Call for Research to Understand the Scope for Urban Infrastructure and Services Finance in Tanzanian Cities.

    INTRODUCTION

    Tanzania’s urban population is expected to grow from 15 million people in 2012 to 60 million people by mid-century. Tanzania already has the fourth largest population in Africa living under poverty (World Bank, 2016)1 and national statistics suggest, unusually that infant mortality and life expectancy are worse in urban centres than in rural areas. The country’s Five Year Development Plan anticipates urbanisation placing additional pressure on urban infrastructure and services in spite of high levels of GDP growth in recent years.

    In partnership with Tanzania’s National Government, the New Climate Economy (NCE’s) Coalition for Urban Transitions (CUT)is looking to support sustainable urbanisation in Tanzania. The NCE’s experience conducting National Urban Transition Assessments (NUTA) in Ethiopia and Uganda reveals the importance of such efforts being firmly grounded in local knowledge, the local policy cycle and available institutional capacity.

    Building on this experience the CUT team in Tanzania has established an Urbanisation Laboratory, that is chaired by Tanzania’s National Planning Commission and coordinated by Economic and Social Research Foundation (ESRF). The Laboratory will commission research that is required to produce a credible and implementable NUTA and to outline a plausible “roadmap” for better urbanisation. The primary audience for this work will be national government departments in Tanzania, although it is understood that effective urbanisation involves government and non-government actors at multiple scales.

    CALL FOR RESEARCH

    This call for proposals from Tanzania’s Urbanisation laboratory outlines the need for a piece of research that is critical for compiling a workable urbanisation roadmap, namely an estimate of the financial resources available to Tanzania’s 6 leading cities: Dar es Salaam, Mwanza, Dodoma, Arusha, Mbeya, and Mtwara.

    Numerous pieces of research have identified the infrastructure deficit and financing gap in African cities to be in the region of $40 billion per annum (See for example, AFD, 2011). In Tanzania infrastructure is estimated to be 50% under-funded. Most of these studies conclude with an exhortation of local government to access finance and address the infrastructure deficit.

    In Tanzania the case has been made that more government investment in urban infrastructure would boost GDP disproportionately (World Bank 2016). This is almost certainly true, but raising and investing the required finance has proven difficult due to missing fiscal capacity, absolute poverty, low levels of revenue collection and structural barriers to finance created by the inability of mainstream financial institutions to gauge risk and opportunity in the urban African context (see Booth, 2014)2 . Local governments in Tanzania may not enter the bond market, but can enter into public private partnerships. Accordingly, the estimates of how much infrastructure and finance is required in an ideal world, tend to prove untenable. They do not find traction in actual service delivery and they often do not shift capital allocations.

    The new research being sought with this commission aims to adopt a different framing of the urban finance challenge. It will do this by describing the available resources for investment in urban infrastructure and services in Tanzania at the current time. The estimate will:

    • Include money available or potentially available to municipalities, districts and national government, for allocation at the city-scale.
    • Combine both the existing capital account of municipalities and the amount of money that could be accessed on behalf of the respective cities in global financial markets given all the prevailing constraints, in Tanzania’s 6 most significant cities.

    The research should assist government officials in Tanzania in understanding both how much money they have at their disposal and how much money they might be able to raise in capital markets.

    It is imagined that completion of this report will involve research into:

    • The extent and reliability of transfers from national government to different sub-national entities in the respective cities. In Tanzania’s Second Five Year Plan, central government has committed to spend $48.8 billion between 2016 and 2021, of which $1.6 billion is for urban planning, housing and human settlements, but these numbers need to be disaggregated across cities and over recent history in order to understand what level of ambition is appropriate in the respective cities.
    • The level of household income available for public services in each city. This data may have to depend on plausible estimates and proxy indicators of household budgets, but should include a reference to remittances from outside the country. The research should distinguish between that household income that currently finds its way into the public purse and that level of income that could contribute to public budgets if revenue collection systems were in place.
    • The degree to which national transfers, local revenue collection and assets-owned by the respective cities, enable access to finance for the respective cities. This estimate should be based on repay-ability of a government loan or bond, the capacity of national government to manage such debt on behalf of the respective cities, and the scope for public private partnerships between local government and private companies involved in the delivery of public services in Tanzania.
    • The intention is not to replicate work showing that infrastructure finance needs are large as this is already well understood by the people who live with the infrastructure deficit on a daily basis. Instead the intention is to understand how much money is available (even if very little) so as to ground the urban development planning in an assessment of the available resources.

