africa to exploit and benefit in the short-term demand, with or without totally losing out and locking itself in a coal carbon future. This could be a risky bet but worth trying as strategies are developed for a gradual phaseout.

Leveraging Africa’s transition minerals

There is need to leverage Africa’s transition minerals to drive economic prosperity and smooth domestic transition. Africa is endowed with vast deposits of minerals which are critical to the clean energy technology required in support of the energy transition and road to net zero. Africa produces less oil but more minerals. According to statistical data between 48% to 70% of cobalt (which is used in the manufacture of batteries for electric car vehicles and phones) and 4% of copper and 1% of lithium is found in the DRC. Tanzania, and Mozambique account for 45% of global graphite, with Tanzania ranked alone ranked to have around the 5th largest global reserve.

Historically, Africa has been a source of materials for global progress.  Unfortunately, minerals in Africa have been largely a source of misery and death.  The heart wrenching stories of mineral driven conflicts in Eastern DRC is well documented. A just transition, therefore,  cannot be achieved if Africa’s minerals are exploited to serve the technological advancement and energy security elsewhere. Africa’s resource rich countries should not be bystanders in this potential energy revolution. This time around Africa must be thinking about how to position itself, so it doesn’t find itself riddled with the resource curse which has bedeviled the continent for so long.

Pegging  Africa’s development on Africa Agenda 2063

Capping global warming at 1.5°C requires a transition to clean energy by 2030 and that global emissions reach net zero by 2050. This is barely less than eight years from now and many African Countries will not beat this deadline. Africa  can not be rushed into an energy transition. To have a just transition in Africa, governments and Africa people’s participation is critical in setting the agenda for the COP negotiations and securing targets that are feasible.

Africa needs to develop or redefine its vision and mission on climate change and energy transition. This redefined vision may be slightly different from the global vision but aligned to Africa’s vision, needs and development determinant factors or drivers of development. For example, setting Africa’s energy transition targets to Agenda 2063 could plausible idea.

Implementing NDCs and NAPs at government level

At government level, implementation of the Nationally Determined Contributions (NDCs) and National Adaptation Plans is critical At the previous COPs, the NDCs were lauded as a major breakthrough demonstrating global political commitment by member states towards climate change mitigation and adaptation. Unfortunately, in many African countries these plans have largely remained unimplemented. Leveraging financing of the NDCs will be an essential game changer in turning the tide against climate Change.

Financing Climate Change and the transition

One of the major obstacles holding back efforts to combat climate change is finance  and finance!. A just energy transition for Africa cannot be achieved without financing. Globally, there is sufficient liquidity and capital to finance climate change. In 2010 developed countries committed provide USD100 billion annually towards climate change. Unfortunately, this promise has not been honored. Much  of what is available is not reaching the African continent.

Africa requires and faces acute shortage in access to energy. Around 759 Mln people in Africa still lack access to electricity. According to the UN Road Map to 2030, it requires only 35bln annually to bring electricity to the 759 million who lack it in Sub Saharan Africa. Indeed, with as low as USD 25 bln annually spent, can raise all 2.6bln people who have no access to electricity, yet Africa seems not to get this money. CoP27 should be where this stain of shame in the fight against climate change is put to an end.

Financing Africa’s climate change and energy transition pathways is mutually beneficial to both Africa and the developed world. By virtue of its location and current low levels of emission, Africa so far is the largest existing carbon sink and buffer that so far can help save the globe.

Africa is not ready to finance a just transition because governments have a limited fiscal space to finance it due to debt servicing pressures and competing priorities for social expenditures. Developed countries must provide financing which was committed and follow by curbing illicit capital and financial out flows from Africa to enable the continent to use it to finance the transition.

Curb illicit financial flows from the continent.

For Africa to be ready for climate change and energy transition, there’s need to seal the existing  loopholes that are facilitating Illicit Financial Flows from Africa to the tune of U$ 89 billion annually (according to the 2020 United Nations Conference Trade and Development report). Much of these outflows trace their destination to developed countries and tax havens whose headquarters are located in developed countries. They are facilitated by weak governance structures, tax avoidance and white collar corruption. If these loopholes are closed, Africa could effectively meet and exceed its financing gap of U$ 70 billion for renewable energy.

