Why a comprehensive approach is needed in the management of the oil and gas economy

By Mr. Dennis Rweyemamu

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Tanzania’s natural wealth has increased with the discovery of large deposits of deep-water off-shore natural gas. The Government is determined that these resources should generate the best possible returns for the country and build the foundation for sustainable socio-economic transformation, as well as broad-based growth and development. However, the transformation of resource wealth into prosperity could easily fail because of a weak underlying system of coordination and decision making. Some of the strategic  issues being addressed transcend agency boundaries, and therefore effective management will require Government to take a comprehensive approach that covers the full range of issues involved in transforming resources under the ground into improved development outcomes above the ground. This should involve linking upstream, midstream and downstream industry decisions, taking on board environmental and community issues, management of revenues, and wider economic concerns. The approach should also consider long-term implications, recognizing the fact that the transformation from wealth in the ground to wider societal benefits can take many years, and present many challenges and surprises along the way.

Ministries and agencies have the essential expertise in their own domains to develop appropriate policies for their respective sectors. However, many issues addressed in policies cut-across the domains of more than one ministry. Also, some general technical expertise may not exist sufficiently in any one ministry. So, while policies are developed in ministries, they should be well coordinated in order to ensure that the system creates policies that are in line with broader government priorities and are consistent with one another.

What parts of government should be setting policy and making key decisions on harnessing gas for sustained transformational development? Currently, the Ministry of Energy and Minerals (MEM) is the lead policy and administrative institution and plays a coordinating role with other institutions in the sector, many of which are its affiliates. Working alongside MEM, the nationally owned petroleum company TPDC is the national partner in all petroleum ventures. While a new independent regulatory body, the Petroleum Upstream Regulatory Authority (PURA) is tasked with upstream regulation, the Energy and Water Utility Regulatory Authority (EWURA) role is confined to midstream and downstream regulation.

Looking towards taxation and revenue collection, the Ministry of Finance (MOF) is the lead policy institution, but MEM and TPDC also play an important role in setting royalty and profit sharing terms on the project level. The Attorney General is also involved in negotiation and devising contracts. In terms of revenue collection, several institutions have roles to play over different components. Among the institutions involved, the Tanzania Revenue Authority (TRA) collects income taxes from gas companies, while MEM collects the large share of non-tax revenues from petroleum activities via TPDC  including royalties, licence fees, application fees and annual rent, and profits from oil and gas. The MOF collects revenues from equity holdings, and local authorities collect a local service levy from extractive companies. These institutions play similar roles in relation to all other economic agents in the economy.

Coordination on environmental and community issues is also complex. The Vice President’s Office (VPO) is the lead policy institution in this domain, and has to coordinate with MEM, and the national agencies on policy issues. Compliance and enforcement of law is implemented by the National Environment Management Council (NEMC), in coordination with local authorities. Meanwhile the Ministry of Labour and Employment, lead on formulation of labour, social security, and employment policies, while the Ministry of Lands, Housing and Human Settlements Development has to approve land allocations for extractives use.

Coordination becomes even more complex when one considers the relationship between oil and gas and wider economic issues. The key institutions in this realm include the Planning Commission, the body which develops Tanzania’s national planning framework centred on the Five-year Development Plan (FYDP), and MOF which manages the national budget, and the financing framework for the Medium-Term Expenditure Framework (MTEF).

Two key challenges pervade when it comes to coordination and decision making on the full range of issues required to harness natural gas for development. First, the fact that many of these institutions lack the authority to convene high-level decision makers from partner institutions on a regular basis means that they tend to operate in an environment of inadequate information. Second, without high-level oversight to direct activities, there has been no one to oversee organizational roles and responsibilities, opening possibilities of ‘mission creep’ where institutions work beyond their mandate, sometimes leading to potential conflicts of interest, while lack of engagement or inaction has meant that other institutions are not doing the work that they should be doing.

Strengthening coordination accross  a range of different Government institutions is critical. However, with coordination, the practice has often been agencies talk to each other and at most share information; knowledge; and expertise, which is not enough when it comes to making decisions on strategic issues with broader implications. This brings about the concept of the “authorising environment” for policy and decision making. It is important to go beyond mere coordination and create an authorising environment with legitimate power for making key decisions. It should be about joint decision-making with regard to strategic matters relating to the oil and gas economy. That is the authorising environment, and that cannot be in one Ministry, it has to be in the relevant group of Ministries. In effect, the cluster of economic Ministries must all be involved in the governance and management of hydrocarbon resources in Tanzania.

