55140 Enabling REfoRms: A Stakeholder-Based Analysis of the Political Economy of Tanzania's Charcoal Sector and the Poverty and Social Impacts of Proposed Reforms Enabling REfoRms: A Stakeholder-Based Analysis of the Political Economy of Tanzania's Charcoal Sector and the Poverty and Social Impacts of Proposed Reforms June 2010 Photographs by Klas Sander. Layout & design Petra Sutila ConTEnTs List of figures ii Abbreviations ii Acknowledgements iii Executive summary iv 1. Introduction 1 2. Methodology:politicaleconomyand povertyandsocialimpactanalysis 7 2.1 Net-Map: an innovative approach to political economy analysis 7 2.2 Poverty and social impact analysis of proposed charcoal sector reforms 8 3. Proposedpolicyreformsforamore sustainablecharcoalsector 11 4. Thepoliticaleconomyofthecharcoal sectorinTanzania 15 4.1 The formal governance framework ­ regulatory overlaps and gaps 16 4.2 (Dis)incentives for sustainable charcoal sector management at different organizational levels 19 4.3 De facto control over the charcoal sector 22 5. Potentialpovertyandsocialimpacts ofcharcoalsectorreforms 31 5.1 Charcoal use and expenditure on charcoal 31 5.2 Price effects of charcoal sector reforms 33 6. Conclusion 39 Annex 1: Details on the methodological approach 41 Annex 2: Selected tables 45 References 48 i lisT of figuREs Figure 1: Trends in charcoal prices (in Tanzanian Shillings) 2 Figure 2: Economic and environmental issues and challenges related to Tanzania's charcoal sector 3 Figure 3: Sources of energy for cooking in Tanzania, 1991 to 2007 5 Figure 4: Institutional roles in reporting forest policy implementation 17 Figure 5: Formal authority relationships in the charcoal sector 18 Figure 6: Retention of charcoal-related revenues, by level of government 19 Figure 7: The de facto organization of authority in the charcoal sector 22 Figure 8: The central role of dealers in the charcoal sector (as perceived by wholesalers/dealers) 26 Figure 9: Actor centrality (layout by standardized centrality index) 27 Figure 10: Source of energy used for cooking by urban consumers, by income quintile 32 Figure 11: Expenditures of urban households by income group 33 Figure 12: Charcoal price projections, per 80­100kg bag 34 Figure 13: Projected costs and profits of charcoal wholesalers, per 80­100kg bag 35 Figure 14: Exchange of information between actors (as perceived by central government stakeholders) 45 Figure 15: Exchange of information between actors (as perceived by local government stakeholders) 46 abbREviaTions CBFM Community Based Forest Management DoE Division of Environment, in the Vice President's Office HBSa Household Budget Survey IFPRI International Food Policy Research Institute LPG Liquefied Petroleum Gas MEM Ministry of Energy and Minerals MLHSD Ministry of Lands, Housing and Human Settlements Development MNRT Ministry of Natural Resources and Tourism MoF Ministry of Finance MOHW Ministry of Health and Social Welfare NGO Non-Governmental Organization PE Political Economy PMO-RALG Prime Minister's Office­Regional Administration and Local Government PSIA Poverty and Social Impact Analysis TaTEDO Tanzania Traditional Energy Development and Environment Organization TRA Tanzania Revenue Authority TZS Tanzanian Shilling VPO Vice President's Office Conversion rate: 1 US Dollar = 1,397 TZS (May 20, 2010). ii aCknowlEdgEmEnTs This report is the product of a team led by Klas Sander (Task Team Leader) and Christian Peter, comprising Clemens Gros (PSIA/PE specialist), Veronika Huemmer (consultant), Shima Sago, Everline Kihulla, and Editruda Daulinge (TaTEDO). The report benefited from helpful input and comments from a number of World Bank colleagues, including Thomas Danielewitz, Hans Hoogeveen, Josaphat Kweka, and Waly Wane. The report also profited from the insightful comments and suggestions of the peer reviewers Gernot Brodnig, Richard Hosier, Simon Rietbergen, and Gregor Wolf. The analysis and recommendations presented in this paper are based on focus group discussions and key informant interviews with 200 stakeholders, conducted in Tanzania between December 2009 and March 2010. We would like to express our sincere appreciation for the time and effort these groups and individuals took to meet with the study team, and for sharing their views, ideas and suggestions with us. The meetings would not have been possible without the tireless support from the TaTEDO team and Faith-Lucy Matumbo in the World Bank country office. We would like to thank the Governments of Finland and Norway for providing financial support to this study through TF-ESSD resources. iii EXECuTivE summaRY Although charcoal is the single most important energy charcoal is without alternative for most urban consumers source for millions of urban dwellers in Tanzania, being who cannot afford or do not have access to the more used by all tiers of society from laborers to politicians, it expensive alternatives. Therefore the protest from urban seems to be politically neglected and even unwanted, charcoal users was predictable and loud, and the measure given that it is not considered as a possible mean was short-lived. The ban was lifted after only two weeks, to achieve long-term sustainable development, for with charcoal production, trade and consumption example as a low-carbon growth option contributing continuing almost unabatedly ­ albeit under more to energy security, sustainable forest management, difficult conditions. and poverty alleviation strategies. A coherent policy framework governing charcoal production, trade and Building on the World Bank's recent policy note on use does not exist, and reliable statistics on the sector potential reforms of the charcoal sector in Tanzania1, are not available. As a consequence, the charcoal sector this report aims to facilitate the policy dialogue remains highly informal with regulations either unclear, around charcoal sector reforms by providing analytical not or only partially enforced, or easily bypassed due to information on the political economy of the charcoal pervasive corruption. While the total annual charcoal sector and on the potential poverty and social impacts business volume in Dar es Salaam alone is estimated to of a sustainability-oriented reform agenda. The research be worth US$ 350 million, the government is incurring an team employed a participatory analytical approach, estimated revenue loss of US$ 100 million per year due based on IFPRI's Net-Map tool for social network analysis. to unregulated and unregistered activities in charcoal The findings presented in this paper are based on focus production and utilization. Overall, it is estimated that only group discussions and key informant interviews with 200 20 percent of the taxes and fees due on charcoal-related individuals from government and non-governmental activities are presently being collected and paid. stakeholder groups relevant to charcoal sector policy making. For the poverty and social impact analysis, an The largely unregistered and unregulated production exploratory quantitative approach was chosen due to and use of charcoal give reason to serious environmental very limited data availability and the informal nature of concerns that call for a comprehensive reform of the the charcoal sector business. Therefore, the findings and sector: with Tanzania's total annual charcoal consumption recommendations presented in this report should be being estimated at 1 million tons, the annual supply of treated with care. wood needed to meet this demand is about 30 million cubic meters. In some areas of the country, especially The formal governance framework of the charcoal sector around the main urban areas, the production of charcoal in Tanzania is characterized by weak institutionalization, results in significant degradation of forest land and ­ in law enforcement, and other regulatory capacity, combination with other land use changes ­ to permanent as well as regulatory overlaps and gaps. There is no deforestation. comprehensive policy, strategy, or legal framework in Tanzania addressing the charcoal sector. Four ministries Systematic initiatives trying to halt forest degradation share responsibility and over the years each of these and to make the sector more environmentally and ministries has issued a range of legal and policy documents economically sustainable are missing or have remained that directly or indirectly pertain to the charcoal sector, largely ineffective.One example for such an initiative was but that are rarely known in their entirety to governmental the ban on charcoal, imposed by the Minister for Natural or non-governmental charcoal sector stakeholders. As a Resources and Tourism in January 2006, to discourage result, substantial uncertainty governs most transactions the production and consumption of charcoal. However, along the charcoal value chain. 1 World Bank 2009. iv There is little incentive for government bodies at the governance practices in the country follow a "command district or village level to implement and monitor and control" system that needs urgent adaption to (unclear) charcoal-related policies due to a lack the realities required to achieve sustainable forest of legal and fiscal empowerment, combined with management. Without minimal forest management low monitoring and enforcement capacity. Despite plans in place, even legal forest utilization is generally not Tanzania's remarkable success in adopting Participatory following sustainable forest management practices. A Forest Management approaches, land use rights and modernized governance framework would need to put ownership of forest assets often remain unclear or an emphasis on sustainable versus unsustainable forest unknown to government officials and non-governmental management, requiring Tanzania's Forest Service to shift stakeholders at the village or district level. As a result, few from policing the forest to a true service delivery agency. communities proactively engage in managing the forest Central government agencies, first and foremost MNRT- areas that surround them. While district and village level FBD, are faced with a mixed incentive structure. They authorities have the primary responsibility for licensing and regard Tanzania's charcoal sector as a threat to the regulating charcoal production and trade, very little of the country's natural resource base and thus as an undesirable total revenue can be legally retained at these subnational energy source. However, they profit from the structural levels. All charcoal revenues, fees and fines are remitted setup of the status quo as revenues from harvesting to back to the Ministry of Finance and Economic Affairs. royalties make up a major share of their annual budget. Therefore there is little revenue that can be reinvested Fiscally empowering district and village governments in sustainable charcoal production or sector monitoring would imply ­ at least partly ­ giving up an important (many district forest offices lack the vehicles and resources stream of revenue. to effectively oversee their mandated forest area). The lack of an effective benefit-sharing mechanism is a key factor The de facto control over the charcoal sector is in accounting for the chronic under-collection and under- largely in the hands of influential charcoal dealer- reporting of charcoal revenues across the country and transporter-wholesaler networks. They dominate an provides a disincentive to effective policy implementation. informal governance system that is characterized by their own strong pricing power; the weak bargaining District level authorities face a potential conflict of power of charcoal producers; collusion with government interest when monitoring compliance with charcoal officials at all organizational levels; and that is driven by sector rules and regulations. The share of forest revenues the unrelentingly high demand for charcoal by urban that can legally be retained at the district level, combined consumers. with the revenue that is informally collected from charcoal- related activities, are an important source of "untied" The dealer-transporter-wholesaler networks would funding for district level authorities. However, through be strongly opposed to reform elements that aim at their role in approving village by-laws and management increasing the share of official payments to be made plans, district councils also play a key role in the approval (currently estimated at 10 to 20 percent) while decreasing and legalization of village land forest reserves . This creates the discretion with which the dealers currently navigate a potential conflict of interest because the approval of all transactions along the charcoal value chain. However, measures that empower village governments results the dealers' dependence on charcoal trade and transport in valuable sources of local revenue being transferred also implies that they may find those components of the downwards and away from district councils. reform program favorable that intend to make charcoal production more sustainable because this would ensure The levy and fee structure of the current governance continued business opportunities in the future. Hence, framework does not provide incentives for sustainable the support or opposition of this stakeholder group to forest management. Forest law enforcement and a sustainability-oriented reform agenda partly depends v vi on how the anticipated benefits and risks of the policy changes in the fiscal and regulatory framework. reforms are communicated. Presently, it is estimated that only 20 percent of all payable taxes and fees on charcoal-related activities A comprehensive approach to reforming Tanzania's are being collected and paid. A realistic short to medium charcoal sector requires as a first step an open dialogue term goal might be to double the enforcement rate within and among key government agencies and so that 40 percent of payable taxes and fees are being a subsequent strategic decision that clearly states collected, and to impose a sustainability premium of 10 where the charcoal sector should be moving, i.e. in the percent, encouraging sustainable forest management and direction of sustainability-oriented reforms, or towards charcoal production while discouraging the production, a stricter sanctions regime. New policies (or changes in trade and use of unsustainably produced charcoal. This existing policies) would need to be based on realistic scenario could result in a 7 percent increase in the overall goals and expectations as to what can be achieved, and retail price of charcoal, which charcoal consumers might they require a coherent communication strategy that still be able to absorb. Otherwise households might be effectively translates the legal provisions of the policy into forced to cut back on essential food expenditures or actionable instructions to district or village governments, reduce their expenses on non-food items such as school even in remote areas of the country. fees or health care fees. However, looking at the sizable margins of wholesalers and retailers, one should engage To create an incentive for better policy implementation in a deliberative process of developing policy measures and monitoring at the sub-national level, it seems that include wholesalers and retailers in sharing the imperative to match institutional responsibilities of higher costs of a more sustainably operating sector. village and district governments to implement and enforce charcoal sector policies with the right to retain The non-governmental stakeholders in the charcoal a percentage of charcoal revenues seems imperative. sector need to be empowered through information In this respect, vertical accountabilities and reporting campaigns, promotion of more efficient technology, mechanisms within existing systems and structures in ownership of production assets, and more sustainable MNRT, PMO-RALG and MEM should be strengthened to management practices. This would allow them to take ensure compliance with centrally formulated policies and more actively part in shaping the sector's rules and directives at the sub-national level, and to gather real- practices, and to counter the pricing and bargaining time information about the de facto functioning of the power of the powerful dealer-transporter wholesaler charcoal sector in practice. networks. This applies first and foremost to producers, but also to charcoal consumers, women, as well as bicycle MNRT, MEM and other key central government transporters, improved stove producers and alternative agencies need to scope out a mode of engagement energy providers. Giving stakeholders ownership over with the dealer-transporter-wholesaler networks who production assets ­ especially secure, long-term property exercise substantial de facto control over the charcoal rights of wood resources grown in small-scale plantations sector. Converting the currently irregular and informal and woodlots ­ would not only provide direct economic interactions with this stakeholder group (mainly through benefits and financial income to rural stakeholders village and district level authorities) into a more formal contributing to economic development and poverty relationship with regular meetings, also including central alleviation, but is also expected to have positive spillover