In a nutshell, give Africa the financial means to deliver on climate change. Provide cheap technology for Africa to deliver on renewable energy. Facilitate Africa to add value to its green minerals so countries such as Tanzania, DRC and Zambia can share the benefits from their mining resources. Provide Africa with adequate timelines to catch up with  its developed counterparts and most importantly listen to our voices at the COPs if we are to collectively deliver on climate change and targets to net zero.

**A modified version of this article also appeared in the Citizen Newspaper of 10th November 2023 to coincide with the COP27

The Future is Green: How Can Tanzania Harness its Renewable Energy-Opportunities and Gaps

With high winds potential that cover more than 10% of its land and solar energy levels ranging from 2800 to 3500 h of sunshine per year and a global horizontal radiation of 4–7 kWh/m2/day, Tanzania is just a step away from becoming a reckonable giant of renewable energy and leap jumping into a clean future

By Moses Kulaba, Governance Analysis Centre

Tanzania, like other developing countries, is striving to adopt different ways of ensuring affordable and accessible energy supply to its socioeconomic and political sectors to achieve renewable energy development. To secure affordable and accessible energy in the country, renewable energy is termed as an alternative energy source because of it is environmentally friendly. If renewable energy is produced and utilized in a modern and sustainable manner, it will help to eliminate energy problems in Tanzania

According to reports, Tanzania has a lot of renewable energy sources such as biomass, solar, hydropower, geothermal, biogas, wind, tidal, and waves. These sources are important for decentralized renewable energy technologies, which nurture the isolated nature of the settlements and are environmentally friendly. Despite their necessity, renewable energy sources are given low priority by both government and Households[1].

Tanzania’s power sector is dominated by state-owned TANESCO (Tanzania Electricity Supply Company Limited). TANESCO owns most of the country’s transmission and distribution network, and more than half of its generating capacity. Tanzania’s electricity generation comes mostly from natural gas (48%), followed by hydro (31%), petrol (18%) with solar (1%), and biofuels (1%). The traditional dependence on hydropower combined with the droughts that are affecting the country, often result in power supply shortages[2].

The World Economic Forum (WEF) reported the total sum of global investment into renewable energy has increased. This was supported by a 28% annual increase in investment from the United States (U.S), in 2019 totalling $54.6 billion[3]. Renewables cannot totally replace fossils such as oil, but increased investment shows increased potential contribution in the energy mix.  The International Energy Agency (IEA) estimates annual clean energy investments will more than triple by 2030.

With its vast resources and location, there are opportunities for investment in its abundant solar and wind potentials. Perhaps, it is argued, the country can leverage its strategic position to scale up investment to generate more and at the same time position as a major supplier and user of renewable energy sources.

However, there are gaps such as financing, infrastructure, storage, and government facilitation which potentially limit investment, scale up, use and benefiting from this potential. The cost for initial investment is high and the returns on investment could be slow. Exploration efforts have largely emphasized hydropower projects, and other renewable energy such as solar, thermal, wind, biomass, and biogas are under-utilized due to different socioeconomic and political reasons

Further, some of African political leaders, such as expressed by Uganda’s President Yoweri Museveni, have argued that renewable energy is not sustainable to meet the future global population energy demands. It cannot even meet or drive Africa’s development agenda.  Renewable energies such as solar and wind are largely dependent on whether and climatic factors. A solar farm requires huge tracts of land, and this can or may potentially spark off a new wave of land grabbing by solar energy investors and land conflict across the continent. Africa could also be a bystander in renewable energy technology. For Africa to benefit, investment in technologies and production of equipment, such as solar panels and wind turbines must be on the continent.

But CSOs such as power shift Africa and Anti Coal Coalition[4] argue that investment in renewable energy is economically viable, will create jobs and increase access to energy to the poor and rural areas where access to the national could be difficult. Significantly, it will help Tanzania achieve its domestic transition and unlocking the country from a fossil future.

The government, along with other renewable energy stakeholders, should complement existing policies and strategies to address issues related to renewable energy development to ensure timely and sustainable utilization of the available resources. Also, there is the need to provide a sound business and investment environment to local and foreign people who can provide capital towards renewable energy technologies and development. There should be more training and awareness made available to the public about how to invest and use renewable energy. Tanzania can and must benefit from the transition by upscaling its potential and starting to roll out implementation. Stalled projects should be implemented.