This article was written as a part of the work that is being undertaken under UONGOZI Institute’s Natural Resource Management Programme. More information on the Programme is available on UONGOZI Institute’s website

Mr. Dennis Rweyemamu is the Head of Research & Policy at UONGOZI Institute.

 

 

 

Industrial Development in Tanzania: renewed commitment amidst persistent challenges

by Dennis Rweyemamu pic+industrial

The fifth phase Government of the United Republic of Tanzania has demonstrated renewed commitment to industrialization, as part of a broader agenda to create employment opportunities and substantially reduce poverty. This renewed commitment to promoting industrial development is timely. Literature suggests that economic development requires structural change from low to high-productivity activities, and that the industrial sector is a key engine of growth in the development process. Virtually all country cases of high, rapid and sustained economic growth have been associated with industrialization, particularly growth in manufacturing production.

Unfortunatley, the manufacturing sector in Tanzania is an example of disappointing sectoral performance. In the past, policy failures both in design and implementation have contributed to poor industrial performance. During the import-substitution phase of the 1970s, government policies and efforts focused more on providing support to domestic firms than on getting them to perform. Furthermore, the emphasis was on setting up industries rather than on building dynamic capabilities that would allow firms to be competitive. High protection meant that domestic firms were poorly prepared for international competition. The fact that the state created and operated the manufacturing firms simply made the problem worse. Investments were often made with little regard to efficiency, and the managerial capacity of the state was badly overstretched.

The structural adjustment phase of the 1980s and 1990s, saw the withdrawal of government support, even in the presence of market failures, and the liberalization of trade without taking account of the capabilities of domestic firms is another example of policy failure. Emerging from being the worst affected during the economic crises of the early 1980s, (despite massive public investments), the sector has never really recovered. The main reforms in the sector evolved around restructuring activities and liberalizing the investment climate. While there were mild achievements in a few industries, the rest were either stagnant or worse off. With the ushering of the Poverty Reduction Strategy Papers (PRSPs) in the early 2000s, resources were shifted away from the productive sectors that are necessary for sustained growth and poverty reduction, with a new focus on the social sectors.

Although policy failures did contribute to poor industrial performance, structural factors also played a role. The structural factors are manifest in the form of poor infrastructure (including roads, airways, railways, and communication), low human capital, small size of domestic markets, and a low entrepreneurial base. No industry can run smoothly in an environment where the whole range of basic infrastructure leaves a lot to be desired. Fortunately, we are now seeing efforts by the Government to address infrastructural constraints, but these efforts need to be intensified.

The small size of domestic markets in Tanzania implies that we are unlikely to sustain an industrialization agenda without access to regional and global markets. These external markets would provide an opportunity to expand production as well as exports, and reap the benefits of scale economies. It would also make available the much needed foreign exchange to import intermediate inputs and capital goods for domestic industries.

But are we competitive enough to enter into these markets? It is important that industrial development efforts be part of an overall process of integration into the global economy rather than inward-looking as was the case during the import-substitution phase. Imposing import bans on goods will only help firms targeting the domestic market, and in a way be a “cost” to consumers who would have otherwise accessed cheaper imports of the same or even higher quality. There should be efforts towards building the capabilities of domestic firms and preparing them to compete in export markets for medium and high-technology manufactured goods.

While the Goverment has recognized the necessity to promote industrial and manufacturing development in order to address the country’s development challenges, there is need to search for an approach that is strategic, integrates lessons from the past, and takes into account the realities of a changing global environment. Investment in human capital should be key to any such strategy so as to improve efficiency and thus productivity levels. This, however, must be supported by necessary public goods (particularly investments in infrastructure), support institutions (for trade facilitation, credit, access to technology, establishment of standards and certification) and an incentive structure that is conducive to industrial growth.

So, in the fierce competition of export markets, does Tanzania stand a chance? Yes, it does. Not that it will be easy or quick, but with better policies and more investment, we could be competitive in things like agro-products, footwear, furniture and other low-skill industries. Opportunities are there, but we need to strategize and implement plans. Otherwise we may remain stuck in only exporting natural resources.