government agencies, might contribute to gain a better effects on providing local public goods with respect understanding of how the sector functions in practice to sustainable land and watershed management. A and to include this critical stakeholder group in the design favorable property rights structure with regard to tree of charcoal sector policy reforms. resources could also trigger investments in enhanced charcoal production technology, a current bottleneck The magnitude of the likely poverty and social impacts in promoting an improved and more efficient charcoal of potential policy reforms depends on the expected value chain. vii viii 1 inTRoduCTion THREEOBSERVATIONSABOUTTANZANIA'S to meet this demand is about 30 million cubic meters. CHARCOALSECTOR­ANURGENTNEEDFOR Despite Tanzania's remarkable success in adopting ACTION Participatory Forest Management (PFM) approaches, the production of charcoal results in significant degradation Looking at Tanzania's charcoal sector from an outsider's of forest land and ­ in combination with other land-use perspective yields three interesting observations: first, changes ­ to permanent deforestation in some areas of although charcoal is the single most important energy the country, especially around the main urban areas.3 source for millions of urban dwellers in Tanzania, being used by all tiers of society from laborers to politicians, Although the rate of deforestation is substantial and the it seems to be treated politically as something unseen need to take action seems imminent, systematic initiatives or unwanted. A coherent policy framework governing trying to make the sector more environmentally and charcoal production, trade and use does not exist, economically sustainable are missing or have remained and reliable statistics on the sector are not available. largely ineffective. One example for such an initiative was As a consequence, the charcoal sector remains highly the ban on charcoal, imposed by the Minister for Natural informal with regulations either unclear, not or only Resources and Tourism in January 2006, to discourage partially enforced, or easily bypassed through informal the production and consumption of charcoal. However, and sometimes extra legal practices by both non- charcoal is without alternative for most urban consumers governmental and governmental stakeholders. This who cannot afford or do not have access to alternatives situation leads to a second observation: while the total such as kerosene, LPG or electricity to satisfy all their annual charcoal business volume in Dar es Salaam alone energy needs. Consequently, the outcry from urban is estimated to be worth US$ 350 million (and US$ 650 charcoal users was predictably loud, and the measure million to the wider economy), the government is was short-lived. The ban was lifted after only two weeks. incurring an estimated revenue loss of US$ 100 million Even while the charcoal ban was in effect, the production, per year due to unregulated and unregistered activities trade and consumption continued ­ albeit under more in charcoal production and utilization.2 Hence, charcoal difficult conditions. Since all charcoal use was officially is one of the biggest business sectors in the country but illegal, transactions had to be carried out in hiding or at contributes little to the national accounts budget relative night. As a result, corruption at the checkpoints increased. to its significance for the national economy. Both the The higher transaction costs were simply passed on lack of effective political management and the shortage to the consumer, with charcoal prices nearly doubling of resources available for reinvestment into sustainable during the time of the ban. Charcoal prices have generally charcoal production explain the third observation that remained at these higher levels, even after the ban was calls for a comprehensive reform of the sector: since revoked (see graph 1). Why this is the case has not yet Tanzania's total annual charcoal consumption is estimated been fully understood but will be explored in more detail at 1 million tons, the annual supply of wood needed in this paper. 2 World Bank 2009. 3 Through a simple modelling exercise it was estimated that an average annual loss of forest area of about 100,000­125,000 hectares may be attributed to charcoal production. These figures should be treated as rough estimates due to the complexity of the modeling exercise and limited data availability (World Bank 2009, p. 36 and pp. 49­51). Tanzania's total annual deforestation rate is estimated at 91,000 to 500,000 hectares (Milledge et al. 2007), but if and how much deforestation is only attributable to charcoal remains un- known. 1 Introduction Figure1Trendsincharcoalprices(inTanzanianShillings) TZS 40,000.00 TZS 35,000.00 TZS 30,000.00 TZS 25,000.00 TZS 20,000.00 TZS 15,000.00 TZS 10,000.00 Producer price Wholesale price Retail price TZS 5,000.00 TZS 0.00 before ban ban after ban 2006 2010 Source: van Beukering et al. 2007; spot survey 2010. The three observations made above call for a strategic production and use more environmentally sustainable effort to make the charcoal sector more environmentally while avoiding to push the price of the product to a sustainable while acknowledging the important role level that is prohibitive for poorer consumers. A strategic of charcoal for satisfying the energy needs of urban approach to reforming the charcoal sector would also households in Tanzania, poor and non poor alike. Since be an opportunity to readjust its regulatory framework charcoal cannot be easily replaced in the short term with so that the sector's contribution to the government's alternative energy sources that are comparably affordable, revenue base would more adequately reflect its overall policy measures are needed that aim at making charcoal contribution to the country's economy. 2 Introduction Figure2EconomicandEnvironmentalIssuesandChallengesrelatedtoTanzania'sCharcoalSector4 TheCentralRoleofCharcoal Contributiontothe Environmental inTanzania NationalEconomy Challenges ˇ The contribution of wood fuels to ˇ The contribution of Tanzania's ˇ It is estimated that 30 million cubic total energy supply is estimated to charcoal sector to employment, rural meters of wood are needed annually be close to 95%, while this share is livelihoods, and the wider economy is to satisfy Tanzania's total annual generally considered to be lower estimated to be in the region of US$ charcoal consumption of 1 million (60­90%) in most other Sub-Saharan 650 million per year, providing income tons per year. African countries. to several hundred thousand people ˇ Although some wood for charcoal is in both urban and rural areas. ˇ Charcoal is the single largest source harvested from forest reserves under of household energy in urban areas, ˇ These tend to be members of poorer license from the government, the bulk as it is considered cheap and easy to households who work as small-scale is harvested in unreserved forest areas transport, distribute, and store. producers or traders, and who often on village land, or on farmland being have limited alternatives for earning cleared for agriculture. ˇ Between 2001 and 2007, the a living. proportion of households in Dar es ˇ Continual, unregulated tree removal Salaam using charcoal climbed from ˇ Due to widespread evasion of can result in deforestation and 47 percent to 71 percent (see Figure licensing fees as well as production forest degradation, depending on 3 below). and transport levies, the contribution the degree to which the wood of the charcoal sector to government production potential of the harvesting ˇ Approximately half of Tanzania's revenues and the broader tax base is site is affected by the harvesting annual consumption of charcoal takes limited. method and the subsequent land place in Dar es Salaam, amounting to management regime (e.g. burning; approximately 500,000 tons. ˇ National and local governments grazing or browsing). are estimated to lose about US$100 million per year due to their failure ˇ This, in turn, can have negative to effectively regulate the charcoal impacts on the protection of water sector. catchments and watersheds, affecting energy and water supplies alike. KEYQUESTIONSGUIDINGTHISANALYSIS documented in abundance ­ and for Tanzania have been summarized and updated in detail in the recently Three key questions emerge from the discussion above: completed World Bank Policy Note on Transforming the First, what are effective, environmentally sustainable Charcoal Sector in Tanzania5 ­ the political economy is policy measures to halt the rapid rate of deforestation only poorly understood and mainly based on anecdotal and to address the loss of government revenue due to "evidence." Experience from other countries has clearly unregulated charcoal production, trade and utilization? demonstrated that even already advanced reform Second, which of these policy measures could be processes or pilot programs are likely to fail in the medium feasibly and successfully implemented, given the political to long term if the political dynamics that persist in the economy of the charcoal sector? Lastly, what would be charcoal sector are neglected in the policy dialogue and the poverty and social impacts of such policy measures if program design. they were to be implemented with the aim of making the sector more socially sustainable? The standstill with regard to charcoal sector reforms in Tanzania is often attributed to the enormous complexity While the more technical aspects of desirable policy and informality of the sector and thus its unmanageability, reforms in the charcoal sector have been analyzed and the lack of viable and affordable alternative energy sources, 4 Adapted from World Bank 2009. 5 Ibid. 3 Introduction or simply a lack of political will. These statements may or analyzing the political economy surrounding the charcoal may not hold true, but they fall short of an explanation sector in Tanzania, mapping out existing networks and of why the sector seems so unmanageable, why fuel power relations persistent in the sector and asking how switching seems still out of reach, and why there seems they influence reform design and implementation. A to be little appetite to tackle the many challenges posed potential reform agenda has already been laid out in the by an unsustainably producing charcoal sector in a recent World Bank policy note6. This paper will assess the politically comprehensive manner. In short, the challenge viability of these reforms based on the political economy for policy makers, civil society, and development partners analysis and by looking at their poverty and social impacts, is to identify the drivers behind the sectoral standstill. with a particular focus on the poor and vulnerable. This will allow for identifying entry points for a strategic engagement with charcoal sector stakeholders to find The value added of this short note is to look at the deal makers and breakers to facilitate much needed charcoal sector as a whole with a political economy lens, reform processes. Policy reforms that aim at making the trying to identify factors that pose an obstacle to reform charcoal sector more environmentally sustainable are design and effective implementation. The information hardly conceivable without increases in the price of about the political economy drivers behind sector charcoal. This raises concerns about the ability of poor and reform or standstill can hardly be found in household vulnerable groups in society and whether they would be budget surveys or national accounts datasets. Rather, able to pay the `sustainability premium' that a sustainably this information lies embedded in the knowledge operating charcoal sector would most likely require. of the stakeholders in the sector, from government policy makers, district and village level authorities, to producers, dealers, transporters, wholesalers, retailers OBJECTIVESOFTHISREPORT and consumers. The participatory approach underlying this analysis taps their knowledge systematically to The main objective of this report is to explore the provide analytical information to decision makers who sensitive political economy issues surrounding charcoal are interested in adopting a realistic reform strategy. sector reform in a systematic way, thereby underpinning Furthermore, the poverty and social impact analysis will anecdotal evidence with analytical results and finding reveal whether and how much room there is for increases explanations for otherwise unexplained social, political, in the price of charcoal, whether households will be able and economic phenomena. Hence, this paper will to absorb higher prices, or whether there are ways to contribute to answering the key questions posed above by buffer potential price increases. 6 Ibid. 4 Introduction Figure3SourcesofenergyforcookinginTanzania,1991to2007 100% 80% 60% 40% 20% 0% 91 /92 00 /01 2007 91 /92 00 /01 2007 91 /92 00 /01 2007 91 /92 00 /01 2007 Dar es Salaam Other urban areas Rural areas Mainland Tanzania Electricity Para n /Kerosene Charcoal Firewood Other Source: Government of Tanzania 2008: Household Budget Survey 2006/07 5 6 2 mEThodologY: PoliTiCal EConomY and PovERTY and soCial imPaCT analYsis This analytical work builds on a number of studies on report is to provide a better understanding of the political Tanzania's charcoal sector that have been conducted economy of the charcoal sector, and of the likely poverty in the recent past: some are more descriptive in nature, and social impacts on the poor and vulnerable that can identifying the main actors, the business processes and be expected from implementing the most feasible policy transactions involved in charcoal production, trade reform measures. A case study approach was adopted and consumption7. Given the sector's high degree with Dar es Salaam and the surrounding districts as the of informality and diversity, this is a much needed main study site since the by far largest share of charcoal contribution to the debate around charcoal sector utilization and production in Tanzania takes place in and reforms. Other studies have explored the impact of the around the country's most populous city.10 charcoal business on Tanzania's forests and woodlands, and the country's environment more generally.8 Again others have set out to formulate concrete proposals for 2.1 nET-maP: an innovaTivE aPPRoaCh how to "green the charcoal chain" by promoting and To PoliTiCal EConomY analYsis implementing fuel switching, making charcoal production more efficient through improved kilns, promoting more Political economy (PE) analysis is concerned with the efficient consumption with improved stoves, and piloting interaction of political and economic processes in approaches to sustainable charcoal production such society: the distribution of power and wealth between as community based forest management (CBFM) and different groups and individuals, and the processes that establishment of wood lots.9 create, sustain and transform their relationships over time. Political economy analysis looks at how actors use What is still missing is an analysis of the key political their position to protect or strengthen their political or economy factors that can facilitate or inhibit a economic interests. PE analysis can reveal the conditions comprehensive political approach to reforming the and processes under which political actors or political charcoal sector to make it environmentally and socio- entrepreneurs maneuver within institutional contexts to economically sustainable. The main objective of this build coalitions, negotiate, build consensus, and bargain 7 For example CHAPOSA 2001; CHAPOSA 2002; Hoiser and Kipondya 1993; Malimbwi et al. 2007; Mwampamba 2007; Schlag and Zuzarte 2008; PREM 2007; van Beukering et al. 2007; World Bank 2006. 8 For example Allen 1985; Hofstad 1997; Kilahama 2008; Luoga et al. 2000; Malimbwi and Zahabu et al. 2008; United Nations Environment Programme 2007. 9 For example, Blomley 2006; ESD 2007; Evans 2004; FAO 2006; Palmula and Beaudin 2007; Heltberg 2004; Howells et al. 2006; Karekezi 2002; Mugasha and Chamshama 2008; Pender et al. 2006; Sanga and Jannuzzi 2005; Sawe 2005; Sepp 2008a and 2008b; The United Republic of Tanzania 2007, 2007a, 2007b, 2007c and 2008; World Bank 2007; WWF 2008; ZeinElabdin 1997. 10 For more detailed information on the methodological approach taken in this analytical activity, see Annex 1. 