    REQUIREMENTS OF THE CONTRACTOR

    The suitable research team will:

    • Understand the political and institutional landscape in Tanzania so as to have a realistic grasp on the nature of budget transfers between tiers of government and the associated opportunities and limitations for cities seeking to deliver infrastructure and services. A separate study is being commissioned by the Urbanisation Laboratory in parallel to this study, that will explore the “political economy” between national and local government. Collaboration with this study is expected, but the successful contractor will have an independent understanding of this issue.
    • Be able to report household budgets and affordability. Official figures for Tanzania suggest a 2015 GDP per capita of $867 (in constant 2010 values), but insight into how the 51% of the urban population that live in informal settlements remains limited. The study will make credible estimates of how much households are able and prepared to contribute to energy, sanitation, transport and other services that meet their day-to-day needs.
    • Be able to estimate access to capital via the bond market and government debt market for each city. The contractor is expected to establish a hypothetical balance sheet for the six cities included in this study, and use this balance sheet, and the estimates of household affordability above, to gauge how much capital the respective cities would be able to access were they to approach the bond or loan market. If cities are not in a position to access bonds, debt or development finance, the reasons for this should be provided.

    REQUIRED DELIVERABLES, BUDGET AND TIMELINE:

    • The key deliverable on this research will be a written report, not to exceed 60 pages, that documents the availability of capital of Tanzania’s 6 leading cities in a manner that can be understood by Tanzania’s public sector decision makers. The report should be accompanied by a 2 page Executive Summary. vThe all-inclusive budget for this work should not exceed $100,000 but proposals will compete in terms of budget and value for money. Budgets less than the threshold amount will count favourably in the evaluation of proposals.
    • The final report must be submitted by 31-July 2018.
    • The research team will be expected to engage local stakeholders including government departments and will draw on existing data, but may need to look for new sources of information in compiling a credible and useful report.
    • It is the intention that the research be enriched by the Urbanisation Laboratory. The successful research team will be required to present their proposal and methodology to the Laboratory in Tanzania, in person, in mid-November 2017 and again in mid-March 2018. At each event the appointed researchers should be open to peer review and recommendations from the Laboratory members. This process is designed to ensure a better research product and understanding of the research findings among local decision makers.

    PROPOSAL SUBMISSIONS AND QUERIES

    • Proposals should be submitted to Dr Kate Owens at the World Resources Institute [Kate.Owens@wri.org] and Anton Cartwright at the African Centre for Cities [CRTANT005@myUCT.ac.za] and Mussa Martine at ESRF [mussa.martine@gmail.com] in the same email by 6pm East African Time, Friday 22 September 2017.
    • Proposals should be explicit about the key criteria against which they will be judged, namely: composition and competence of the research team, all-inclusive costs, track-record in conducting this type of research and knowledge of Tanzanian public finance.
    • Proposals will be evaluated by a core team within the Urbanisation Laboratory comprised of members from African Centre for Cities (ACC), World Resources Institute (WRI) (Ross Centre), Economic and Social Research Foundation (ESRF) and Tanzanian Government. All conflicts of interest will be declared and managed so as to ensure they do not interfere with the appointment process.
    • All submissions will be acknowledged by email. Successful contractors will be announced by 10 October 2017 and expected to begin work by 1 November 2017 at the latest.
    • The successful researchers will be required to enter into a contract with WRI Ross Centre, who is responsible for disbursing fees on this project. The final payment will only be made once a satisfactory report has been received.
    • Member of the Tanzanian Urbanization Laboratory are eligible to submit proposals but will be required to declare conflicts of interest and recuse themselves from the evaluation of proposals.
    • Queries on this research can be submitted by email to CRTANT005@myUCT.ac.za

    1World Bank. 2016. Tanzania economic update: the road less traveled – unleashing public private partnerships in Tanzania. Tanzania economic update; issue no. 8. Washington, D.C.: World Bank Group. http://documents.worldbank.org/curated/en/302151467992051044/Tanzania-economic-update-the-road-less-traveled-unleashing-public-private-partnerships-in-Tanzania

    2Booth, J (2014) Emerging Markets in an Upside Down World: Challenging Perceptions in Asset Allocation and Investment (The Wiley Finance Series).




    Last updated on 2017-09-06




ESRFs activities are supported by the Government of the United Republic of Tanzania, United Nations Development Programme (UNDP), African Capacity Building Foundation (ACBF) and International Development Research Centre (IDRC)