Youth Leadership Development: Lessons from the past

Some of the founding leaders of the OAU. (Source Steelpulse)
Some of the founding leaders of the OAU. (Source Steelpulse)

By Gwamaka R. Kifukwe

“Each generation must discover its mission, fulfil it or betray it…” – Franz Fanon

Youth leadership development programmes and networks have become abundant in Africa. Each claiming to equip, support, and inspire ‘the next generation of Africa’s leaders’. Leadership is a great challenge for Africa, and one of the things we can draw from the numerous and massive investments in Africa’s young high-achievers and those recognised as ‘high potential’ is that the world is taking ‘the next generation of Africa’s leaders’ very seriously.

History tells us that young people, whether in the civil rights movement of the United States or the ‘Arab Spring’ across North Africa and the Middle East, play a critical role in ushering in change. Indeed, many of the icons of Africa’s independence era were all relatively young when they led us to independence: Kenneth Kaunda (40), Patrice Lumumba (34), Samora Machel (41), Kwame Nkrumah (47), Julius Nyerere (39), Thomas Sankara (33), Haile Selassie I (24), Sekou Toure (36), etc. At the very least, this list of distinguished men (and this is not to detract from the critical role of women in these movements) highlights the potential of youth. It should be noted, none of the above-mentioned (nor other leaders of that generation) ever had opportunities for specialised and dedicated grooming in the form of youth leadership programmes. However, they were visionary in the sense that they quickly realised that they needed each other – the pan-African struggle is and was as much a moral battle as it was a case of ‘enlightened self-interest’ since their fates were intimately linked.

Sadly, there are few examples where youth organise themselves or are being organised by, of and for Africa. This reflects a failure to recognise the power and importance of networks of and for leaders (and leadership). In part, this is due to an emphasis on leaders as individuals. Sadly, this is a lesson from the past that we are ignoring. Not organising young high achievers and high- potential youths is a missed opportunity. That the world recognises Africa’s talents and potential is great – and well deserved for the many men and women who have had the privilege and opportunity to participate in these programmes. However, there is a missing piece to the puzzle. In order for Africa to progress as Africa, we need to build the relationships between these young individuals to understand our different pasts and value-systems, and build consensus around our common purpose and destiny, on our terms. We are failing to marshal these (would-be) ‘leaders’ into a cohesive ‘leadership’ that will drive the continent and her people forward. This requires specialised investment in and organisation of this demographic that so far has not been forthcoming by the continent itself.

The most valuable component of these programmes is not the technical knowledge that is gained, nor is it the opportunity to practice particular skills associated with ‘leading’. The community (or network) of peers who one can reach out to for guidance or support is by far the most valuable take-away for participants. As mentioned above, the liberation-era leaders across Africa formed these social bonds and are known to have been in constant communication. Despite the lack of specialised grooming, they realised the importance of alliances and a group of leaders (peers) to form a collective leadership. These relationships were vital in securing Africa’s independence. Such relationships are, and will be, vital for good leadership in Africa. As these programmes are often not Africa based or formed, which individuals are being promoted, and why? How are potential-leaders identified? For what purpose are they being groomed? Are we coaching and mentoring would-be leaders to equip them with the skills and knowledge to understand how Africa got to be where it is today, why we face the challenges we face, where Africa’s place is in the world, and what efforts we can build on to get a better seat at the global table?

This piece starts with a famous quote from Franz Fanon, a psychiatrist and anti-colonial philosopher who fought in the Algerian War of Independence. It speaks to the heart of the matter regarding the development of young and emerging leaders in Africa – for what?

Through the African Union, African Heads of State and Government have adopted the Agenda 2063 (with its seven pillars) followed by seven goals. Are these the tasks we are setting our leaders? Are we doing enough to prepare ourselves across private, public, and civil society spaces to take on the leadership challenges that fulfilling these seven goals will face, and are our leaders doing enough to prepare future leaders for this task?

If we are serious about our future, we must groom the young and emerging leaders of today, to move us towards sustainable development and transformation. We must prepare them, so that when they too become Elders, they will in turn help to prepare future young and emerging leaders for Africa. For this, Africa too must look to the talented individuals across the continent and give them the opportunities and support they need to succeed – and we need to get them talking to, and working with, each other.

For more on Agenda 2063 see http://agenda2063.au.int/en/home

Frantz Fanon’s ‘The Wretched of the Earth’ is available from the UONGOZI Institute Resource Centre (http://www.uongozi.or.tz/centerservices.php)

Disclaimer: The views and opinions expressed in the above article are the views of the author and do not necessarily represent the views of UONGOZI Institute.