7 Methodology: political economy and poverty and social impact analysis to create, maintain or change policies, legislation, and (2) The incentive structure that governs the charcoal institutions. sector both from bottom up (local governments not partaking in charcoal revenue collection) and top down The political economy analysis in this study aims to identify (policy makers involved in the charcoal business profiting and understand existing networks that prevail in the from the status quo) inhibits the design and enforcement charcoal sector in Tanzania, assessing their interests and of effective sector regulation. influence, and thereby identifying potential obstacles and opportunities to designing and implementing necessary policy reforms. By mapping out the key actors in the 2.2 PovERTY and soCial imPaCT analYsis of sector, determining their linkages, levels of influence, and PRoPosEd ChaRCoal sECToR REfoRms goals, one can determine which groups are the most or least influential, identifying disempowered stakeholders Poverty and Social Impact Analysis (PSIA) is an approach who might stand to lose from reform implementation, with the objective to assess intended and unintended determining who supports or who opposes a certain consequences of policy reforms on the wellbeing or reform agenda, whether the links to an influential welfare of different social groups. The approach considers potential supporter would need to be strengthened, or the effects of policy initiatives on all income groups, but whether one has to be aware of an influential actor who particular focus is given to the poor and vulnerable. PSIA does not support the reform agenda. includes exante analysis of the likely impacts of specific reforms, analysis during reform implementation, and This study employs the social network analysis tool Net- expost analysis of completed reforms. Each of these has a Map, developed by the International Food and Policy specific utility: exante PSIA can inform the choice, design, Research Institute (IFPRI) to analyze the actors and and sequencing of alternative policy options. During influence networks in the charcoal sector in Tanzania.11 implementation, the monitoring of a reform and its impacts Net-Map is an innovative empirical research tool can lead to refinement of the reform, a reconsideration of developed to better understand stakeholder networks the pace/sequencing or institutional arrangements of the by gathering in-depth information about stakeholders reform, or the introduction or strengthening of mitigation and their relationships, their goals, and their power and measures. Finally, expost PSIA assesses the actual influence. Net-Map merges social network analysis with distributional impacts of a completed reform, which helps the methodology of power mapping in a participatory analysts understand the likely impacts of future reforms. process. It has been tested and applied successfully by IFPRI and other institutional stakeholders.12 PSIA aims to identify winners and losers of reforms before they are implemented, thereby allowing decision makers KEYHYPOTHESESTOBETESTED to consider the trade-offs between different policy options and to reduce the risk of negative impacts of policies on Two key hypotheses to be tested were identified at the the welfare situation of the population. In cases where planning stage of this analytical activity, derived from the potential negative impacts are identified, mitigating prevailing anecdotal evidence which suggests that: measures can be included in the design of the policy from the outset. The process of conducting a PSIA, which (1) Influential networks in the charcoal sector maintain can comprise consultative and participatory processes a system of informal institutions (i.e. rules, processes, including a wide range of stakeholders, has the potential organizations) that effectively undermines the to open up space for public policy dialogue and debate, to establishment and/or enforcement of formal charcoal raise public awareness of important policy issues, and to sector governance. build coalitions for reform. 11 Schiffer and Waale 2008. 12 For a brief but more detailed description of the Net-Map process and methodology, see Annex 1. 8 Methodology: political economy and poverty and social impact analysis KEYHYPOTHESESTOBETESTED (2) Implementation of the proposed key reforms in Based on an initial assessment of the current business Tanzania's charcoal sector will result in a more equitable processes and governance structures in the charcoal distribution of profits along the charcoal value chain, sector, and informed by experiences with charcoal sector given that rules governing the sector will be effectively reforms in other countries, the following hypotheses enforced. were formulated: (3) Implementation of reforms and effective enforcement (1) Influence and profits in the charcoal value chain of rules will result in higher consumer prices, thus are concentrated in the hands of a limited number of negatively affecting poorer households and their ability powerful actors or institutions. to pay for energy supply. 9 10 3 PRoPosEd PoliCY REfoRms foR a moRE susTainablE ChaRCoal sECToR The objective of this paper is to assess the viability of policy STRENGTHENINGREGULATORY,FISCALANDPRICING reforms that have been proposed to make Tanzania's FRAMEWORKS&INCENTIVES charcoal sector more environmentally, economically and socially sustainable, based on an analysis of the political As many regulations currently governing the charcoal economy of the sector and by looking at the likely sector are either unclear, inconsistently enforced or poverty and social impacts of the proposed reforms. regularly bypassed, the regulatory regime for charcoal A variety of policy measures has been suggested by production, trade and transport would need to be different actors and institutions; for the purpose of this revised and simplified.14 The revised regulations would analysis the various policy options are summarized in a then need to be communicated effectively to all coherent reform framework that covers four broad areas relevant stakeholders in the sector. Producers and rural and a more detailed action framework as given in Table communities are particularly uncertain about their rights 1 below.13 and obligations with regard to land and forest use for charcoal production, which creates a strong disincentive STRENGTHENINGMARKETTRANSPARENCY for sustainable forest management and charcoal production. Therefore, a first priority would be to legally The high degree of informality of the charcoal sector in clarify the roles, rights and obligations of producers and Tanzania results in substantial uncertainty governing all rural communities. transactions along the value chain. This not only increases transaction costs and imposes a significant burden on A second key element of the reform design would be to most stakeholders in the sector; it also makes collecting provide local and district government authorities with information about stakeholders, business processes and an incentive to be knowledgeable about charcoal sector business volumes in the sector difficult. As a result, the regulations and to monitor and enforce these regulations sector is notoriously resistant to oversight, regulation and effectively in charcoal production and trade. At present political management. Fully legalizing charcoal use and the largest share of the fees and taxes collected by these clarifying the regulations that govern the sector in one government entities has to be transferred directly to the coherent framework would be a necessary first step that central government, leaving them with little or no official could have a catalytic effect for facilitating all subsequent reward for effective rule enforcement. This step would also reform steps. require making the payment of fees and licenses easier, 13 This section summarizes the policy reform options as put forward in the World Bank's recent policy note (World Bank 2009). 14 A more detailed assessment of the formal governance framework of Tanzania's charcoal sector and its shortcomings is provided in section 4.1 (page 19). 11 Proposed policy reforms for a more sustainable charcoal sector more transparent, and easier to enforce and monitor, outside forests, increasing the efficiency of wood while minimizing the opportunities for corruption along conversion to charcoal through capacity building and the value chain. One possibility to achieve this would be training and the introduction of new kiln technology, and through introducing fixed charcoal trading sites around introducing fiscal incentives for sustainably produced urban centers that allow for easier trade and transport charcoal making unsustainably produced charcoal more monitoring and oversight. expansive. This again would require clearly delineating and communicating the rights and obligations of MAKINGCHARCOALPRODUCTIONMORE charcoal producers and local government. SUSTAINABLE PROMOTINGSUSTAINABLEANDEFFICIENT The current rate of deforestation points to a need CHARCOALCONSUMPTION to make charcoal production more environmentally sustainable. Measures to achieve this include scaling On the side of charcoal utilization, the easiest way to up community-based forest management, introducing slow down the rising demand for charcoal is to promote management plans that meet management capacities more fuel efficient stoves that burn less charcoal for the of local institutions and people, incentivizing the same energy output. Other policy measures would be establishment of small-scale plantations and woodlots to promote fuel switching and alternative fuels. These, at the household level including the planting of trees however, would incur greater investment costs. Table1Shortandlongtermpolicyinterventionsaspartofacomprehensivecharcoalsectorreformstrategy obJECTivEs inTERvEnTions kEY insTiTuTions Addressing the regulatory, fiscal and pricing frameworks ˇ Creating incentives for sustainable ShortTerm ˇ Forestry and Beekeeping charcoal sector management by ˇ Identification of pilot districts with commitment and Division allowing districts to retain a portion political will to reform charcoal trade ˇ PMO-RALG of licenses and fines collected from ˇ Written authorization from MNRT to allow selected ˇ Ministry of Finance and licensing charcoal districts to retain percentage of charcoal fees and Economic Affairs ˇ Supporting districts to retain and provide fiscal incentives for sustainably produced ˇ Selected "lead" districts within reinvest charcoal revenues in charcoal (CBFM or planted trees) catchment area of major urban revenue collection and sustainable ˇ Establishment of checkpoints at key points supported center with political will to forest management by training and supervision of checkpoint staff reform finances ˇ Fiscal incentives that reward ˇ Technical support to districts on financial management sustainably produced charcoal and procedures that encourage reinvestment of natural place additional fines on illegal resource revenues products ˇ Creating a larger revenue base from LongTerm which investments in sustainable ˇ Assessment of effectiveness of pilot program on forest management can be made increasing revenue base, improving forest services, and reducing deforestation ˇ Promotion of "success stories" and positive publicity for districts with political will, followed by expansion to other areas ˇ Establishment of a "Forest Fund" to manage increased revenues from charcoal 12 Proposed policy reforms for a more sustainable charcoal sector obJECTivEs inTERvEnTions kEY insTiTuTions ˇ Moving toward transport based ShortTerm ˇ Forestry and Bee keeping fees for charcoal ˇ The gazettement of legal rules on transport based fees Division ˇ Building fixed trading sites for the for charcoal by FBD ˇ Police transport and trade of charcoal ˇ Public information campaign on new rules and training ˇ Judiciary ˇ Increasing the number and of law enforcement staff effectiveness of fixed checkpoints ˇ Identifying suitable sites for trading around Dar es Salaam and supporting construction ˇ Construction of checkpoints around Dar es Salaam and targeted training and supervision for staff LongTerm ˇ Expansion of activities piloted around Dar es Salaam to other regions of the country based an evaluation of lessons learned Making Charcoal Production More Sustainable and Efficient ˇ Developing harvesting plans for ShortTerm ˇ Forestry and Bee keeping forest areas administered by central ˇ Identifying forest blocs on village land of sufficient size Division or local governments and condition that would support extensive charcoal ˇ National Land Use Commission ˇ Securing tenure for rural producers management under community management ˇ PMO-RALG by scaling up community-based ˇ Undertaking village land use mapping and planning ˇ Local governments forest management in urban exercises that secure village land tenure and identify ˇ NGOs with capacity in catchment areas areas of village forest suitable for community facilitating PFM (Tanzania management Forest Conservation Group, ˇ Developing charcoal harvesting plans in village forests Wildlife Conservation Society ˇ Supporting selected villages to reserve and declare of Tanzania, etc) village land forests ˇ Ministry of Agriculture ˇ Preparing harvesting plans in local authority and national forest reserves in selected areas ˇ Monitoring harvesting levels to ensure they are in line with agreed off-take levels LongTerm ˇ Scaling up to other areas ˇ Increasing supplies of wood for ShortTerm ˇ NGOs with capacity in tree charcoal through plantations and ˇ Developing a performance-based grant scheme that planting and production woodlots supports the establishment of plantations ˇ FBD ˇ Design of silvicultural packages (seed sources, species, ˇ Community groups management, etc.) that can be rolled out in target ˇ Individuals areas ˇ Private sector tree growers ˇ Identifying individuals and groups with significant ˇ Support services areas of land and interest in tree planting ˇ Launching grant scheme and ensuring close monitoring and compliance MediumTerm ˇ Enhance property rights of households to their planted trees LongTerm ˇ Linking producers to markets and technology (improved kilns) and supporting them through fiscal incentives (see above) ˇ Scaling up to other urban charcoal catchment areas 13 Proposed policy reforms for a more sustainable charcoal sector obJECTivEs inTERvEnTions kEY insTiTuTions ˇ Increasing efficiency of converting ShortTerm ˇ Informal artisans in the private wood to charcoal ˇ Identifying suitable designs from other countries (e.g. sector Kenya) ˇ NGOs ˇ Training informal artisans to produce quality stoves ˇ Marketing support LongTerm ˇ Expansion to other urban centers Reducing Charcoal Consumption ˇ Promotion of fuel-efficient, ShortTerm ˇ Informal artisans in the private domestic charcoal stoves ˇ Identifying suitable designs from other countries (e.g. sector Kenya) ˇ NGOs ˇ Training informal artisans to produce quality stoves ˇ Marketing support LongTerm ˇ Expansion to other urban centers ˇ Exploring opportunities for ShortTerm ˇ Private sector enterprises commercially viable briquetting ˇ Undertaking market survey for possibility of briquetting ˇ Fuel switching in Dar es Salaam or Arusha ˇ Linking entrepreneurs to financing sources These detailed action steps would then feed into a communication strategy that should ­ ideally ­ be part of any policy reform agenda from the outset. This is particularly relevant in the case of charcoal sector reforms in Tanzania as some reform elements can be expected to trigger considerable resistance if policy makers fail to explain the rationale behind such expansive sector reforms. The following section will analyze the political economy surrounding charcoal sector reforms in detail. 14 4 ThE PoliTiCal EConomY of ThE ChaRCoal sECToR in Tanzania The analysis below is based on the Net-Map discussion do not fall under the sole responsibility of MNRT, but meetings and key informant interviews conducted with are also the concern of several other government 200 stakeholders in Tanzania between December 2009 agencies, as will be explained in more detail in the and March 2010. As the formal governance framework following section. The fact that the charcoal ban was of the charcoal sector has been described elsewhere in largely ineffective means that either (a) the policy sufficient detail, the following section only provides a brief measure to ban charcoal was not well coordinated overview and then steps directly into the analysis of the among the different government agencies who are ­ de facto processes, relationships, interests and influence at least partly ­ responsible for the subject matter; or of the actors and institutions relevant for designing and (b) the monitoring and enforcement machineries of implementing charcoal sector reforms. the other government agencies were as ineffective as MNRT's bureaucracy to successfully enforce the LESSONSLEARNEDFROMTHECHARCOAL complete ban on charcoal. BANIN2006 ˇ The points previously made support the proposition that the effective control over the charcoal sector Tanzania's experience with the two week-long ban does not lie with the government agencies formally on charcoal in 2006 constitutes a unique experiment mandated to govern the sector, but that effective that exposes the limited effectiveness of the formal decision making power lies elsewhere. governance framework of Tanzania's charcoal sector: ˇ The ban was imposed by the Minister of Natural This chapter will analyze the formal governance Resources and Tourism for a period of two weeks; framework of Tanzania's charcoal sector and explore yet the production, trade and use of charcoal possible explanations for why it is so ineffective. First, the continued almost unabatedly, albeit under more regulatory overlaps and gaps will be examined; second, difficult conditions. This points to the fact that MNRT the incentives and disincentives this framework poses for officers (who share responsibility of implementing government agencies at different organizational levels charcoal-related government policies in the districts) will be assessed; and third, the Net-Map methodology will unsuccessful attempted to enforce the ban, or be used to trace who has the de facto decision making colluded with charcoal entrepreneurs during the power in the sector. As far as possible, recommendations time of the ban. for action to government will be derived from these analytical components. ˇ The purpose of the ban was to discourage the production, trade and use of charcoal. These issues 15 For example World Bank 2009; Malimbwi et al. 2007; van Beukering et al. 2007. 