2. THE CHANGE DRIVERS

2.1 POLICY CHANGES IN THE FORESTRY SECTOR

2.1.1 The Forestry Policy

In March 1998 the Government of the United Republic of Tanzania (Mainland) approved National Policies for Forestry and Beekeeping. The overall goals of the national forest policy and that of the beekeeping sector are to enhance the contribution of the two sectors to sustainable development of Tanzania and the conservation and management of the natural resources for the benefit of the present and future generations. The specific objectives of the forestry policy based on the overall goal have been defined as follows:

Ensure sustainable supply of forest products and services by maintaining sufficient forest area under effective management

Increased employment and foreign exchange earnings, through sustainable forest based industrial development and trade

Ensured ecosystem stability through conservation of forest biodiversity, water catchment and soil fertility

Enhanced national capacity to manage and develop the forest sector in collaboration with other stakeholders

2.1.2 The National Forest Programme

Since the policy gives the general directions and ambitions of the sector, a framework and guidelines for its implementation must be put in place. The National Forest Programme (NFP) gives this framework within the general context of sustainable development. The Forestry and Beekeeping Division embarked on the formulation of the National Forest Programme in January 2000 to:

Establish an instrument to put the National Forest Policy of 1998 and related legislation into practice taking all relevant macro-economic and sectoral/policy changes into account

Operationalize the commitments and obligations derived from international agreements and intergovernmental processes

The ultimate goal (NFP Vision) of the NFP process is to reduce poverty and increase economic growth by managing the forest resources sustainably without comprising their present and future environmental and cultural values.

2.2 SOCIO-ECONOMIC CHANGES

As of 1999, the population for Tanzania was estimated at 31.8 million of which 51% was women. Children under the age of 15 years constituted 47%. These estimates indicate a 2.8% growth as compared to the 1988 population census. Rural-urban population ratio continued to narrow from 75:25 in 1978 to about 60:40 in 1999.

In terms of human resources, the country had a total of 16,006,178 working people of which 52% were women (Table 2). However, contribution of HIV/AIDS and malaria is very significant and cannot be underestimated in the national statistics.

2.2.2 Per capita and income distribution

The overall economic growth is 4.8% as compared to 4.0% in 1998. The agricultural and natural resources sector grew by 4.1%. There is an envisaged upward growth trend following the growth in private sector investment (mainly the mining and industries), infrastructure development and improvement in tourism. National estimates indicate a growth of 5% in the next decade. Key economic indicators are summarized in Table 1.

Table 1: The key economic indicators

Source: Bureau of Statistics, 2000

In light of declining productivity in agriculture and agribusiness industry, a continuing growth in GDP is uncertain for the next decade. Factors contributing to this decline include market uncertainties, increase in agricultural inputs and the taxation system.

Consumer Price Index shows a 7.8% inflation rate as of 1999 compared to 32.4% in 1986. This is attributed to continued growth in production, services delivery and improvements in monetary reforms. According to the Bank of Tanzania, inflation rate will continue to decline to an average of 5% in the medium term horizon. Despite this optimism, continued price increases for the petroleum and foods disfavor a majority of the low-income population. Despite the abundance of natural resources and the favorable climate conditions, Tanzania remains one of the poorest countries in the world.

2.2.3 Contribution to the economy

Forests are important in Tanzania due to the numerous goods and services they offer both to the national economy and to the society. In both rural and urban areas, wood-based energy consumption is estimated to account for about 92% of total energy consumed in the country (MNRT 1998). The estimated contribution to the Gross Domestic Product (GDP) in 1998 was 3.3% (including hunting) and about 10% of exports. The sector employs about 3% of paid labor and even a bigger proportion of people in the informal forestry related sector.

2.2.4 National debt and economic development

As of December 1999, the national foreign debt had reached US$ 7.3 billion as compared to US$ 196 million in 1970.

In terms of economic performance, foreign income remained relatively low with a total of US$ 541 million in 1999, compared to imports that leveled at US$ 1,418.6 million. This scenario limits highly the capacity to pay mature debts as well as sustaining economic growth. Further implications in this aspect include stunted growth in all the service sectors (health, education and water), the productive sectors (natural resources, agriculture and industries) as well as support services and infrastructure. This further "enhances" poverty in the country.

2.2.5 Trends in forest investments and trade (outlook 1998-2020)

Forest-based industries in Tanzania are dominated by some 130 small industries concentrated in a few regions. The distorted distribution is related to raw material availability, infrastructure development and market channels; both domestic and export. The total installed wood processing capacity fell from 900,000 m³/year of round wood in 1992 to 710,000 m³/year in 1998 (Ngaga et al 1998), which is relatively low. Factors causing low capacity utilization include obsolete technology, low investment, poor financing and weak market development. As for these figures, there is a surplus of 700,000m³ of round wood.

