Chapter 2: Literature Review
2.6 Policies and Institutions
Poverty elimination is an enormous challenge that will only be overcome by working at multiple levels, ensuring that micro-level activity informs the development of policy and an effective enabling environment and that macro-level structures and processes support people to build upon their own strengths (Carney 1999). Institutional arrangement for bioenergy and institutional coordination of such development projects should be in place. A clear institutional arrangement and clear coordination mechanisms are critical policy issues that must be addressed to reduce
conflict and duplication of efforts or worse still, a situation where there is no department which can be held accountable on how such projects are implemented (Sasovele 2010).
The biofuels program cuts across different sectors which include agriculture, energy, industry and international trade. As such, some available laws governing energy development and distribution cut across sectorial laws governing forestry, agriculture, environment, water, industry, electricity and petroleum requiring institutional coordination, a complex challenge that is not easily overcome( Bulletin 2007).
There is a general lack of guiding policies and legal framework in many developing countries as pointed out by Jumbe, Msiska and Mhango (2007). Sasovele (2010) noted the same problem in the case of Tanzania. There is a need for an integrated policy that takes into account energy development, transportation, agriculture, land and water issues. This policy would facilitate a policy and legal framework for standards, criteria for investment and targets (blending) to be achieved which would be used in bioenergy investment (Sasovele 2010).
Biofuels programs should be systematically integrated into policy planning processes for the concerned sectors and stakeholders (Bulletin 2007). One challenge that has been identified in to design and implement policy measures to ensure that the growing use of biofuels is conducive to reducing poverty and hunger so th t ‘bio rgy b com pro-poor’ (IFA 2008).
According to IFAD (2008) existing institutions also have a crucial role in making bioenergy pro- poor. Examples cited are that cooperatives or producer companies can bundle the interest of the poor, accumulate and attract capital and partnerships for the necessary investments, organize feedstock supplies in large quantities and in turn create a countervailing power to larger firm operating in the energy market (IFAD 2008).
There are other policies that are used in the biofuels spectrum although they are mainly used by developed countries. These include energy and carbon policies which are in the form of taxes, trade policies, government funding for research and development of biofuels and investment incentives (Rajagopal and Zilberman 2007). Jumbe, Msiska and Mhango (2007) reviewing national trade policies of African Countries noted that they have trade and investment policy frameworks to promote or facilitate domestic and foreign investment in various sectors of the countries. The common policy instruments used to promote trade and investment include: tariff structures such as taxes and duty drawback schemes, non-tariff measures such as quotas and
import licensing, trade defence mechanisms such as subsidies and anti-dumping, trade promotion instruments such as export processing zones and international trade instruments such as bilateral trade agreement. Most of these policies are at national and international level and whilst they ultimately impact on the ability of the households to achieve or not achieve their desired outcomes in their livelihood activities including in the growing of Jatropha curcas for biofuel, it is beyond the scope of this research to discuss them in detail.
Jumbe, Msiska and Mhango (2007) have however given a snapshot of the challenges that the biofuel industry faces especially in the Sub-Saharan African(SSA) region in terms of policies by analysing some national trade policy documents of some African countries and by comparison with the policy framework of Brazil whose successful biofuel industry dates back to 1975. What is noted is that one marked difference between SSA and Brazilian policy frameworks is that the SSA frameworks do not focus on the biofuel sector but on other sectors of national economy whereas that of Brazil is directly focused on the development of the biofuels sector. One common challenge across the SSA countries with regard to trade and investment promotion include inadequate national capacity to apply the available instruments and in some cases the prevailing policy and regulatory instruments are still not quite conducive for both domestic and international investments in a number of sectors including the biofuels sector (Jumbe, Msiska and Mhango 2007:20).
In Swaziland at the time when the biofuels project of growing Jatropha curcas was commissioned in 2005, the feasibility study report on biofuels was not even out and the draft of the Swaziland National biofuels Development Strategy and Action Plan only came out in 2007 and the final strategy and action plan came out in October 2010 (SWADE 2005, Ministry of Natural Resource and Energy (MNRE) 2007& 2010). Articulating such challenges Jumbe, Msiska and Mhango (2007:21) state that the SSA region should not expect the biofuels industry to effectively develop in the presence of the multiple investment huddles that threaten to strangle to death the biofuels industry even before its full potential is realised for the African continent. These authors note that what is needed for the African countries to put in place is appropriate policy and regulatory frameworks that would not only promote biofuel production and processing by foreign and domestic investors, but also
protect poor households from being displaced from their land, creating hunger through large- scale appropriation of arable land meant for food crop production for growing energy crops. The SSA region needs to come up with policies, legislation and strong institutional frameworks that will stimulate production and processing of biofuels in a sustainable manner and in addition build capacity and skills in the production systems through training of experts in biofuel technology (Jumbe, Msiska and Mhango 2007). These same authors highlighted that the above measures must be complemented by an increased investment in infrastructure such as biofuel production plants, storage depots, service stations and transportation system without which it will be difficult for most SSA countries to establish and take advantage of the growing international biofuels markets. UNCTAD (2006) states that the location of the processing of biofuel feedstock in rural areas is what can greatly contribute to rural development, creating employment, improving infrastructure and making agricultural activities more profitable. This calls for an adequate policy framework (UNCTAD 2006). That way the biofuels industry has the potential to greatly contribute to livelihoods at local levels and ultimately rural development in general.