16 We also limit ourselves to describing the stakeholder and institutional characteristics that are immediately relevant to the subject of this analysis and do not go into detail describing the functional roles of the various actors in the sector (e.g. what are the typical characteristics of households that produce charcoal). This background information has been provided competently by others in more detail than space would permit here, for example Malimbwi and Zahabu 2008; CHAPOSA 2002. 15 The political economy of the charcoal sector in Tanzania 4.1 ThE foRmal govERnanCE At the national level, FBD is presently the primary policy fRamEwoRk ­ REgulaToRY ovERlaPs lead with regard to charcoal production. However, as and gaPs wood is converted to and then used for energy, policy responsibility becomes more complicated. FBD remains The charcoal sector is characterized by weak governance, responsible for managing charcoal transportation and law enforcement, and other regulatory capacity. There is trade, while MEM becomes involved as the primary no comprehensive policy, strategy, or legal framework in policy lead on energy use. As such, MEM is responsible Tanzania addressing the charcoal sector. Four ministries for the promotion of efficient charcoal burning stoves, share responsibility, including the Division of Environment supporting biomass energy projects (such as alternative (DoE) within the Vice President's Office (VPO), the Ministry briquette producers), and alternative energy sources (e.g. of Energy and Minerals (MEM), the Ministry of Natural LPG, electricity, etc). The DoE has authority to oversee and Resources and Tourism (MNRT) ­ particularly its Forestry coordinate the aforementioned line ministries to ensure and Beekeeping Division (FBD), and the Prime Minister's protection of the environment, including requirements Office­Regional Administration and Local Government for environmental impact assessments. Hence, there (PMO-RALG). Over the years, each of these ministries has is a substantial amount of shared responsibilities and issued a range of legal and policy documents that directly overlaps. or indirectly pertain to the charcoal sector (see box 1). At the sub-national level, FBD in the past had the primary responsibility for all forests in Tanzania and worked Box1Selectedkeylegalandpolicy through its staff posted within different levels of local documentsrelatingtothecharcoalsectorin government, while vertical reporting lines were retained Tanzania to the parent ministry ­ MNRT. Since the adoption of the Local Government Act (1982), forest officers have ˇ Guidelines for Sustainable Harvesting and been decentralized and are now directly accountable Trade in Forest Produce, MNRT-FBD, 2007 to locally elected councils through the District Executive ˇ New Royalty Rates for Forest Products, MNRT- Directors, whose vertical line of reporting goes through FBD, November 2007 the Regional Secretariat back to PMO-RALG at the central ˇ Community-Based Forest Management government level. This setup is complicated by the Guidelines, MNRT-FBD, April 2007 fact that forest reserves exist in many districts that are ˇ Joint Forest Management Guidelines, MNRT- administered by central government due to their regional FBD, April 2007 or national biodiversity or water catchment values. Such ˇ Charcoal Regulations, MNRT-FBD. 2006 areas fall outside the domain of local government; their ˇ Environmental Management Act, VPO, 2004 management is vested in District Catchment Forest ˇ Forest Act, MNRT, 2002 Officers who work alongside District Forest Officers but ˇ Subsidiary Legislation to the Forest Act, MNRT, are answerable to central government. This creates a 2002 situation where, as depicted in Figure 4,17 similar duties ˇ National Forest Programme, MNRT, 2001 related to forest policy and law implementation fall under ˇ National Forest Policy, MNRT, March 1998 the responsibility of two different ministries with different ˇ National Land Policy, Ministry of Lands and lines of accountability for planning and reporting. Human Settlements Development, 1997 ˇ National Environmental Policy, VPO, 1997 17 Adapted from Blomley 2006, p.8. 16 The political economy of the charcoal sector in Tanzania Figure4Institutionalrolesinreportingforestpolicyimplementation Ministry of Finance MNRT-FBD PMO-RALG Regional Catchment Regional Secretariat Forest O ce District Catchment District Council Forest O ce (District Forest O cer) Impact and Output Monitoring Financial and Progress Reporting At the district level, the Charcoal Regulations and the whether permits for "harvesting" forest products, Guidelines for Sustainable Harvesting require ­ among which the committee has authority to require, and a other things ­ the establishment of a harvesting permit to "produce" charcoal are the same. committee. This committee includes participation ˇ The harvesting committee helps "local area from village representatives for areas where charcoal authorities" to develop special areas for charcoal production occurs (§ 4c). The responsibilities of the production. It is unclear whether these "local area harvesting committee are outlined in these regulations, authorities" include village governments. but a number of provisions are insufficiently specified: The overlapping responsibilities between different central ˇ The harvesting committee has the responsibility to government agencies are visualized in Figure 5 below. develop district harvesting plans. No guidance is It shows a Net-Map of all relevant stakeholders in the given in the regulations as to how a district should charcoal sector, with the arrows indicating formal lines develop such a plan or what lands it should cover. of authority running from one actor to another actor.18 ˇ The committee defines standards for granting permits On the left hand side are the relevant governmental to produce charcoal under section 7. It is unclear stakeholders (in yellow), in the bottom middle are 18 Authority here is the legal mandate of one actor to set or enforce rules on another actor; it also manifests itself in the mandate to issue or withhold licenses and collect fees and taxes from stakeholders. In the charcoal sector, MNRT issues business licenses to stakeholders who commercially trade or transport charcoal, at a cost of TZS 205,000 per year (approx. US$ 145). MNRT also issues charcoal production licenses, to be obtained in the districts from the District Forest Officer, at a cost of TZS 50,000 (US$ 36) annually. When transporting charcoal, separate MNRT permits (TZS 4,000-6,000 per bag) and transit passes (TZS 1,000 per truck) need to be obtained from MNRT officials; bicycle transporters pay slightly different fees, depending on the size of the bags they carry. MNRT and district officials man checkpoints on the roads to urban centers to check whether the appropriate licenses and permits have been obtained, and to collect harvesting royalties (TZS 2,000 per 80-100 kg bag of charcoal, fully paid to MNRT) and a district levies (typically TZS 1,000- 1,500 per bag). District Forest Officers are also tasked to monitor that charcoal is not illegally produced, i.e. without a production license or in protected forest reserves. Village level authorities usually decide where charcoal can be harvested (or at least where it is not to be harvested), and they collect forest royalties of TZS 200 per bag of charcoal, usually from the transporter. 17 The political economy of the charcoal sector in Tanzania development partners and NGOs (in purple), and on the within the government system. The intricate composition right hand side are the sector stakeholders involved in of accountabilities creates an intransparent governance charcoal production, trade or utilization, as well as the framework that facilitates the active (e.g. by making side manufacturers of improved charcoal stoves and providers payments) or passive (e.g. by accepting such payments) of alternative energy sources (e.g. briquettes, kerosene, bypassing of formal sector regulations and poses a LPG), in blue. The figure shows an overly complex disincentive for implementing policy reforms that would governance structure of authority relationships between make the practices in the sector more sustainable, as will governmental and non-governmental actors, as well as be argued in the following section. Figure5Formalauthorityrelationshipsinthecharcoalsector19 VPO TRA MoF MEM Stove Producer PMO-RALG Alternative Energy Provider MNRT Consumer Retailer District Authorities Wholesaler Village Authorities Dealer Development Partners Vehicle Transporter Bicycle Transporter NGOs Labourer Producer Legend: Formal authority of one actor over another. 19 All Net-Maps presented in this paper were drawn with Visone version 2.5.1, a software program for analyzing and visualizing social networks. The software is free for academic and research purposes and can be obtained from http://visone.info. 18 The political economy of the charcoal sector in Tanzania 4.2 (dis-)inCEnTivEs foR susTainablE ChaRCoal sECToR managEmEnT aT Figure6Retentionofcharcoal-related diffEREnT oRganizaTional lEvEls revenues,bylevelofgovernment At the heart of the incentive problem regarding a more effective and sustainable management of the charcoal sector are three issues, stemming from the present District regulatory setup of the sector: Authorities 17% Village Authorities 2% a) There is a lack of fiscal empowerment: While district and village level authorities have the primary responsibility for licensing and regulating charcoal production and trade, very little of the total revenue can be legally retained at these sub-national levels (see Figure 6). All National Authorities 81% charcoal revenues, fees and fines are remitted to back to the Ministry of Finance and Economic Affairs (MoF). The lack of an effective benefit-sharing mechanism is a key factor in accounting for the chronic under-collection of charcoal revenues across the country. b) Legal empowerment: land use rights and ownership of forest assets are often unclear or unknown to mandate. There is also little oversight from the central village and district level stakeholders, both government ministries as to how the regulations pertaining to the officials and non-governmental stakeholders. This charcoal sector are enforced at the local and district level. includes information about the rights to declare a state The low capacity to enforce regulations and effectively or communal forest area as protected reserve or open for collect revenues is further undermined by corruption wood harvesting, e.g. for charcoal production. As a result, at the checkpoints along charcoal transport routes. As few communities proactively engage in managing the a result, it is estimated that around 80 percent of the forest areas that surround them. Instead, the largest share charcoal trade takes place outside the formal market.20 of wood needed for charcoal production is harvested in Instead of obtaining the necessary licenses or paying unreserved forest areas on village land, or on farmland the required fees, the majority of producers and traders being cleared for agriculture. In such situations, little choose to evade payments and, where necessary, pay attention is given to considerations of sustainable bribes when challenged at government checkpoints or harvesting or longer-term forest management objectives. by traffic police, as reported frequently in the stakeholder Such continual, unregulated tree removal results in focus group discussions. deforestation and forest degradation. As a consequence of these three factors, there is little c) Low capacity for policy implementation and incentive for national, district and village level authorities enforcement by government entities exacerbates to engage proactively in sustainable management of stakeholders' uncertainty about which regulations apply charcoal production, trade or utilization: to charcoal production, trade, or utilization. Forest offices in the districts rarely have the financial means (vehicles, At the central government level, MNRT and MEM ­ being fuel, etc) to monitor the area officially under their the key central government agencies in this regard ­ view 20 Malimbwi et al. 2007; spot survey 2010. 19 The political economy of the charcoal sector in Tanzania charcoal production, trade and utilization as a serious ˇ Central government stakeholders are at times threat to Tanzania's natural resource base, as stated in the perceived to be informal `shareholders' in the business Net-Map discussion meetings with these actors. Hence, side of the charcoal sector, i.e. having an interest in the they have a strong motivation to support charcoal profits of dealers, vehicle transporters or wholesalers. sector reforms from an environmental point of view: District level authorities neither systematically enforce ˇ Charcoal is largely regarded as an unwanted energy nor substantially shape charcoal sector regulations or source; in their view the country should move away processes. This is no surprise given the incentive structure from using charcoal as an energy source as quickly as they face: possible. ˇ The government revenue collected from charcoal- ˇ Most charcoal-related revenues collected at the related activities is seen as an unneeded contribution district level go directly into the budget of central to MNRT's budget ­ a somewhat surprising government entities; little can be retained at the observation given that harvesting royalties (from district or local level, e.g. for re-investment in trees felled for charcoal production or for timber) sustainable charcoal production (establishment of account for over 90 percent of FBD revenues in the tree plantations, more efficient kilns, etc) or other period 2001 through 2008.21 sub-national investment schemes. ˇ However, for purposes of reporting, the royalties ˇ The share of forest revenues that can legally be received from trees felled for charcoal production and retained at the district level are an important source those felled for timber are grouped together under of "untied" funding for district level authorities.22 "Forest Products" by the MoF. This makes it difficult ˇ District councils play a key role in the approval and to tell how much of FBD's revenue is generated legalization of village land forest reserves, through from charcoal-related royalties, and it obscures the their role in approving by-laws and management significance of the contribution of the charcoal sector plans. to overall government revenue. ˇ This creates a potential conflict of interest as it results ˇ These considerations constitute a strong incentive to in valuable sources of local revenue being transferred impose a sanctions-oriented policy reform agenda downwards and away from district councils. that aims at discouraging charcoal production, ˇ Therefore, district level authorities have little incentive trade, and use, rather than a sustainability-oriented, to monitor compliance with rules and regulations business-enabling reform agenda (as outlined in closely, let alone to proactively engage in sustainable section 3 above). management of the charcoal business. However, while MNRT and MEM do not seem to have a Village level authorities see the forest resources in their strong formal incentive to support sustainability-oriented communities shrink and have few options to counteract charcoal sector reforms, there are incentives for them to forest degradation and deforestation. While this would support the informal nature of the status quo: strongly speak for stricter rule enforcement with regard to charcoal production, there are a number of disincentives: ˇ As part of the national authorities overseeing charcoal sector regulations, they get a major share of ˇ Village governments are either unclear or unaware of the (admittedly limited) government revenue that is their rights and obligations regarding the forest areas generated from charcoal business (see also Figure 6) in and around their communities. 21 Registration fees, compounding fees and export permits account for the remainder. 22 It was frequently reported in the Net-Map discussion meetings that district officials create an informal stream of forest revenues, thanks to the informal nature of the status quo: first, passively as the recipients of side-payments from dealers (or transporters or wholesalers) to not interfere in their business processes; and second, actively when marketing confiscated forest products (such as illegally produced charcoal) informally for private profit, or even actively colluding with dealers to `commission' illegal charcoal production and collecting a share from the final profit. 