Indigenous hardwoods from natural forests, which account for about 300,000 m³/ year round wood are on the decline whereas plantations contributing 600,000 m³ /year round wood are expected to stabilize.

Following the ongoing economic reforms, most of the available capacity will be privatized. As of 1998, private sector share grew to about 78% from 25% in the 1980s as a result of privatization of the former Tanzania Wood Industries Company mills (Ngaga et al. 1998).

Investments in the forest estate development are envisaged to improve following the introduction of autonomous Executive Forest Agency. The growing market for softwood as well as increasing awareness in forest conservation is expected to trigger growth in private forest estate development. The main limiting factors in forestry investments include unavailability of credit facilities from the commercial financial institution basing on the high interest rates and the long-term return from most forestry investments.

The production projection and trade-based studies indicate a decline in hardwood sawn wood by about 2% basing on the declining resource base for hardwoods (Table 2). Again, the controls on harvesting for most hardwood-producing forests for the preservation of biodiversity and watershed values, adds to this drop. Currently harvesting in catchment forest reserves is banned despite the on going illegal tree cutting for hand sawing.

Table 2: Production trends:

Products	Capacity (1000 m3 or tone)	Production (1000 m3 or tone)		% Change
		1998	2018
Hardwood	105	94	92	-2
Softwood	316	162	224	38
Wood panels	22	13	17	31
Paper & paperboard	94	30	54	81
Charcoal	887	585	777	33

Source: MNRT, 1999

Sawn wood from softwoods and paper and paperboard production are forecast to increase due to envisaged improvement in macro-economic indicators. This will trigger expansion in production and consumption as well as growing construction industry and private sector involvement in forest estates management. Charcoal production is also forecast to increase partially due to unavailability of appropriate alternative sources of energy both physically and financially.

Basing on the low production levels in forest products and services, the international trade in forest products will be low in the medium and long term planning horizon. Net export in softwood is projected at an average of 34,000 m³/year, hardwood sawn-wood at 1,000 m³/year and hardboard at 1000 t/year (MNRT, 1999). These figures are however a bit optimistic both because of low product quality and market uncertainties. However, the growing private sector involvement in the forest industry is expected to address these issues.

Net import is expected to increase in all paper products ranging between 22,000 and 8,000 t/year (MNRT, 1999). This is attributed to low production and expected increases in consumption levels. The increase in import is likely to trigger a slowdown in domestic production due to stiff market competition.

Price trends for the period 1998 through 2020 are expected to be fairly inelastic based on economic factors such as declining resource base, poor domestic production and low purchasing power as a result of slow economic growth.

2.3 INDUSTRIAL DEVELOPMENT AND ITS IMPLICATIONS ON FORESTRY

The contribution of forestry to eco-tourism, watershed/water source protection, soil protection and free use of forest resources such as rural wood-fuel energy and construction is yet to be valued in monitory terms. Over the past several decades, Tanzania has been trading largely on primary products (logs) with gradual decline in wood based processed products mainly sawn-wood and paper products.

On the other hand, the global trade today is becoming more and more on added value processed products while the forest based industries in Tanzania have been performing inefficiently as documented in various studies and this situation is likely to persist for some years.

The government has been undertaking some economic and market reforms in order to raise the economic growth and hence improve the performance of different sectors of economy including the forestry sector.

2.3.2 Forest resources

As earlier indicated Tanzania has over 80,000 ha of state owned forest plantations and about 70,000 ha privately owned. Basically the prime motive, which led to their establishment, was to form a base for future forest industries and to cover the expected future forest wood deficit from the natural forest resource base (Ahlback 1986). About 70% of the total forest area is suitable for production of wood products and the other 30% is more suitable for production of Non-Wood Forest Products (Catchment/Protection areas).

The average growing stock is estimated at 41m³/ha representing a total wood volume of about 1.3 billion m³. The potential sustained yield from the net production area could be 16.7 million per year or 0.7 m³/ha/yr.

2.3.3 Forest based industry and products

The chemical wood industries encompass paper mill, matchboxes factory, poles impregnating plants, chipboard and fibreboard plants and tannin extraction.

Sawn wood is the most important wood product in the country used primarily in building and construction, joinery, furniture making and packing. The forestry industry has changed from using only the indigenous hardwood from natural forests to using softwood from plantation. Current estimates indicate 70–80% of the total log consumption is from softwood plantations with a large surplus of softwood. At present the forest industry is under a strong privatisation and restructuring process. Lack of capital resources is one of the factors that has severely hit the operations of the forest industry.

