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FINAL REPORT: Market Systems Analysis United Republic of Tanzania MINISTRY OF NATURAL RESOURCES AND TOURISM FINAL REPORT: Market Systems Analysis 21 December 2018 General Comments - MSA report PREFACE Contact: Chief Technical Advisor, Forestry and Value Chains Development (FORVAC) Program Tanzania Finland Cooperation MNRT, P.O. Box 1351, Dodoma, Tanzania Email: [email protected] ACKNOWLEDGEMENTS This work would have not been possible without the support from many individuals and institutions. It is not possible to name everybody here, but we are grateful to all of them. We want to express particular thanks to the FORVAC team for their guidance and support during field visit, report writing phases and logistic support. We also wish to extend our thanks to the village leaders in all the villages the team visited for giving us permission to collect data. Special thanks are also extended to District staff, District forest officers, District Planning officers, District Trading and Associations, District Lawyers, District Community Development Officer, Tanzania Forest Service managers in Kilwa, Ruangwa, Namtumbo, Songea, Mbinga, Nyasa, Handeni and Kilindi districts as well as universities, research institutes and NGOs for their guidance during marketing system data collection. We also appreciate the willingness of all the local communities to provide the team with relevant and useful information during implementation of this study. The Competent Authorities and CTA received and reviewed Inception Report presentation and the draft report and their inputs are also highly appreciated. 2 Market Systems Analysis: A Market Diagnosis for FORVAC Abbreviations AMCO Agricultural Marketing Co-operative Society ARTI Appropriate Rural Technology Institute BRELA Business Registrations and Licensing Agency CBFM Community-based forest management CCRO Certificate of Customary Right of Occupancy DC District Council EoF Embassy of Finland FHP Forest harvesting plan FITI Forest Industries Training Institute FLEGT Forest Law Enforcement, Governance and Trade FMP Forest management plan FTI Forest Training Institute FSC Forest Stewardship Council FundaK Fundación Capital HRBA Human Rights Based Approach ICT Information and Communication Technology IGA Income Generating Activity JFM Joint Forest Management JMA Joint Management Agreement LGAs Local Governments MFA Ministry for Foreign Affairs of Finland MNRT Ministry of Natural Resources and Tourism M4P Making Markets Work for the Poor (also known as MM4P and MMW4P) MSA Market Systems Analysis NTFP Non-Timber Forest Product NWFP Non-wood forest products PES Payments for Ecosystem Services PFM Participatory Forest Management PMO Prime Minister’s Office PMT Project management team PO President’s Office RALG Regional Administration and Local Governments RS Regional Secretariat SACCO Savings and Credit Cooperative Organisations SC Steering Committee SE Socio-economic SP Service Provider SUA Sokoine University of Agriculture SUMATRA Surface and Marine Transport Regulatory Authority TA Technical Assistance TABEDO Tanzania Beekeeping Development Organization TASAF Tanzanian Social Action Fund 3 Market Systems Analysis: A Market Diagnosis for FORVAC TaTEDO Tanzania Traditional Energy Development Organization TBA Tanzania Buildings Agency TBS Tanzania Bureau of Standards TFCG Tanzania Forest Conservation Group TFS Tanzania Forest Service ToT Training of Trainers TP Transit Pass TZS Tanzanian shilling URT United Republic of Tanzania VAC Value-added chain VC Village Council VLFR Village Land Forest Reserve VLUP Village Land Use Plan VNRC Village Natural Resource Committee VPA Voluntary Partnership Agreement VICOBA Village Community Bank VSLA Village Savings and Loans Associations 4 Market Systems Analysis: A Market Diagnosis for FORVAC Table of Contents Abbreviations 3 Table of Contents 5 Executive Summary 7 1. Introduction 14 1.1 Programme Overview 14 1.2 Market Systems Analysis (MSA) Assignment 14 2 Methodology 15 2.1 M4P: Making Markets Work for the Poor (A Market Systems Approach) 15 2.2 HRBA 16 2.3 Diagnostic Process 17 2.4 Approach 17 2.5 Report Structure 17 3 Findings 18 3.1 Key Market Actors and their functions 18 3.2 Wood Products 18 3.2.1 Market Chain/ Actors and Linkages 18 3.2.2 Timber Pricing, Demand and Supply 21 3.2.3 Supporting Functions 27 3.2.4 Rules 31 3.2.5 Competitive Analysis of the Wood Product Market 39 3.3 Charcoal (and Briquettes) 41 3.3.1 Charcoal Market Chain/ Actors and Linkages 41 3.3.2 Supporting Functions 45 3.3.3 Rules 46 3.4 NTFP (other than charcoal) Market Screening 48 3.4.1 NTFP Market Chain/ Actors and Linkages 50 3.4.2 NTFP Potential 51 3.5 Cluster overview 52 3.5.1 Socio economic 52 3.5.2 Cluster Specific Information (including Village Selection Criteria) 56 3.6 HRBA Considerations and