20 The political economy of the charcoal sector in Tanzania ˇ They have no alternative but letting members of STREAMLINING THE GOVERNANCE FRAMEWORK their communities produce charcoal unsustainably because there are few livelihood alternatives. ˇ Close existing gaps in the formal regulation of the charcoal sector, as outlined in section 4.1 (e.g. the ˇ The Net-Map discussion meetings in rural responsibilities of district harvesting committees) and communities also showed that stakeholders were not establish a government `roundtable on charcoal sector aware of alternative means of forest management governance'to minimize the overlaps in charcoal sector and charcoal production, such as Participatory Forest regulation by different agencies. The roundtable could Management (PFM) or Community Based Forest be coordinated by MNRT-FBD and include MEM, VPO, Management (CBFM), or they heard of it being rolled MLHSD, the National Land Use Planning Commission, out in certain pilot areas but perceived themselves as as well as selected civil society organizations and not having the means, the rights, or the know-how to development partners in an advisory role. implement such measures themselves. ˇ MNRT, together with MEM, VPO, MLHSD, and the ˇ Village level authorities do not have the resources National Land Use Planning Commission issue, gazette to invest in sustainable charcoal production. With and comprehensively communicate guidelines to a village revenue rate of about TZS 200 (US$ 0.15) village and district level authorities that clarify who per bag of charcoal, village governments get only owns the forest assets under question and that outline marginal shares of the charcoal-related revenues (see a process for (a) declaring or transferring ownership of Figure 6). such assets or (b) making use of these assets by way of passing by-laws and management plans. A number of actionable recommendations to government emerge from the discussion of the complex governance ˇ Fiscal empowerment is necessary to precede this step as otherwise the conflict of interest at the structure of the sector and the resulting (dis-)incentives district level (approving / legalizing by-laws and for sustainable charcoal sector management due to the management plans while giving up sources of lack of fiscal empowerment, uncertainty about land rights revenue) can systematically inhibit the efforts of and forest asset ownership, and limited rule enforcement village governments at the district level. capacity: STRENGTHEN CAPACITy FOR POLICy RECOMMENDATIONSFORACTION IMPLEMENTATION AND ENFORCEMENT FISCAL EMPOWERMENT ˇ Educate village, district and central government actors ˇ Diversify and strengthen the reporting on charcoal- about their rights and obligations regarding charcoal related revenue collection within existing government production, trade and use. systems and structures (including differentiated ˇ Promote sustainable forest management practices reporting on harvesting royalties collected from trees such as PFM and CBFM, and provide training on felled for charcoal production or for timber). This sustainable production and utilization technologies would create more transparency at all organizational to stakeholders in both rural and urban communities. levels of government as to what share of government revenue is generated from charcoal, and hence it ˇ Establish fixed trading sites around the urban centers would expose the contribution of the charcoal sector in which charcoal is mainly consumed to simplify the to the national economy. collection and verification of charcoal-related fees and taxes while reducing the opportunities for informal ˇ Match institutional responsibilities of village and business practices in interaction with government district governments to implement and enforce officials between the production and the trading site. charcoal sector policies with the right to retain a percentage of charcoal revenues, to be re-invested in ˇ Strengthen vertical accountabilities in MNRT, PMO- sustainable charcoal production. RALG and MEM to ensure compliance with centrally 21 The political economy of the charcoal sector in Tanzania formulated policies and directives at the sub-national and disincentives associated with it, and the failure to level (and to avoid implementation failures such as the enforce a complete ban on charcoal in 2006, suggest that ban on charcoal in 2006). Tanzania's charcoal sector does not function as written on government policy paper. Instead, one needs to look at the The question remains who are the de facto influential constellation of actors and institutions, their relationships stakeholders who control the business practices in the and their influence to understand who commands the de charcoal sector. The experience from the (unsuccessful) facto decision making power in the sector. ban on charcoal in 2006 has shown that it is most likely not the government agencies who solely control whether Figure 7 shows the actors relevant to Tanzania's charcoal and how the charcoal sector operates. This question will be sector, with the size of the circle depicting the actor's explored in the following section. relative influence in the sector. Influence is understood here as the power to shape processes and outcomes related to charcoal production, trade or utilization.23 The arrows 4.3 De Facto ConTRol ovER ThE in Figure 7 show the authority relationships between the ChaRCoal sECToR actors in the charcoal sector. De facto authority is the power of one actor to influence another actor to do something The discussion of the complex, formal governance by compulsion or persuasion. Solid lines indicate strong de framework of the charcoal sector in Tanzania, the incentives facto relationships of authority, exercised in and through Figure7Thede factoorganizationofauthorityinthecharcoalsector TRA VPO MoF MEM Stove Producer PMO-RALG Alternative Energy Provider MNRT Consumer District Authorities Retailer Wholesaler Village Authorities Dealer Vehicle Transporter Development Partners Bicycle Transporter NGOs Labourer Producer Legend: De facto authority of one actor over another. Weak/irregular authority relationship. 23 The level of influence assigned to an actor naturally varied by discussion group. Since it can be assumed that governmental actors know more about government-internal processes and power relations than non-governmental actors (and vice versa), a discussion group's assessment of the influence levels of an actor belonging to a different activity sphere than their own (governmental or non-governmental) were discounted by a factor of 2/3. An actor's overall influence is the average level of influence of this actor (with the discount factor taken into account), normalized into an influence index as presented in Table 2. The size of the actor circles in Figure 7 is based on the value of the influence index. 22 The political economy of the charcoal sector in Tanzania regular interactions. Dotted lines represent weak links A number of observations stand out: of authority through irregular interaction. The authority patterns displayed in Figure 7 were identified by overlaying ˇ Looking at the authority relationships between the Net-Maps of producers, transporters, wholesalers, governmental and non-governmental actors, one retailers, and government discussion groups which all can compare Figure 7 with Figure 5 and immediately showed similar or virtually identical features. see that the complex authority relationships between the government and the non-governmental side of Table2StakeholderRankingbyInfluence the charcoal sector have largely disappeared. They are replaced by brittle links of weak authority running aCToR influEnCE indEX between governmental (left) and non-governmental MNRT 0.90 (right) actors in the charcoal sector; the only firm link District Authorities 0.66 of de facto authority runs from village level authorities Development Partners 0.56 to charcoal producers. Overall, the government seems to have lost its handle on the business side of Village Authorities 0.48 the charcoal sector. Dealer 0.44 Vehicle Transporter 0.42 ˇ Among governmental actors, the authority PMO-RALG 0.40 relationships remain de facto unchanged and run along the lines of formal institutional hierarchies. Producer 0.37 Bicycle Transporter 0.30 ˇ The Ministry of Natural Resources and Tourism Consumer 0.20 (MNRT) is considered to be the most influential Wholesaler 0.20 player in the sector (represented by the biggest dot on the map), which is understandable given NGOs 0.19 the ministry's mandate to regulate most aspects of MEM 0.19 charcoal production, trade and utilization. It also has Alternative Energy Providers 0.16 the power to change the policy framework of the Improved Stove Producer 0.14 charcoal sector. Retailer 0.13 ˇ The next highest-ranked actors are the district and MoF 0.13 village-level authorities who have an important Laborer 0.10 role in implementing and monitoring charcoal- TRA 0.05 related policies and who have the power to pass VPO 0.04 and approve by-laws that can alter the district-level policy framework for charcoal production and trade The left hand side in Figure 7 shows the relevant to a limited extent. governmental stakeholders (in yellow / light shading), ˇ PMO-RALG oversees the decentralization of in the bottom left are development partners and NGOs government authority and is therefore in an (in purple / dark shading), and on the right hand side are important position to monitor how centrally the sector stakeholders involved in charcoal production, formulated policies are implemented at the regional trade or utilization, as well as the manufacturers of level and beyond. improved charcoal stoves and providers of alternative energy sources (e.g. briquettes, kerosene, LPG), in blue ˇ Other governmental stakeholders are not deemed and green.24 to be very influential because they are seen to fulfill 24 Not all actors were mentioned by all Net-Map focus groups, although a core set of actors was mentioned by all groups. Figure 7 is a summary map that includes all actors and institutions that were ever mentioned in any of the Net-Map discussion meetings, and their overall influence level as visualized by the size of their circle on the Net-Map. 23 The political economy of the charcoal sector in Tanzania mainly oversight and revenue collection roles that are producers, if only sporadically (e.g. when District Forest in essence derived from the policy framework set by Officers fine illegally producing stakeholders, or when MNRT. illegally produced charcoal is confiscated ­ keeping in mind ˇ On the side of the stakeholders who produce, trade that it is not always clear what constitutes `illegal' charcoal or use charcoal, the dealers, vehicle transporters and production, given the uncertainty about and lack of clarity wholesalers assume a central role as the authority in sector regulations). However, they neither systematically relationships on the non-governmental side of the enforce nor substantially shape charcoal sector regulations sector seem to run entirely through them. They are or processes, as discussed in section 4.2 above. also seen as the most influential non-governmental actors by a quite substantial margin, followed by The only definitive link of de facto authority runs between charcoal producers, as indicated by the size of the dots the village level authorities and the producers. Charcoal assigned to these actors. producing households are typically embedded in rural communities where the orders of the village leaders are Based on the Net-Map approach to political economy regarded as authoritative by all members of the community. analysis, the following section analyzes why the Directives from district or central government authorities government has limited control over how the charcoal are regarded as far less imperative. For example, during sector functions in practice; it explores the central role the two weeks of the charcoal ban in 2006, charcoal of charcoal dealers, transporters and wholesalers, and it producers looked to their village leaders for a decision on assesses the implications of this situation for designing and whether they really had to give up charcoal production implementing effective, sustainability-oriented charcoal and therewith a vital source of income, or whether they sector reforms. could continue producing charcoal. The relatively intangible character of MNRT's and other THELIMITEDCONTROLOFGOVERNMENT central government agencies' authority over the charcoal AUTHORITIESOVERTANZANIA'SCHARCOALSECTOR sector stems from three main factors: For the vast majority of non-governmental stakeholders ˇ New policies (or changes in existing policies) are who participated in the Net-Map discussion meetings, practically not implementable because they pursue the authority MNRT and other central government actors unrealistic goals (such as the total ban on charcoal is of rather `atmospheric' quality. Policy changes, even in 2006, disregarding that charcoal is presently fundamental ones such as the ban on charcoal in 2006, are without alternative for most urban consumers) or felt distinctly, but only in certain activity spheres (production they lack a coherent communication strategy that and transport became more difficult and hence more effectively translates the legal provisions of the policy costly during the time of the ban) while the way the sector into actionable instructions to district or village operates in practice remains de facto unchanged (trees governments, even in remote areas of the country. were still being harvested without any payments for these forest resources, production and transport still took place, ˇ Charcoal policy implementation and control of the side-payments were still being made and accepted). Figure sector is mediated through government institutions 7 exemplifies this with the weak authority links that run and officials who are either unclear about the full from the government to the non-governmental actors in range of regulations, or who have an incentive the sector. to actively translate formal fee or tax payments into informal side-payments, bypassing official District level authorities are seen as influential actors regulations for personal profit. 25 who can have a discernable impact on the livelihoods of ˇ There is a lack of real-time information on the side of 25 This incentive stems from the fiscal disempowerment of village and district level governments, and the weak vertical lines of accountability in MNRT, MEM, and other central government agencies, as discussed in section 4.2 above. 24 The political economy of the charcoal sector in Tanzania the government about how the non-governmental Key facts about dealer-transporter-wholesaler networks: side of the charcoal sector functions in practice. Figure 14 and Figure 15 (Annex 2), both Net-Maps ˇ Charcoal dealers (or vehicle transporters and of central and local government discussion groups, wholesalers together with dealers, or acting as visualize the exchange of information between the dealers, in the following referenced as dealers- charcoal sector stakeholders. These figures show that transporters-wholesalers) are brokers and facilitators. there is virtually no exchange of information between ˇ They finance production, buy charcoal from rural governmental and non-governmental stakeholders, producers, pay for transport, and are thus the as perceived by the government. main link between rural producers and their urban consumers. The central role played by charcoal dealers, vehicle ˇ Dealers serve as the cash source to the sector. Apart transporters and wholesalers is clearly discernable in from purchasing or financing charcoal, they hire Figure 7. The authority links indicate that government transportation, labor, and typically pay all necessary agencies mainly interact with these three key actors in licenses, registrations and permits, including for the their efforts to control the sector. Hence, the following transporter. section will analyze their roles, interests and influence in greater detail. ˇ The dealer owns the charcoal throughout the marketing process and is responsible for any CHARCOALDEALERS,TRANSPORTERSAND marketing-related (or non-vehicle related) expenses WHOLESALERS­WHOREALLYCONTROLSTHE en-route to the wholesaler or the market. Charcoal CHARCOALBUSINESS dealers therefore command substantial bargaining power and exercise considerable informal authority Charcoal dealers, vehicle transporters, and wholesalers over the non-governmental actors in the charcoal are the linchpin on the non-governmental side of the sector. sector: In fact, these three actors are frequently one and ˇ Dealers are well connected among each other and the same, or one actor takes on the functions of another exchange information on production sites, charcoal actor for a limited amount of time or for a certain number prices and unfavorable government interventions of transactions.26 This is illustrated by the common lighter (such as raids at illegal production sites). If a dealer shading of their actor dots in Figure 7. It can therefore finds the price charged by rural producers in a certain be difficult to engage with these actors, even if only for area too high or encounters roads that are impassable informational purposes, and more so when it comes to for transport vehicles, they direct their efforts towards issues of sector governance and rule enforcement. One other areas where prices are more favorable or roads might be able to identify individual stakeholders in these are easier to pass. dealer-transporter-wholesaler networks by looking at who obtained a charcoal business license, but this may only The central role played by dealer-transporter-wholesaler bring up the name of a person who is licensed to operate networks in the charcoal sector is further illustrated a charcoal truck or to run a wholesale site (licenses which in Figure 10. It presents the Net-Map from a discussion are frequently shared by several individuals). It does not meeting with wholesalers (some of whom stated to uncover the powerful networks these stakeholders belong function as dealers). While the Net-Maps previously to, held together by a common interest and sustained by discussed (Figures 7 ­ 9) visualized either links of formal patterns of regular communication, collaboration and and de facto authority (black) or exchange of information support. (green), the Net-Map in Figure 10 shows both types of 26 A person owning a truck for charcoal transportation might act as a dealer or might lend money to the dealer to procure charcoal in the villages to be transported to town us- ing the truck owner's business. Or someone running a wholesale site might broker a charcoal deal in a charcoal-producing village, hire transport and bring the charcoal to town to be sold at his wholesale site. Every combination of actors and functions exists. For details see Malimbwi, and Zahabu 2008. 