Constraints facing the industry include lack of data on raw materials availability, degraded resource base and conservation requirement of natural forests, poor utilization and wastage of raw materials and low recovery rates. Plantations have not been efficiently managed hence causing raw material deterioration. Poor transport and communication infrastructure as well as inaccessibility to and with forests, mills located far from the actual resource base, performance and efficiency of the forestry industry plants is poor because of old machinery and inadequately trained staff.

2.3.4 Wood fuel

Out of the total energy used in Tanzania about 90% is generated from wood. Tanzania Traditional Energy and Environment Development Organisation (TaTEDO) recently revealed that about 65 million m³ of wood for fuel are consumed annually. The amount of wood fuel consumed will continue to increase with the increasing population.

This is causing serious over-exploitation and degradation of natural forests; in particular the production of charcoal by traditional earth kiln methods. The high tariffs for electricity and gas prevent the potential users to switch to non-wood based fuels.

2.3.5 Artisanal wood–based industry and products

These include flooring strips and black woodcarvings. It is one of the fast growing industries with high demand of products for both local and export market. The industry suffers from inadequate information on raw material and its availability, a narrow resource base that depends on a few species currently being muhuhu (Brachlaena hutchii) and mpingo (Dalbergia melanoylon). The existing technology is wasteful and unsuitable for mass production. Poor marketing skills and a narrow range of products have affected business.

2.3.6 Non-Wood Forest Products

The main NWFPs include gums, resins, bark, tannin, aromatics, latex, natural dyes, fruits, nuts, fiber, spices, medicinal plants and beekeeping.

Main beekeeping products include honey, beeswax, royal jelly, propolis and pollination service. Almost all beekeeping is currently practiced through traditional methods and only 3.5% of the production potential of the beekeeping sector is realized. Besides its income generation and hence poverty alleviation and food security, the industry is offering employment to number of people and its picking up after a decline in the mid 1990s, generating an export value of US$ 1,863,387 and US$ 148,808 for respectively beeswax and honey for the year 2000.

Lack of appropriate equipment as well as handling facilities, inappropriate storage facilitates, poor packaging, obsolete technology and poor market information hamper the development of the beekeeping industry. Knowledge of honey and beeswax handling to maintain quality and quantity is also poor. Declining natural forest cover and the use of pesticides in vermin and pest control also affect the industry.

2.3.7 Privatization and restructuring of the forestry-based industry

The parastatal organisation in the field of forestry-based industries has been inefficient in terms of productivity and marketing of their products. Under the Parastatal Sector Reform Programme the forest-based industry has been undergoing privatization and restructuring. The aim is to promote the participation of the private sector in the ownership and management of the industry to:

Improve efficiency in harvesting and processing

Bring in new skills and technology

Offer new employment opportunities

Enhance production

Open up foreign markets for forest products

Increase Government revenue both local and foreign

Assuming that the above objectives are fully achieved, the constraints listed under each industry will end gradually and bring about forestry based industrial development in the country.

2.3.8 Industrial development implications on forestry

The development of the industry will cause a high demand of raw wood material to feed the industry. This demand can be met from the following sources:

Using lesser known tree species

Opening up forest areas which are currently inaccessible

Harvesting from the catchment forests which are currently closed for timber harvesting

Forest plantations by private companies and individual out growers, induced by the high demand of raw material

By further processing to value added products.

More labor will be needed to work in the industry but they need to be trained to operate Hi-tech machinery.

Establishment of small-scale business to utilize semi processed/processed products from the industry or utilizing production waste to manufacture e.g. solid fuel by briquetting.

More forest products will be harvested hence increase revenue and this could be re-invested to develop the industry.

Improvement of infrastructure e.g. roads, communication and rail.

Improvement of technology in harvesting and processing will reduce wood wastage.

Manufacturing of products has to take into account customer’s requirements to make sure the customer gets what he/she requires.

Improving the management of the forests so that the raw material supplied corresponds to the market demand.

Establishment of social services e.g. hospitals, shops, houses, water electricity, recreational services etc.

Multiplier effect of the industry e.g. people selling products from the industry will buy licenses and pay income tax to the government.

Improve the standard of living of people employed by the industry.

Depending on payment (Salary) there will be a shift of labor from low paid to higher paid (industry) also working condition may attract labor.

Depending on the type of the industry it may cause environmental pollution (smoke, chemical waste etc).