Tanzania’s potential in Wind and Solar Energy

Wind energy

Tanzania has areas of high wind potential that cover more than 10% of its land[5]. This is equivalent in size to Malawi and has greater potential than the US state of California, as reported by the World Bank report. There are areas with annual average wind speeds of 5–8 m/s[6] . These exist along a coastline of about 800 km with predominant surface winds, moving from south-east to northeast. Based on the current research works, Tanzania has a lot of wind energy resources in the areas of Great Lakes, the plains, and the highland plateau regions of the Rift Valley. Wind energy evaluation indicates that areas such as Makambako (Njombe) and Kititimo (Singida) have sufficient wind speed for grid-scale electricity generation, with average of wind speeds 8.9 m/s and 9.9 m/s at the height of 30 m, respectively[7]. Small-scale off-grid wind turbines along the coastline and in the islands also possess great potential in Tanzania.

By 2017, at least four companies had expressed interest in investing in wind energy in Tanzania to build wind plants with a capacity of more than 50 MW. These companies include Geo-Wind Tanzania Ltd in Dar es Salaam, Tanzania; Wind East Africa in Singida, Tanzania; and Sino Tan Renewable Energy Ltd. and Wind Energy Tanzania Ltd. in Makambako, Tanzania. Wind farms with capacities of 100 MW in Singida would be constructed under the corporation of the Six Telecoms Company in Singida, Tanzania; International Finance Corporation in Washington DC, The United States of America; and Aldwych International in London, the United Kingdom. The project would cost US$286 million[8]. Compared to other renewable energy resources that attract investment, most of the people have been trying without success to produce electricity from the wind energy. Thus, only the government and private companies are the ones who are involved in power generation assessments from wind energy resources[9] [66]

Solar Energy

In Tanzania, solar energy is used as a source of power by 24.7% of the households with access to electricity. Potential solar energy resources are found in the central parts of the country[10] [1]. There are high solar energy levels ranging from 2800 to 3500 h of sunshine per year and a global horizontal radiation of 4–7 kWh/m2/day [1,70]. According to the World Bank, Tanzania has a solar energy potential greater than that of Spain and wind energy potential greater than that of the US State of California. With such great potential for solar energy resources, Tanzania is naturally appropriate for producing solar energy as a feasible alternative source for modern energy supply and rural electrification.

The solar energy market in Tanzania has drastically grown and increased over the last few years. Currently, the potential solar energy resources in Tanzania are used in different parts such as solar thermal for heating and drying and photovoltaic for lighting, water pumps, refrigeration purposes, and telecommunication. Solar energy is used mostly in rural areas with about 64.8% compared to urban areas with only 3.4%. The regions of Lindi, Njombe, Mtwara, Katavi, and Ruvuma lead in the use of solar power electricity in Tanzania[11]. Despite the increasing market for solar energy applications, there are fewer signs that the government is expecting to include solar PV in the national electricity mix in any substantial way in the future

[1] Obadia Kyetuza Bishoge: The Potential Renewable Energy for Sustainable

Development in Tanzania: A Review, 2018 accessed at : https://www.mdpi.com/2571-8797/1/1/6/pdf#:~:text=Tanzania%20has%20a%20lot%20of,are%20environmental%20friendly%20%5B1%5D.

[2] https://www.trade.gov/energy-resource-guide-tanzania-renewable-energy

[3] https://www.weforum.org/agenda/2020/06/global-clean-energy-investment-research/

[4] https://www.theguardian.com/world/2022/aug/01/african-nations-set-to-make-the-case-for-big-rise-in-fossil-fuel-output#:~:text=African%20nations%20expected%20to%20make%20case%20for%20big%20rise%20in%20fossil%20fuel%20output,-Exclusive%3A%20leaders%20expected&text=Leaders%20of%20African%20countries%20are,documents%20seen%20by%20the%20Guardian.

[5] Tanzania Invest. Tanzania Has High Potential For Renewable Energy Projects, US Consulting Firm Indicates. TanzaniaInvest. 2015. Available online: https://www.tanzaniainvest.com/energy/tanzaniahas-high-potential-for-renewable-energy-re-projects (accessed on 15 April 2018).