25 The political economy of the charcoal sector in Tanzania links in one map and introduces a third type of link ­ the Map displays a typical pattern observed on the majority of exchange of money (one actor giving money to another all Net-Maps: the sector's business runs entirely through actor, displayed in red). Although Figure 8 is the result of a and is powered by the dealer-transporter-wholesaler discussion with charcoal dealers and wholesalers, the Net- networks. Figure8Thecentralroleofdealersinthecharcoalsector(asperceivedbywholesalers/dealers)27 Consumer Stove Producer TRA Retailer MNRT Vehicle Transporter Wholesaler District Authorities Dealer Village Authorities Labourer Producer Legend: Formal authority of one actor over another. Exchange of information. Money flows. Charcoal dealers are not only perceived to have information social network by counting the links that are going in about the interests and actions of all government actors and out of an actor's node, relative to the total number (contrary to the government stakeholders who felt they of in- and out-links in the network. For the Net-Map did not have any information about the processes in the shown in Figure 8, a standardized centrality index was sector, as shown in Figure 14 and Figure 15 in Annex 2), constructed with this method. Figure 9 depicts the result they are also the cash source of the entire sector and of this calculation, with the actors placed on a circular connect the non-governmental actors with the central, grid according to their centrality level. It clearly shows district and village level authorities. that dealers are by far the best connected actors and that most other actors are in a highly peripheral position. The central role played by dealers can be further specified: One can calculate the level of centrality of an actor in a 27 The size of the actor node again reflects the relative influence ascribed to this actor in the sector by this particular Net-Map discussion group. 26 The political economy of the charcoal sector in Tanzania Figure9Actorcentrality(layoutbystandardizedcentralityindex) Village Authorities District Authorities TRA MNRT Vehicle Transporter Producer Dealer Wholesaler Labourer Retailer Stove Producer Consumer Legend: Formal authority of one actor over another. Exchange of information. Money flows. INTERESTS AND INCENTIVES OF CHARCOAL DEALERS, production and trade at night or over remote routes, TRANSPORTERS AND WHOLESALERS in combination with side-payments to officials of all tiers in the government hierarchy. As profit-maximizing individuals or groups, charcoal dealers (together with transporters and wholesalers) With regard to the charcoal sector reform agenda as have a strong interest in maintaining the status quo, i.e. outlined in section 3 (page 12), this creates the following a largely informal system where the continuously high incentives for dealer-transporter-wholesaler networks: demand for charcoal by urban consumers guarantees the de facto functioning of the sector: ˇ They would be strongly opposed to reform elements that aim at increasing the share of official payments ˇ Charcoal is produced and traded under an to be made (currently estimated at 10 to 20 percent) arrangement where official fee and tax payments while decreasing the discretion with which the dealers can be kept at a minimum (it is estimated at 10 to 20 currently navigate all transactions along the charcoal percent). value chain (which would be the case if vertical lines ˇ Instead, well-known avoidance strategies are of accountability in MNRT, MEM, and other central used to bypass formal sector regulations and to government agencies would be strengthened). integrate government officials or institutions in an ˇ As these stakeholders depend on charcoal trade and informal benefit sharing mechanism, i.e. charcoal transport for their livelihoods, they would also oppose 27 The political economy of the charcoal sector in Tanzania reform measures that could reduce the demand for sources in the short to medium term. On the basis charcoal in the medium term, i.e. any components of of this premise, a (sustainability-oriented) reform the reform program aiming at more efficient charcoal agenda is needed that emphasizes the legitimacy use (through improved cook stoves) or promotion of of charcoal as an energy source while trying to alternative energy sources such as LPG or biomass make its production, trade and utilization more briquettes. sustainable. This in turn requires an adequate policy ˇ However, the dealers' dependence on charcoal framework that can generate the revenue needed trade and transport also implies that they may find to be reinvested at the district and village level into those components of the reform program favorable sustainable production practices, and that can be that intend to make charcoal production more used at the national level to support initiatives that sustainable because this would ensure continued promote more efficient use of charcoal and use of business opportunities in the future. alternative energy sources.28 ˇ Hence, the support or opposition of this stakeholder ˇ This open dialogue within government would group to a sustainability-oriented reform agenda include the need to openly discuss the interests depends on whether policy makers can successfully of government officials at stake. As many central, convince this stakeholder group that its benefits district and village government officials are reported would outweigh the risks. If sector reforms are simply to be involved in the business side of the charcoal seen as a way to introduce new control and sanctions sector, a sensible way forward to deal with these mechanisms, it is likely to meet strong resistance interests during reform design and implementation from dealer-transporter-wholesaler networks. If it is needs to be identified. A `charcoal sector roundtable', also viewed as a business opportunity, their political as suggested above, could be helpful in this regard. support (or at least acquiescence) may not be completely unthinkable. STRENGTHENING VERTICAL ACCOUNTABILITy AND ExCHANGE OF INFORMATION A number of recommendations emerge if government is to regain control of the charcoal sector and wants to ˇ Strengthen vertical accountabilities and reporting shape how the sector functions in practice. mechanisms in MNRT, PMO-RALG and MEM to ensure compliance with centrally formulated policies RECOMMENDATIONSFORACTION and directives at the sub-national level, and to gather real-time information about the de facto functioning SETTING REALISTIC GOALS AND ExPECTATIONS of the charcoal sector in practice. ˇ The establishment of fixed trading sites around and ˇ As a first step, an open dialogue is needed within the in urban centers can simplify the collection and Tanzanian government to decide in which direction verification of charcoal-related fees and taxes while the charcoal sector should be moving. A fundamental reducing the opportunities for informal business strategic decision is to be taken that can shape the practices of government officials and charcoal sector future of the sector in either one of the following stakeholders. ways: ˇ Charcoal cannot be easily substituted with comparably affordable and readily available energy 27 The alternative would be a sanctions-oriented reform agenda that is based on the premise that charcoal is an undesirable and environmentally damaging energy source that is to be substituted as quickly as possible with alternative energy sources. This would call for measures that discourage the production, trade and use of charcoal by implementing an effective rule and sanctions regime. However, it is not clear whether this is realistic, given that over the past 7 years the number of households using charcoal has significantly increased. 28 The political economy of the charcoal sector in Tanzania ENGAGING WITH CHARCOAL DEALER-TRANSPORTER- or at least contacted ­ through his agents. This means that WHOLESALER NETWORKS what has been missing so far is an explicit commitment by central government actors to wholeheartedly engage ˇ MNRT, MEM and other key central government in a comprehensive sector reform. Once this decision agencies engage in a dialogue with the dealer- has been made, the connections of government officials transporter-wholesaler networks who exercise both centrally and on the district level can be used to substantial de facto control over the charcoal sector. identify and engage with the individuals who make the ˇ Convert the currently irregular and informal decisions on the business side of the charcoal sector. interactions with this stakeholder group (mainly Then an effective reform proposal acceptable to both through village and district level authorities) into sides can be brokered. a more formal relationship with regular meetings, also including central government agencies, to get a The previous discussion has shown that an open dialogue better understanding of how the sector functions in both within the government system and between practice and to include this critical stakeholder group government and dealers-transporters-wholesalers as in the design of charcoal sector policy reforms from the key actors in the charcoal sector is necessary to the outset. render the design and implementation of viable policy reforms politically feasible. The remaining question is The government, until now, seems to be missing an entry how a sustainability-oriented reform agenda as outlined point of how to engage with the dealer-transporter- in section 3 would affect the other stakeholders in the wholesaler networks. However, the missing entry point sector, what would be the overall poverty and social seems to be neither of geographic nor of individual nature. impacts, and how this would affect support or opposition Dealers, transporters and wholesalers can be found at to the reform agenda. This question will be explored in wholesale sites and near charcoal trucks. Even though the the following section. individual in charge may not be known, he can be found ­ 29 30 5 PoTEnTial PovERTY and soCial imPaCTs of ChaRCoal sECToR REfoRms Since the two week-long ban on charcoal in 2006, the 5.1 ChaRCoal usE and EXPEndiTuRE on price developments in the charcoal sector have been ChaRCoal astounding. All stakeholders used the period of the ban as an opportunity to mark up prices considerably and THECENTRALROLEOFCHARCOAL essentially held prices up even after the ban was lifted. Figure 1 (page 2) illustrates the remarkable increase in Figure 10 demonstrates the pivotal role of wood-based charcoal prices at all levels since the time of the ban. The fuels among the energy sources used for cooking by price charged by producers has gone up by 50 percent; urban consumers, shown by income quintile. In all wholesalers charge 83 percent more than immediately income groups, charcoal is by far the most important after the ban, and retailers have marked up their margin energy source for cooking. It ranges from 46 percent of by 108 percent. Given the ever increasing amounts of the households in the poorest quintile up to 76 percent charcoal being transported into urban areas, the price of the households in the richest quintile who mainly cook elasticity of demand seems to be minimal. How do these with charcoal. The figure also indicates that in all income price changes affect charcoal consumers? Do charcoal groups, firewood is still used for cooking by a significant users, especially the poor, still have room for further price number of households due to its affordability. In the two increases? Who are the stakeholders profiting most from poorest quintiles, firewood is still used by 38 percent and the current setup of the sector, and how would their 27 percent of households, respectively. Charcoal is mainly profits change under reform implementation? Taking into used for cooking by urban consumers, as Figure 3 shows. account the expected effects of consumers and charcoal Therefore the following analysis focuses on households in producers, dealers-transporters-wholesalers, and retailers, Dar es Salaam and other urban areas. what are the implications for reform design? 31 Potential poverty and social impacts of charcoal sector reforms Figure10Sourceofenergyusedforcookingbyurbanconsumers,byincomequintile 100% 90% 80% 70% Other Fuel 60% Firewood 50% Charcoal Kerosene / Paraf n 40% Electricity 30% 20% 10% 0% Poorest 2. Quintile 3. Quintile 4. Quintile Richest Quintile Quintile HOUSEHOLDEXPENDITUREANDROOM school fees) or health care, which can have a substantial FORFURTHERPRICEINCREASES negative impact on families' well-being and income, particularly for children and women. If expenditure on Looking at the expenditures of urban households in food items is reduced (through buying lower quality Tanzania (Figure 11), one can see that the overwhelming foods or less food altogether), this could result in a lower majority of households across all income groups spend calorie intake, negatively affecting especially children well over 95 percent of their income on food and (whose body and brain development critically depends essential non-food items (see Annex 2, Table 3 and Table on sufficient nutrient supplies) and women. Some form 4) for detailed expenditure shares for households in Dar of substitution behavior or more efficient charcoal es Salaam and other urban areas). Charcoal expenses take consumption must have happened already, given that up a major share of the otherwise minimal remaining the statistics presented here are based on the Household household resources. Therefore, the room for increases in Budget Survey of 2006/07, which was conducted around the price of charcoal is marginal. Even for the wealthiest the time of the charcoal ban. Since then the retail price 20 percent, a rise in charcoal prices would quickly of charcoal has increased by 108 percent. As no newer force them to consume less charcoal (which is a strong household expenditure survey data exists, one cannot incentive for using improved cook stoves) or to substitute say with certainty through which compensation or charcoal through cheaper fuel sources (i.e. firewood) or substitution strategy households have coped with the forego other ­ most likely non-food ­ expenditures. higher energy costs. The cut-back in non-food expenditures could appear in essential expense categories such as education (children's 32 Potential poverty and social impacts of charcoal sector reforms Figure11Expendituresofurbanhouseholdsbyincomegroup 100% 90% 80% 70% Savings 60% Taxes 50% Other fuels Charcoal 40% Non Food 30% Food 20% 10% 0% Poorest 2. Quintile 3. Quintile 4. Quintile Richest Quintile Quintile Data source: HBS 2007. 5.2 PRiCE EffECTs of ChaRCoal sECToR graph. Wholesalers are taken as a proxy for the dealer- REfoRms transporter-wholesaler networks; wholesale sites are the most reliable price points that are easiest to track, and ­ As there seems to be no room for charcoal price increases, as explained earlier on ­ it would be difficult to determine reform-induced or otherwise, one needs to look at how the who pays the taxes and fees of these three actors because price of charcoal might actually develop if sustainability this frequently changes. Retailers are small-scale vendors reforms were implemented. Given the limited availability who typically do not pay any charcoal-related taxes and of reliable price data in the charcoal sector, such fees; hence their cost-profit share remains constant. projections have to be treated with great care. All prices contain an unknown percentage of unofficial side- Figure 12 yields the following key observations regarding payments made on route from the production site to the potential price effects of sustainability-oriented charcoal final marketing place. It is estimated that only 20 percent sector reforms: of all taxes and levies are actually paid to the authorities.29 However, some general trends can be identified in Figure ˇ The first bar shows the situation in the status quo 12. Due to a lack of disaggregated data for each actor, with only about 20 percent of all charcoal-related only the aggregate `costs and profits' are shown in this taxes and fees being paid.30 This results in a current 29 Malimbwi et al. 2007; World Bank 2009. 