It Starts with a Woman: Taking the lead in enabling more women leaders in Africa

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By Nura-Lisa Karamagi

Most of us may have seen a picture of the African woman carrying a child on her back, a pile of chopped wood on her head, and in addition, some harvest from the farm or a bucket of water. That picture depicts an African woman as an epitome of strength. Not just physical, but psychological and intellectual strength as well. It shows the will and determination to persevere, provide and survive. In Africa, women are arguably the backbone of our communities, and elderly women, especially, are respected for their wisdom. The disturbing question then, is why we have very few prominent women leaders on the continent.

Although the movement towards gender equality has continued to progress in the right direction, it is still dragging and leaving many behind, as is evidenced by gender development indexes across the continent. The percentage of women holding political leadership positions in Africa stands at 24.4% with the number of female parliamenterians in sub-Saharan Africa at 23%. Even in business where there is a semblance of empowered women leaders, statistics such as only 18/107 directorship positions being held by women and 12/109 corporate executive positions held by women in Tanzania exposes the nakedness of such illusions.

In my view, two main challenges exist that hinder the empowerment of women to leadership positions. These problems ultimately reinforce each other. There is the problem of the negatively connoted status of women in society. We live in a rigid patriarchal society where the mindset of a majority of women and men consider the roles of women as secondary. This manifests itself into the compulsion to make the attributes of men the benchmarks for leadership roles. Second, is the internal struggle within and amongst women that subsists; African women are continuously challenged to overcome a two-pronged inferiority complex. They become prone to subconsciously question their self–worth when measured up against other races, and with the pressure to sacrifice their own needs in favour of men’s. The result is a vicious cycle of women clinging superficially to a questionable status quo and subjecting other women to practices that negatively affect both themselves and fellow women.

The status of women and their empowerment is being addressed at various levels and platforms. There is a will and effort to expand opportunities for women to be fairly employed, and to be enabled in business and other economic activities. However, this may not be enough to rapidly expand the pool of women leaders on the continent. Unfortunately, this is due to the lack of discourse on the issue of strengthening women’s self-worth.  We have been witness to the sheer unproductive (sometimes destructive) envy by some women at the success of other women. To cap it all, in events that propagate the themes of empowering women, we constantly see selective inclusiveness and apparent disunity, as almost all the invitees belong to the category of the arguably already empowered. Failure to brave the surrounding issues to this challenge may make the efforts to address the negatively connoted status of women futile.

Africa’s women leaders must be at the forefront towards resolving this problem and they need to lead differently. It begins with first leading oneself. This leadership calls for a change in the mindset, a change in the general perceptions of a woman in society, and their inability to take leadership roles. Confidence and a feeling of self-worth are essential attributes of enabling a woman leader to bring on board fellow women and men towards a shared vision.

Furthermore, the woman leader needs to be inclusive. This inclusiveness should of necessity transcend the demarcations of privilege. Women must help each other, rather than break each other, by their actions and practices amongst themselves.  They should walk hand in hand, focusing on moving together with a mightier force, even if the pace would be slower.

At the societal level, the woman leader must aim to lead in terms of influencing, shaping and changing the mindset of the people in her environment who are ignorant about or deliberately hindering in one form or another gender equality. She is a central component of the community and must encourage her sisters and brothers, her friends, her daughters and sons, her granddaughters and grandsons, her husband, his friends, and their neighbours to be part of the change. She must recognize, inspire and motivate other women leaders. This recognition should not come in waves that peak and subside; rather it should maintain a constant flow. For, at any time there are many women at various levels who are emerging as leaders and are in need of being motivated to lead further.

As a group, women must own their empowerment. Like the African woman in the alluded to picture above, they possess the strength and ability to persevere and overcome the obstacles towards becoming prominent leaders. African women in leadership positions have and will have more to showcase and reconcile. They are ambassadors for all women in what is still a very much male-dominated world. They must strategically use their roles to enable more women to aspire towards and attain leadership positions.

Disclaimer: The views and opinions expressed in the above article are the views of the author and do not necessarily represent the views of UONGOZI Institute.

For more on UONGOZI Institute’s programmes on women leaders, visit http://www.uongozi.or.tz or email info@uongozi.or.tz