[6] Kasasi, A.; Kainkwa, R. Assessment of wind energy potential for electricity generation in Setchet, Hanang, Tanzania. Tanz. J. Sci. 2002, 28, 1–7.

[7] Energy Charter Secretariat. Tanzanian Energy Sector under the Universal Principles of the Energy Charter. 2015. Available online: https://energycharter.org/fileadmin/DocumentsMedia/CONEXO/20150827- Tanzania_Pre-Assessment_Report.pdf (accessed on 8 May 2018)

[8] The Minister of Energy. The Speech of the Ministry of Energy and Minerals on the Estimates of the Revenue and Expenditure for Financial Year 2018/2019. 2018. Available online: https://www.nishati.go.tz/hotubaya-bajeti-ya-wizara-ya-nishati-kwa-mwaka-2018-19/ (accessed on 15 January 2018)

[9] The Economist. A World Turned Upside Down—Renewable Energy. 2017. Available online: https://www. economist.com/briefing/2017/02/25/a-world-turned-upside-down (accessed on 4 May 2018).

[10] Sarakikya, H. Renewable energy policies and practice in Tanzania: Their contribution to Tanzania economy and poverty alleviation. Int. J. Energy Power Eng. 2015, 4, 333. [CrossRef]

[11] https://www.thecitizen.co.tz/News/33pc-of-Tanzanians-have-access-to-electricity–report/1840340-3900298-9elccaz/index.html

Energy transition risks. Can Tanzania’s Gas and Coal remain stranded assets?

 

Tanzania has vast deposits of natural gas and coal. The looming energy transition will potentially have significant economic impacts on fossil rich countries and potential new producers such as Tanzania.

By Moses Kulaba, Governance Analysis Centre

The urge to curb Climate Change is here, and energy transition to cleaner energy is coming. These will affect countries differently. Fossil rich countries stand to lose most as countries transit from fossil fuels to clean energy. With the Russia-Ukraine war, current oil producers may enjoy a windfall benefit in the short term, but long-term demand cannot be guaranteed.  Fossils such as new oil and coal could remain stranded, as investments cut back. Yet, the energy transition also provides a potential opportunity for countries with viable deposits and potential suppliers of natural gas, if gas will be considered a clean source of energy, relevant for driving countries energy mix in the midterm and longer term.

With vast deposits of Natural Gas, so far discovered along its shores, Tanzania could benefit from the energy transition. At about 57 trillion cubic feet (tcf) Tanzania’s deposits are massive and considered of high quality, with low carbon.  However, this will be dependent on whether the global energy trends and discourse on energy transition can generally reach a consensus that gas is a clean source of energy, investment can be attracted, infrastructure can be developed and both domestic and international markets can be assured. Determining the potential for use of natural gas in achieving the country’s energy mix targets and securing its energy security will be key. Defeating international competition from established players such as Qatar and Algeria and new potential large producers such as Mozambique will equally be essential. If the global climate change movement reaches consensus and declares gas as a fossil fuel and polluting source, this will render Tanzania’s gas reserves to remain stranded.

The International Oil Companies (IOCs) interested in Tanzania’s gas are still optimistic that the project will take off. Although the over the past year’s negotiations were slow, the IOCs have not left, and this gives some hope that the Country could somehow navigate around the sensitive climate agenda and deliver its gas before 2030. The risks are there, and the negotiations for the development of the Liquefied Natural Gas (LNG) project in Mtwara must move faster before the gas is locked underground.

Tanzania’s coal as a stranded asset?’

Tanzania has vast deposits of coal. Tanzania’s coal is considered one of the best grades in the world. With the war raging in Ukraine over the past months, Tanzania has experienced a record boom in its exports to Europe since March 2022.

Globally, there has been an upsurge in the demand and prices for thermal coal reached above $400 per tonne up from $176 per tonne last year and around $75 in 2020. Europe is willing to pay more than twice the price for coal last year. This therefore gives Tanzania the opportunity to exploit its coal and benefit in the short-term demand, with or without totally losing out before a coal carbon future.