Sales of the products from the industries (local/foreign trade) will increase GDP.

Compliance to international initiatives.

2.3.9 Conclusion

Tanzania is endowed with large areas of forest resources, which could contribute to the national economy if fully tapped. With the current economic reforms going on in the country and aiming at creating a conducive investment climate, it is envisaged that the industry will develop gradually and make more contribution to the national economy.

H2!2.4. CHANGES IN ENERGY USE AND THEIR IMPLICATIONS ON FORESTRY

!H22.4.1 Introduction

Although reliable figures are not available, estimates suggest that there is no nationwide fuel wood crisis. However, in many areas surrounding main urban centers, densely populated settlements, and those around rural industrial centers and in drier regions, fuel wood shortages are being experienced (Sawe 1997, Ishengoma and Ngaga 2000). Due to high prices, non-wood energy sources are hardly accessible for the major part of the population.

2.4.2 Energy sources and demand pattern in Tanzania

The indigenous energy sources that are found in Tanzania include biomass (mainly fuel wood and charcoal), electricity, coal, solar energy, wind and natural gas. Among these, the major energy sources most utilized in the country are biomass, electricity and oil. Oil and electricity are commercial energy services while wood fuels are both commercial (mostly in urban and some rural areas) and non-commercial (mostly in rural areas) at varying degrees depending on availability and demand.

The wood fuel consumption estimates for 1987 and projection for year 2000 are 42.4 and 64.2 million m³ respectively (IED 1988). The current demand is said to exceed the capacity of forests to regenerate by about 12 million m³ per year (Mwandosya and Luhanga, 1990). The overall purchase capacity in rural areas is very low and energy issues are in most cases given low priority when ranked with other needs. In rural areas, about 90% of the households use traditional tree stoves with no thermal efficiency while about 62% of the urban households use inefficient charcoal stoves with an efficiency of 15% (Ishengoma and Ngaga 2000).

The national annual per capita wood fuel consumption is estimated to be between 1.0 m³ and 2.0 m³ as reported in various studies in the country (Kaale 1983; Skutch 1983; FAO 1984, Ishengoma and Ngaga, 2000).

Electric power is the single most important indigenous source of commercial energy in Tanzania. The total installed capacity is about 605 MW with the available capacity of about 505 MW in the interconnected system and 18 MW in the isolated load centers. The number of people who have access to electricity is a mere 10% of the entire population. This is attributed to low per capita income, expenses of purchasing electric appliances, unreliable power supply and high tariff structure which indicates exponential increase in power cost as one uses more units. The average electricity tariffs in Tanzania are reported to be the highest in the SADC region (Mrindoko 1999).

Coal is one of the major energy resources in Tanzania. So far, the exploitation of coal for energy purposes has been minimal. The present generation capacity of coal exploitation is only 6 MW. The contribution of coal in the current energy balance in Tanzania is considered to be negligible.

Petroleum is the principal energy resource in Tanzania providing 88% of commercial energy. It has been noted that 50% of petroleum is consumed by the transport sector. Tanzania imports all its petroleum product requirements and about 30% of the total foreign currency is spent on this important commodity.

The proven and recoverable high quality natural gas resources at Songosongo are estimated to be 15 million Tonnes of Oil Equivalent (TOE) and that at Mnazibay to be 13 million TOE (Sawe 1997). However, significant use of natural gas is not anticipated in the near future.

Generally, Tanzania is in the process of implementing World Solar Programme (WSP) 1996–2005, with the main focus on village solar electrification and small Island solar electrification. Currently, some energy intensive sectors have begun installing solar systems. Solar energy use has been limited to thermal applications and photovoltaic (PV) applications in the households, health centers, transport and communication sectors in remote areas.

2.4.3 Impact of changes in energy use on Forestry

The competitive nature of wood fuel markets in Tanzania appears to play a major role in the levels of consumption. Most of the charcoal used is coming from unreserved natural forests whose area is diminishing fairly fast. This makes the environmental impact high especially in locations serving charcoal from catchment areas close to urban centers.

The experience indicates that as peoples’ income improves they tend to shift from fuel wood to other forms of fuel such as kerosene, liquefied petroleum gas (LPG) and electricity. However high prices of these alternative energy sources have been a restrictive hindrance to their effective use by the rural community.

Against this background, the obvious main challenge is how to ensure that the supply of wood fuel is sustainable. The energy situation particularly regarding availability, affordability, services and technologies for rural areas as well as for renewable energy promotion efforts are characteristically weak in Tanzania This implies that wood fuel will continue to dominate as a source of energy now and in the future.