Target Beneficiaries 58 4 Understanding systemic constraints 61 4.1.1 Market Stakeholder Relationships 62 5 Proposed Interventions 64 5.1 Overarching Themes 65 5.1.1 Capacity building 65 5.1.2 Relationship Building 68 5.1.3 Information / communication 69 5.1.4 HRBA 69 5.1.5 Service providers 71 5.2 Interventions (Thematic Areas Output 1) 73 5 Market Systems Analysis: A Market Diagnosis for FORVAC 5.3 Interventions (Thematic Areas Output 2) 76 5.3.1 Rules and Regulations (governance) 79 6 Bibliography 81 Annex 1: Key Stakeholder Organisations and Projects 83 Annex 2: Market Actors and Stakeholders Interviewed 93 Annex 3: National Policy Framework for Forest Policy Implementation 95 Annex 4: Classification of Tree Species and Fees 102 Annex 5: The HRBA Context in Tanzania 110 Annex 6: Additional System Constraints 111 Annex 7: MSA Team and TOR 117 List of Tables Table 1: Classes of timber tree species for the cluster, adapted from Forest (Amendment) Regulations, 2017 22 Table 2: Royalty per cubic meter (standing tree volume in TZS) payable on natural forest products eXtracted from Forest (Amendment) Regulations, 2015 and 2017 22 Table 3: Other fees payable on services related to timber trade 23 Table 4: Interest rates charged on loans (Abdallah and Ishengoma (2016)) 29 Table 5: Socio Economic Data 53 Table 6: Village JFM Responsibilities 54 Table 7: Summary of preliminary types of service provision 72 Table 8: Intervention Options under FORVAC Output 1 76 Table 9: Intervention Options under FORVAC Output 79 List of Figures Figure 1: The Market System ‘Doughnut’ ....................................................................................................................... 16 Figure 2: Timber market chain ........................................................................................................................................ 38 Figure 3: Competitive Analysis of the Market for Hardwood Products from the Natural Forest using Porter’s Five Forces Model…………………………………………………………………………………………………………………………..…………………41 Figure 4: Charcoal market chain ..................................................................................................................................... 44 Figure 5: Bamboo distribution in Tanzania, Lyimo (2018) .............................................................................................. 49 Figure 6: Bamboo potential utilisation ........................................................................................................................... 49 Figure 7: Market information flow, governance and Support levels in FORVAC ............................................................. 56 Figure 8: Risks and Assumptions ..................................................................................................................................... 62 Figure 9: FORVAC Stakeholder Interactions .................................................................................................................... 63 Figure 10: Timing of Interventions and Exit Strategy (HEKS/EPER, 2015) ....................................................................... 64 Figure 11: Capacity Building ........................................................................................................................................... 65 Figure 12: Illustration of a capacity development intervention (or series of interventions) ........................................... 67 6 Market Systems Analysis: A Market Diagnosis for FORVAC Executive Summary Background The absence of a well-functioning enabling environment for the sustainable management and trade of natural forests and their related products puts the forests, with their forest dependent communities and importance in environmental services at a high risk. This risk is exacerbated when considering the increasing pressure on the land from a fast growing population (about 100 million in the coming 20-30 years) with unsustainable and degrading land use practices, and increasing negative effects from climate change. Putting an excessive and costly burden to Village Forest Reserves, without a corresponding support in regulations, and at the same time not being able to address the illegal/semi-legal forestry sector is a perilous combination. The market actors making an effort to apply best management practices are facing many difficulties, while the ones in the illegal sector are the winners. Study Objective This Market System Analysis report incorporates a Human Rights Based Approach (HRBA) focus and includes conclusions and recommendations about: • Market development in the programme during the implementation phase; • VLFRs to be involved in the programme; • Organisational strengthening with focus on sustainable forest management (in relation
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