According to Mr Rizwan Ahmed, the managing director of Tanzania based coal miner Bluesky Minings and Jan Dieleman, President of Cargill Ocean transportation division, as European countries look everywhere, including far places for thermal coal. They are willing to pay twice the price and the Tanzanian suppliers plan to ramp up its production and double its exportation during this window.

According to the Mining commission and reported by Reuters and the Citizen Newsapers, Tanzania expects to double its coal exports this year to around 696,773 tonnes while production is expected to increase by 50% to about 1,364,707 tonnes.  Tanzania-based miner Ruvuma Coal had so far, exported at least 400,000 tonnes of coal via a trader to countries including the Netherlands, France, and India since November 2021, as per trade data reviewed by Reuters. Since November 2021 when Mtwara launched its first ever coal shipment, up to 13 vessels of coal had been loaded up by September 2022.

Tanzania has hinged its development pathway to an industrialised nation on harnessing its coal and gas potential. The two consecutive Five Year National Development Plans (2015-2020 and 2021-2026) identified the Natural Gas and Coal projects as strategic projects to deliver the country onto its development goals and to a Middle-Income Country. The project revenues and increasing access and supply of energy through to gas to electricity.

The government is considering building a railway that would link the coal-producing Ruvuma region to Mtwara, according to the acting executive secretary of the Mining Commission, Yahya Semamba.

Mitigating climate change concerns and the steadily moving trajectory towards energy transition away from fossil-based energy sources however offers a dilemma whether the government can achieve these objectives.

Tanzania’s development dilemma in the context of energy transition

In the wake of the looming energy transition to clean energy, the rekindled interest in coal because of the Russia-Ukraine war may not be guaranteed in the longterm. The war has accelerated interests in Africa’s thermal coal and gas but at the same time it may accelerate the energy transition in Europe as governments look for other cleaner alternatives including heavily investing in renewables to secure their cleaner future.

The government therefore needs to balance its excitement over bumper coal exports and use the extra revenues from the booming coal exports to invest in a cleaner energy system which will guarantee its country a place a clean energy future.

Securing financial investment in coal mining, and the market demand for coal, will be challenging in the future, as most (financial) institutions are now advocating for clean energy and sustainable finance. Indeed, according to the International Energy Agency (IEA) petroleum companies are the current leading investors in research and development for clean energy.  They don’t want to be locked out of the future and are spending their revenues carefully and locking into future energy markets with diligence.

Therefore, if the government of Tanzania still wants to benefit from its coal resources, it will need to take swift action to allow its extraction. Or, if it wants to participate in the energy transition, it will be compelled to leave its coal as a fossil fuel stranded in the ground. A tight policy choice that government may find difficult to partake. A divesture in investment from coal by large investors could cause potential disruptions in investment flows to Tanzania as a new producer, disrupt development projections.

Moreover, Tanzania is a signatory to international climate change obligations such as the UNFCC (1996) and Paris Agreement on climate change (2018), whose it must oblige.  According to the Nationally Determined Contribution (NDC) Tanzania has committed to reduce green gas emissions economy wide between 30%-35% relative to the business As Usual (BAU) Scenario by 2030[1]. Tanzania has committed to promoting climate resilient energy systems and exploring options for energy diversification. By doing so, Tanzania must balance its development imperative and climate change obligations. These will require political will, resources, and preparation. The government will also need to harmonise its NDC targets with the targets of its National Energy Systems Master plan which seek to increase the off take of gas to generate power into the national grid as part of the National energy mix.

Further, Tanzania is facing several challenges related to weak institutional, financial; poor access to appropriate technologies; weak climate knowledge management, inadequate participation of key stakeholders, and low public awareness which have significantly affected effective implementation of various strategies, programs, and plans[2].  The opposing voice against gas and coal is getting louder and this may have an impetus on whether these g projects move on. Government will have to address these moving forward

The energy transition debate therefore offers a potential dilemma for Tanzania. As alluded above, Tanzania is a potential supplier of critical minerals needed for the clean energy transition at the global level.  But also, a significant new producer of natural gas and fossils such as coal.

 

 

 

 

 

 

 

[1] URT: Nationally Determined Contribution, pg

[2] URT: Nationally Determined Contribution, pg3