30 van Beukering et al. 2007; spot survey 2010. 33 Potential poverty and social impacts of charcoal sector reforms Figure12Charcoalpriceprojections,per80-100kgbag TZS 50,000.00 TZS 45,000.00 TZS 40,000.00 10,000 10,000 TZS 35,000.00 10,000 10,000 TZS 30,000.00 TZS 25,000.00 Retailer's costs & pro ts 23,171 23,818 Wholesaler's costs & pro ts TZS 20,000.00 19,293 18,000 Producer's costs & pro ts TZS 15,000.00 TZS 10,000.00 TZS 5,000.00 9,000 9,440 10,640 10,820 TZS 0.00 1 2 3 4 Percentage of taxes/licences paid per bag Sources: van Beukering 2007, CHAPOSA 2001, spot survey 2010. consumer price of TZS 37,000 per bag of charcoal the sector, in addition to 100 percent tax and fee (US$ 25.50). If charcoal sector reforms were effectively collection, would result in a total increase in the implemented, more revenue would be collected for current retail price of charcoal of 20 percent. The central, district and local level authorities, to be partly premium would be charged on charcoal coming reinvested in more sustainable charcoal production from unsustainably managed forests, unsustainably and consumption. produced charcoal or illegal forest products in general. This would put an incentive on sustainable ˇ Bringing tax and fee collection up from 20 percent charcoal production generating financial resources to a hypothetical 40 percent enforcement rate and that can be used to further promote sustainable assuming that all additional costs would be passed production and efficient consumption.31 on to the consumer, urban charcoal consumers would have to absorb a 4.7 percent increase in the While it may not be realistic to assume that revenue retail price of charcoal. collection would triple or even quintuple in the short ˇ Increasing tax and fee collection up to 100 percent, term, the projection shows that it would impose a a state where a all necessary dues were paid to the substantial additional cost (if passed on to consumers) authorities, and still assuming that all additional costs which the bottom four income groups could hardly would be passed on to the consumer, urban charcoal absorb. On the other hand, urban households seem to consumers would have to absorb an 18 percent have coped well with the 108 percent increase in the increase in the retail price of charcoal. price of charcoal since 2006; or ­ more likely ­ they simply have no alternative. ˇ Imposing a 10 percent sustainability premium on 31 For details on the sustainability premium model, see World Bank 2009, page 37. 34 Potential poverty and social impacts of charcoal sector reforms Figure13Projectedcostsandprofitsofcharcoalwholesalers,per80-100kgbag TZS 40,000.00 status quo incl. sustainability all taxes and licenses paid premium TZS 35,000.00 10,000 10,000 10,000 10,000 TZS 30,000.00 TZS 25,000.00 3,776 2,910 10,707 8,974 TZS 20,000.00 6,000 6,000 TZS 15,000.00 6,000 7,110 6,000 6,464 TZS 10,000.00 2,586 1,293 TZS 5,000.00 9,000 9,440 10,760 10,980 TZS 0.00 20 40 100 110 Percentage of taxes/licences paid per bag Retailer's pro ts and costs Taxes & licenses paid by wholesalers Wholesaler's pro ts Price at production site including taxes & licenses paid by producers Transportation costs Sources: Spot survey 2010; van Beukering et al. 2007; CHAPOSA 2002. A realistic short to medium term goal might be to bag (which is typically the case when transportation increase the share of taxes and fees paid from 20 percent is hired by dealers or wholesalers). With 100 percent of to 40 percent and to impose a sustainability premium of taxes and fees paid, or with all taxes and fees paid and 10 percent, resulting in a 7 percent increase in the retail an additional sustainability premium of 10 percent, the price of charcoal. However, given consumer's extremely wholesaler's profits would shrink by 65 percent or 73 limited ability to pay, one can look at a different scenario percent, respectively. In case the share of taxes and fees where the additional costs are absorbed by the actor with paid was doubled from the status quo to 40 percent, the seemingly greatest cost-profit share ­ the wholesaler. the wholesaler's profit would be marked down by only 16 percent. With an additional sustainability premium of Looking at the wholesalers' cost-profit situation, Figure 13 10 percent, the wholesaler would already make a quarter unbundles the wholesaler proxy as far as possible. Holding less profit (24 percent). This suggests that a doubling the final consumer price constant, Figure 13 shows how current revenue collection may still be feasible, while any the wholesaler's profits change given the percentage of measures going beyond this might be met with strong taxes and fees he has to pay and given that he has to resistance. pay a lump-sum amount of vehicle transport costs per 35 Potential poverty and social impacts of charcoal sector reforms THESITUATIONOFCHARCOALPRODUCERSAND mechanisms). They are also uneasy about the prospect THEINCENTIVESTHEYFACE of having to pay for the forest resources which they are currently using at no cost. However, a communication The situation of charcoal producers seems to be strategy for the proposed policy reform agenda could somewhat paradox: the entire sector depends on them clearly explain that the benefits for charcoal producers for a continuous supply of charcoal, and yet they are the would outweigh their additional costs substantially: most disempowered stakeholder in the sector: without switching to sustainable production practices there will soon be no forest areas from which to produce ˇ Producers have little knowledge about their rights charcoal. In addition to paying for the production of and obligations regarding the forest resources they charcoal from natural forests, two further options exist: rely on. First, charcoal producers may establish their own small ˇ They are largely unaware of improved production woodlots from which they produce charcoal or they pay technologies and lack the means to use them. those households that own trees for the wood to produce ˇ Charcoal producers lack bargaining power vis-ā-vis their charcoal. It remains a point for discussion in future the dealer-transporter-wholesaler networks and they charcoal sector reforms whether wood produced on a report to be subject to arbitrary rule enforcement smallholder basis should to be charged or exempt from a acts by district level officials.32 harvesting tax charged by the forest service. ˇ The lack of bargaining power partly stems from OTHERCHARCOALSECTORSTAKEHOLDERS,THEIR the producers' inability to form associations or INTERESTSANDANTICIPATEDIMPACTS organized interest groups. Living scattered across rural areas, they lack the means of communication The consumer's ability to pay for charcoal seems already and transportation, they are discouraged by the stretched to the maximum. Therefore, reforms would need cumbersome processes of district bureaucracy, to be designed so that the burden of additional costs and they do not necessarily see the value added of would be put on those who can more easily cope with putting effort into a concerted process whose payoff them (i.e. the dealer-transporter-wholesaler networks). they cannot immediately see. It is also a legitimate question to ask whether the retailer ˇ As producers generally do not pay any harvesting should not take over a share of the charcoal-related fees royalties, fees or taxes at present (this is usually and taxes. This seems to be an attractive proposal from done by the charcoal dealer or transporter, if only a burden-sharing point of view, but it may be difficult to sporadically), they have little incentive to support a implement given that retailers are small street vendors who sustainability-oriented reform agenda that would put rarely run registered businesses. Who will bear the burden a cost the forest resources that are used for charcoal of higher charcoal-related costs is also a matter of who can production. decide what to charge and what to pay. Hence, it becomes a question of bargaining power and empowerment. Nevertheless, the Net-Map discussion meetings showed that charcoal producers are largely in favor of sector The pricing power in the sector is currently concentrated reforms as they expect more clarity and certainty over largely in the hands of the dealer-transporter-wholesaler the regulations that apply to them, and they hope to be networks. To prevent them from pushing all additional empowered regarding the ownership rights over forest costs fully on to other stakeholders in the sector, certain assets, which would give them an incentive to manage key actors would need to be empowered to have a forest areas more sustainably (e.g. through CBFM or PFM greater say vis-ā-vis the wholesalers. 32 Arbitrary in the sense that district level authorities are seen as having an interest in the business side of the charcoal sector and do not coherently enforce or monitor charcoal- related policies because they benefit from the informal nature of the status quo themselves. Therefore, raids or confiscations of `illegal' forest products are seen as arbitrary and weakly justified. 36 Potential poverty and social impacts of charcoal sector reforms ˇ Consumers need to be better informed about the any campaign that promotes alternative fuels, such energy choices they have, and about the simple ways as biomass briquettes produced from agricultural through which the amounts of charcoal needed for waste in lieu of traditional charcoal, because they cooking can be reduced (e.g. through improved generally make the choice as regards which fuel stoves, dowsing remaining charcoal to be used for source used and, therefore, constitute an important cooking the next meal, etc). But consumers can also part of influencing the charcoal value chain. be empowered vis-ā-vis the government, to make their voices heard more clearly. If there was more ˇ Alternative stove producers and energy providers public demand for the government to promote (e.g. biomass briquettes) face a marketing gap which sustainable charcoal production and use as well as they find themselves unable to bridge. Their products alternative energy sources, such activities might can make charcoal consumption more efficient, or achieve higher priority on the government's policy even substitute it with comparably affordable energy agenda. One important part of enhancing the sources of similar calorific value. However, relatively information on energy choices should focus on those few consumers are aware of cheap alternative energy fuels that can be used with the same charcoal stoves. sources, or they do not find them as easily accessible These are mainly "charcoal" briquettes made from as charcoal. Improved stoves are already widely agricultural waste, which are currently sold below the available but not every household can afford to buy price of traditional charcoal. one as prices are generally 35 percent higher than for conventional stoves. Advertising or some financial ˇ Women are the main users of charcoal in household support from government or development partners settings. They suffer most from indoor air pollution could help this sustainable business segment to get and its consequences ­ a burden that can be a larger market share in the charcoal sector. For third eased with simple but effective measures such as and fourth generation cook stoves, carbon finance improved stoves with a chimney, placement of the options could be explored to provide financial stove, better ventilation, or through changed user incentives to consumers by lowering prices on these behavior. Information about such measures needs cook stoves. to be disseminated widely and easily accessible so that all women in urban areas are educated about ˇ Bicycle transporters are in a marginalized position, the measures that can make their daily life easier. making minimal profits when transporting charcoal Women in rural communities are usually responsible from production sites to road sites or trading centers, for selling the charcoal at the road side, but in times and they feel disempowered because they lack access of economic hardship they are often required to to capital to invest in better transport equipment and work in charcoal production as well ­ a physically they face similar constraints as charcoal producers in extremely challenging task. Women would need their efforts to form associations to have a greater access to education and finance to be less dependent say in the struggle for establishing their own on charcoal as a source of household income, to marketing sites or in disputes with village or district diversify their livelihoods, and they would need to be governments. Hence, they would need support in educated about the relatively easy ways by which to gaining access to micro credits or other investment alleviate indoor air pollution. capital, and they need to be empowered vis-ā-vis the government bureaucracy to strengthen their formal Women are also generally responsible in the role in the charcoal sector. households for selecting and purchasing stoves. Therefore, women need to be the target group for ˇ Retailers are also relatively non-vocal in the charcoal any marketing and sensitization campaign that have sector, but the above analysis of costs and profits the objective of enhancing the dissemination of shows that their profits seem to be substantial and improved stoves ­ especially third generation cook leave room to absorb producer price increases or stoves. Similarly, women need to be in the focus of more coherent fee and tax collection. 37 Potential poverty and social impacts of charcoal sector reforms RECOMMENDATIONSFORACTION EMPOWERING KEy STAKEHOLDERS SHARING THE BURDEN OF INCREASING CHARCOAL ˇ Educate producers about their rights and PRICES responsibilities regarding ownership and use of forest resources, including ownership of trees grown ˇ Looking at the income-expenditure situation of in small-scale plantations, woodlots, and along fields charcoal users, the consumer's ability to pay for and in agroforestry systems. charcoal seems already stretched, while wholesalers ˇ Effectively disseminate knowledge about and and retailers seem to score substantial margins promote sustainable, simple charcoal production that leave room for tax maneuvering. Therefore, technologies, such as improved kilns. sustainability-oriented reforms that could result in rising charcoal prices would need to be designed ˇ Promote Community Based Forest Management so that the burden of additional costs would be put (CBFM) and Participatory Forest Management (PFM) on those who can more easily cope with them, i.e. to empower rural communities and producers to the dealer-transporter-wholesaler networks or the make charcoal production more sustainable and give retailers. them a more reliable source of income. ˇ A realistic short to medium term goal might be to ˇ Raise awareness among consumers, especially increase the share of taxes and fees paid from 20 women, about more efficient ways of using charcoal percent to 40 percent and to impose a sustainability (e.g. through improved cook stoves) and promote premium of 10 percent, resulting in a 7 percent the use of improved stoves and alternative energy increase in the retail price of charcoal. sources (such as LPG or biomass briquettes), for example by increasing their availability or subsidizing ˇ This price increase, mainly due to the higher costs their use through a targeted scheme. of sustainable production and sanctioning of unsustainably produced charcoal, could be absorbed by wholesalers (resulting in a 24 percent profit cut), or shared between wholesalers and retailers (whose profits are difficult to estimate due to limited data availability) through targeted tax measures or price controls (which are difficult to implement and have a rather mixed success record in Tanzania). 