Sustainable Investment: The Future for Tanzania

The global market is characterised by increasing complexities and volatility, resulting in the need for business leaders to adapt and navigate through uncertainty in order to stay competitive. Amidst the many challenges leaders need to address, climate change is critical and requires urgent attention to ensure the well-being of future generations. Carbon emissions and biodiversity loss are considered to be among the top three threats to humanity, and as the global climate crisis escalates, Tanzania, with its abundant natural resources and diverse ecosystems, finds itself at a crossroads. Sustainable investments provide a promising pathway to combat the climate crisis while fostering economic growth, and the Private Sector has a key role to play in aligning business operations with sustainable practices in order to drive the country's prosperous future.

At a recent knowledge forum around the theme ‘Sustainable Investment: The Future for Tanzania’, members of the CEO Roundtable of Tanzania (CEOrt) unpacked the contribution of businesses in championing the climate action agenda within  three focus areas: business performance, access to finance, and market access. Sharing examples of best practices, this session highlighted opportunities for business leaders to explore innovative strategies and collectively contribute to shaping an environmentally conscious Private Sector in Tanzania. As Chairman of the CEOrt Business and Sustainability Committee, Mr. Devang Vussonji - Managing Director at Dalberg Tanzania - set the stage for the focused discussions by emphasising how across the region and beyond, the push for sustainable investments is evident. For one, Kenya's pursuit of green growth opportunities and intention to develop a green economy serve as an example, and Tanzania is well-positioned to capitalise on broader market access. Furthermore, global investors are now considering carbon footprint as a screening criterion for potential beneficiaries, presenting businesses with opportunities to enhance operational efficiency and reduce costs. 

Sustainable Investments and Business Performance

Taking a proactive approach allows business leaders to be well-prepared for future regulatory requirements that may arise. The increasing demands of consumers are also driving organisational transformations, compelling businesses to comply with green initiatives. As environmental consciousness continues to grow within society, the pressure on businesses to adopt sustainable measures will intensify. While sustainability certainly needs to be linked to business, the significant expected returns are long-term. The efficiency improvements driven by decreased costs will ultimately boost operational profits. 

During the CEOrt dialogue session, the consensus among industry captains was that  sustainability practices are present across businesses, varying in scale. Tanpack Tissues Ltd, serves as an excellent example of an environmentally sustainable organisation. As a major manufacturer and supplier of Tanzania's recycled tissue paper and paper products, Tanpack prevents over 7,000 tons of paper waste from ending up in landfills. Instead, it recycles such into environmentally friendly products under the brand names of Velvex, Rexa and Toilex, which are recognized and well recalled by consumers across the country as well as in the region. Tanpack takes pride in waste reduction, generating taxes and creating employment through recycling. Derm Group Ltd, is also actively engaged in the sustainability space by prioritising environmentally friendly products and solutions that cater to the needs of a developing nation. Specialising in advanced, energy-efficient solutions, Derm Group ensures reliable and comfort-controlled environments while maximising operational efficiency. Group Chairman Ridhuan Mringo emphasises the organization's commitment to making financial decisions that consider environmental, social, and governance (ESG) factors. Tembo Nickel Corporation Ltd, also a sponsor of this dialogue, embodies a strong stand for sustainable development and recently handed over its 2022 community development projects worth more than 200 million shillings to support education and health projects in Ngara, Kagera. Businesses are presented with a multitude of opportunities to embrace sustainability, and by making the most of them, they can play a significant role in driving sustainable development and creating a positive socio-economic impact while securing their own future growth and success.

Sustainable Investments and Access to Finance

Many businesses grapple with the question of how to secure funding for their sustainability practices, especially small and medium-sized enterprises (SMEs) in Tanzania. To address this issue, discussions on access to finance highlighted important insights. Mr. Benedict Busunzu , a member of the CEOrt Business and Sustainability Committee and CEO at Tembo Nickel Corporation Ltd, mentioned the need for national ESG policies that incentivize and support businesses. It is crucial to ensure that the transition towards sustainability is fair and realistic, avoiding any adverse impact on business operations. 

Financial institutions participating in the discussions pointed out that green funding options are available for clients; however, one of the challenges lies in identifying viable projects that can tap into these resources. Banks are actively interested in assisting SMEs in meeting the necessary requirements to access these opportunities.

As a bank committed to sustainability, Exim Bank (Tanzania) Limited has emerged as one of the leading forces in driving positive change and championing sustainable initiatives within our communities. Demonstrating a steadfast dedication to the environment, Exim Bank proudly directs its investments towards green initiatives, enabling businesses to embrace renewable energy sources, adopt eco-friendly technologies, and contribute to re-afforestation efforts. By actively promoting a thriving economy built on sustainable foundations and restoring our forests, