Biofuel investment in Tanzania: Omissions in implementation

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Increasing demand for biofuels as a component of climate change mitigation, energy security, and a fossil fuel alternative attracts investors to developing countries like Tanzania. Ample unused land is critical for first generation biofuels production and an important feature to attract foreign direct investments that can contribute towards agricultural modernization and poverty reduction initiatives. Despite the economic justifications, the existing institutional and infrastructural capacities dictate the impacts of biofuels market penetrations. Furthermore, exogenous factors like global recessionary pressure depressed oil prices below the level at which biofuel production were profitable in 2007, making Tanzania’s competitiveness and potential benefits questionable. This paper investigates the extent that first generation, jatropha-based biofuels industry development in Tanzania observed during fieldwork in Kisarawe and Bahi may fulfill policy objectives. This paper argues that without strong regulatory frameworks for land, investment management, and rural development, biofuel industrialization could further exacerbate poverty and food insecurity in Tanzania. The paper concludes with policy recommendations for first generation biofuel development while keeping in mind implications of second generation production. Since the topic is broad and multifaceted, a multidisciplinary approach is used that includes political, institutional, and agricultural economics to analyze and conceptualize biofuel industry development and food security.