38 6 ConClusion Based on the findings of the Policy Note on the charcoal decision is needed to clearly state where the charcoal sector in Tanzania published in August 2009, it is evident sector should be moving, i.e. in the direction of that charcoal will continue to be a major source of energy sustainability-oriented reforms, or towards a stricter in Tanzania and other Sub-Saharan African countries sanctions regime. for the next 30 to 40 years. With the majority of the ˇ New policies (or changes in existing policies) need population now living in urban areas, the poorer part of to be based on realistic goals and expectations as the urban population will continue to rely on charcoal to what can be achieved and require a coherent and other biomass to satisfy energy needs, especially for communication strategy that effectively translates cooking. Given the relative price increase of alternative the legal provisions of the policy into actionable fossil fuels and fossil fuel derivatives such as LPG, the instructions to district or village governments, even number of households using traditional biomass has in remote areas of the country. increased dramatically over the past few years. ˇ Matching institutional responsibilities of village and district governments to implement and enforce Against this background, the analysis presented in this charcoal sector policies with the right to retain a report has attempted to identify the key political economy percentage of charcoal revenues seems imperative to factors that facilitate or inhibit a comprehensive political create an incentive for better policy implementation approach to reforming the charcoal sector in Tanzania to and monitoring at the sub-national level. make it environmentally and socio-economically more sustainable. The paper also tried to anticipate the poverty ˇ In this respect, vertical accountabilities and reporting and social impacts of a sustainability-oriented policy mechanisms within existing systems and structures in reform agenda. Given the enormous uncertainty about MNRT, PMO-RALG and MEM should be strengthened rules and regulations in the charcoal sector, and the to ensure compliance with centrally formulated extremely limited availability of reliable data ­ particularly policies and directives at the sub-national level, and at disaggregate levels ­ the findings presented in this to gather real-time information about the de facto report have to be treated with some care. functioning of the charcoal sector in practice. ˇ MNRT, MEM and other key central government A number of key conclusions emerge: agencies need to scope out a mode of engagement with the dealer-transporter-wholesaler networks ˇ The fiscal disempowerment of village and district who exercise substantial de facto control over the governments, combined with the uncertainty about charcoal sector. Converting the currently irregular forest asset ownership and user rights, as well as and informal interactions with this stakeholder group the limited policy implementation and monitoring (mainly through village and district level authorities) capacity of government agencies at all organizational into a more formal relationship with regular meetings, levels, create substantial disincentives for sustainable also including central government agencies, might management of the charcoal sector by government contribute to gain a better understanding of how institutions and sustainable production, trade, and the sector functions in practice and to include this use by non-governmental stakeholders. critical stakeholder group in the design of charcoal ˇ An open conversation within and among key sector policy reforms. government agencies and a subsequent strategic ˇ A realistic short to medium term goal might be to 39 Conclusion increase the share of payable taxes and fees collected production while including wholesalers and retailers from 20 percent to 40 percent and to impose a in sharing the higher costs of a more sustainably sustainability premium of 10 percent, encouraging operating sector. sustainable forest management and charcoal ˇ Other non-governmental stakeholders need to production while discouraging the production, trade be empowered through information campaigns, and use of unsustainably produced charcoal. This promotion of more efficient technology, and more scenario could result in a 7 percent increase in the sustainable management practices. This applies retail price of charcoal, which charcoal consumers first and foremost to producers, but also to charcoal might still be able to absorb. However, looking at consumers, women, as well as bicycle transporters, the sizable margins of wholesalers and retailers, one improved stove producers and alternative energy should engage in a deliberative process of developing providers. policy measures that promote sustainable charcoal 40 annex 1 dETails on ThE mEThodologiCal aPPRoaCh CONTEXTMATTERS:AMULTI-DISCIPLINARYAND the focus group discussions and key informant interviews PARTICIPATORYAPPROACH conducted with some 200 stakeholders from all relevant groups in Tanzania's charcoal sector, carried out between The analysis presented in this paper is grounded in the December 2009 and March 2010. commonsensical understanding that (a) context matters, i.e. policies are neither designed nor implemented in (3) Quantitative research methods: The availability a socio-economic or political vacuum, but are subject of quantitative data on charcoal production, trade and to stakeholder interests and influence, negotiated in consumption is extremely limited due to the sector's high political processes and mediated through institutions degree of informality and limited government capacity to whose setup and configuration can substantially affect collect and process such data. It was beyond the financial policy outcomes during implementation. Therefore it means of this research project to fund a comprehensive is important to acknowledge that (b) multi-disciplinary and nationally representative survey on charcoal-related approaches, combining quantitative and qualitative issues. However, the team collected some current charcoal research methods as well as economic and political, price data in Dar es Salaam and the surrounding districts, institutional and stakeholder analysis are key to answering and could draw on the Household Budget Surveys (HBS) the complex questions that are the subject of enquiry in of 1992, 2001 and 2007. This data was particularly useful this paper. for the PSIA to conduct some basic household income and expenditure analysis and to estimate consumers' Therefore, the analysis is based on three building blocks: ability to pay. (1) A multi-disciplinary team: the analysis has been DARESSALAAMASCASESTUDY conducted and the paper been produced by an integrated team of political scientists, economists, and The research team adopted a case study approach with natural resource management specialists both from Dar es Salaam serving as the main case study site. Charcoal Tanzania and internationally. This effectively combines consumption in Dar es Salaam accounts for about 50 contextual, country- and sector-specific knowledge and percent of Tanzania's annual charcoal consumption, and analytical rigor with an (as far as possible) unprejudiced the proportion of households using charcoal in Dar es mode of curious inquiry from an outsider's perspective. Salaam lies at 71 percent as of 2007. Thus, choosing the country's largest city and its surrounding districts for case (2)Qualitativeresearchmethods: For both the political study is sensible, considering that the most important economy (PE) analysis and the poverty and social impact charcoal business takes place here. analysis (PSIA) the team engaged in a participatory and consultative process to integrate the knowledge of those The team met with 200 stakeholders in key informant likely to influence the policy design and those likely to be interviews and focus group discussions, conducted in Dar affected by the policy. At the heart of this approach lie es Salaam and the surrounding districts (Kibaha, Kisarawe), 41 Details on the methodological approach from where the majority of the capital's charcoal supplies groups are comparable. However, the goals are defined come. Meeting participants were assured confidentiality so broadly enough with respect to the key questions so that that they felt comfortable to speak freely about politically stakeholders can identify with one of the three goals (or and socially sensitive issues. From the government's side, be qualified as indifferent). the team met representatives from the Ministry of Natural Resources and Tourism (MNRT), Forestry and Beekeeping 2.Actorselection Division (FBD), the Ministry of Energy and Minerals (MEM), As a next step, the discussion group is asked to identify the the Ministry of Health and Social Welfare (MOHW), and actors involved in the process (of charcoal sector reforms). representatives from district and local government entities The actors mentioned are written down on post-it cards (district commissioners, forest extension officers, foresters, and distributed on a large, empty sheet of paper, the Net- village leaders). Regarding non-governmental stakeholders, Map sheet. Working with color-coded actor cards, links focus group discussions were conducted with charcoal and goals ensures that even illiterate stakeholders can producers, bicycle and vehicle transporters, wholesalers, meaningfully participate in the Net-Map discussion. retailers, household and commercial consumers (restaurant owners and small street vendors), as well as women's 3.Drawinglinks groups and various development partner agencies. Once the relevant actors have been identified, the meeting participants are asked to point out "who is POLITICALECONOMYANALYSIS:THENET-MAP linked to whom," using the predefined links as described PROCESS33 above. The links are drawn onto the Net-Map sheet in the different colors assigned to the different links (i.e. who has The Net-Map process can be undertaken with one key authority over whom; who exchanges information with informant or a group of stakeholders. It can help the whom; who gives money to whom). analyst and the stakeholders themselves develop an understanding of which actors are involved in a given 4.Assigninginfluencetowers network, how they are linked, how influential they are, At this stage the discussion group is presented with the and what their interests and goals are. For this analysis question of "how strongly can actors influence processes the team conducted Net-Map discussion meetings with and outcomes in the sector?" The objective is not to rank different stakeholder groups of 5 to 15 people. actors by the magnitude of the formal powers vested in them by law, but to gain a realistic assessment of which 1.Preparation actors can de facto make things happen or stall, or how The Net-Map process starts with defining the key much influence they have over the behavior of other questions to be answered. For this analysis the questions actors. The meeting participants are then asked to put are "who will be affected by charcoal sector reforms, and `influence towers' on the actor cards; an influence tower who can influence the success of the reform process?" As is made up of one to eight flat stackable objects, such as a next step, the possible links between actors are defined poker chips. The height of the influence tower represents (here: formal authority; exchanging information; giving the actor's relative influence in the sector. money) and colors are assigned to these links. The last preparatory step is to define the goals that actors can 5.Identifyinggoals have (oppose the proposed reform agenda; support the According to the predefined goals, the meetings reform agenda mainly for economic/business reason; participants are asked to assess ­ actor by actor ­ who or support the reform agenda for mainly environmental opposes and who supports a given reform agenda, and reasons). The goals need to be predefined so that why. The goals are noted next to the actor cards in an the results of the meetings with different stakeholder abbreviated form. 33 Adapted from Schiffer and Waale 2008; IFPRI Discussion Paper 00772. 42 Details on the methodological approach 6.Discussingimplications Step1Whichactorsareinvolved? Steps 1 through 5 result in the creation of a `Net-Map landscape' that lays out the relevant actors in the sector, their links, their relative importance and their goals in a visually accessible way. The stakeholders develop an actor enhanced understanding of their own position in the actor sector and how their own situation is influenced by the actors and processes that prevail in the sector. Based on actor this `Net-Map landscape' the researchers can discuss with the groups that have in-depth knowledge of the sector actor how the actors, links, influence and goals mapped out on the Net-Map sheet can affect a specific reform agenda or actor process, and with whom and how one needs to engage in the sector to support the design and implementation of viable policy reforms. Step1Howaretheactorslinked? POVERTYANDSOCIALIMPACTANALYSIS: BASICECONOMICMODELINGWITHLIMITED DATAAVAILABILITY actor actor Given the data constraints in the charcoal sector in Tanzania, with current price and revenue data not available, the actor options to conduct an in-depth analysis of the poverty and actor social impacts of the proposed policy reforms were limited. For general data on household income and expenditure, the team drew on the Household Budget Surveys (HBS) actor of 1992, 2001 and 2007. For charcoal-related data such as prices, fees, taxes, or transport costs, the analysis used data collected in earlier research projects,34 complemented with current information gained in spot surveys carried out in Step1Howinfluentialarethey? Dar es Salaam and the surrounding districts in March 2010. actor The analysis is complicated by the fact that all charcoal- related prices (usually calculated by bag of charcoal) can only be approximated as they are not systematically recorded and depend on varying factors. Therefore, the results of the quantitative analysis have to be treated with some caution. ˇ Producer costs and prices vary by dry and wet season (as production is more difficult during wet season, and many producers engage in other income generating 34 van Beukering et al. 2007; World Bank 2009. 43 Details on the methodological approach activities such as farming, which further decreases ˇ Retail prices depend on the region, the charcoal bag the supply of charcoal), by region (as taxes and levies size (at least seven different sizes on the market), and vary by region), and by the extent to which the the margin added by the retailer. producer pays the necessary licenses and harvesting royalties. Based on the data sources mentioned above, and with the ˇ Transport costs depend on the means of transport caveat of limited data availability and reliability in mind, (different truck sizes, bicycle), the distance between the team created some simple projections of how prices, the production site and the wholesaler or retailer, and costs, and profits would change if the proposed reform the season (as transport is more difficult during wet agenda were to be implemented. Comparing these season when unpaved roads are difficult to navigate). calculations with household income and expenditure, one can estimate the impact of the policy reforms on ˇ Wholesale prices vary by region (different levies and charcoal consumers' incomes and ability to pay for their taxes), the means of transport (different levies and energy needs. taxes), whether license and taxes to the different authorities are paid, and the margin added by the wholesaler. 44 annex 2 sElECTEd TablEs Figure14Exchangeofinformationbetweenactors(asperceivedbycentralgovernment stakeholders) Stove Producer VPO MEM Alternative Energy Provider PMO-RALG Consumer MNRT Retailer Wholesaler District Authorities Vehicle Transporter NGOs Producer Development Partners 45 Selected tables Figure15Exchangeofinformationbetweenactors(asperceivedbylocalgovernment stakeholders) Stove Producer Consumer TRA Retailer VPO MNRT Wholesaler District Authorities Vehicle Transporter Village Authorities Buyer Bicycle Transporter NGOs Development Partners Producer Table3Exchangeofinformationbetweenactors(asperceivedbylocalgovernmentstakeholders) household Poorest Quintile 2. Quintile 3. Quintile 4. Quintile Richest Quintile Expenditures inDaresSalaam Food 66.9% 76.3% 77.7% 77.3% 76.1% Non Food 30.6% 20.5% 18.8% 19.0% 19.5% Charcoal 1.9% 2.4% 2.5% 2.5% 1.9% Other Fuels 0.5% 0.7% 0.6% 0.7% 0.6% Taxes 0.0% 0.1% 0.2% 0.2% 0.5% Savings 0.0% 0.0% 0.2% 0.2% 1.4% inotherurbanareas Food 82.4% 82.4% 81.5% 81.5% 78.8% Non Food 14.6% 13.8% 14.3% 13.5% 13.5% Charcoal 1.3% 1.8% 1.7% 1.7% 1.1% Other Fuels 0.9% 0.9% 1.0% 0.9% 0.7% Taxes 0.1% 0.2% 0.3% 0.4% 1.0% Savings 0.6% 0.9% 1.3% 2.0% 4.9% Data source: HBS 2007. 46 Selected tables Table4Householdexpendituresbyincomegroup(inTanzanianShillings) household Poorest Quintile 2. Quintile 3. Quintile 4. Quintile Richest Quintile Expenditures inDaresSalaam Food TZS 55,559 TZS 117,765 TZS 180,698 TZS 275,028 TZS 717,010 Non Food TZS 20,298 TZS 31,516 TZS 43,706 TZS 68,041 TZS 178,045 Charcoal TZS 1,593 TZS 3,729 TZS 5,917 TZS 8,699 TZS 13,680 Other Fuels TZS 468 TZS 1,050 TZS 1,486 TZS 2,599 TZS 5,650 Taxes TZS 19 TZS 135 TZS 407 TZS 715 TZS 5,693 Savings TZS 148 TZS 661 TZS 3,273 TZS 7,433 TZS 593,174 inotherurbanareas Food TZS 65,508 TZS 125,116 TZS 188,208 TZS 287,592 TZS 753,888 Non Food TZS 11,022 TZS 20,902 TZS 33,052 TZS 47,741 TZS 119,253 Charcoal TZS 1,171 TZS 2,754 TZS 3,890 TZS 6,114 TZS 8,493 Other Fuels TZS 733 TZS 1,292 TZS 2,212 TZS 3,057 TZS 5,622 Taxes TZS 87 TZS 368 TZS 722 TZS 1,389 TZS 15,004 Savings TZS 506 TZS 1,413 TZS 2,898 TZS 6,985 TZS 70,234 Data source: HBS 2007. 47 REfEREnCEs Allen, J. A. 1985. Wood energy and preservation of woodlands in semi-arid developing countries: The case of Dodoma region, Tanzania. 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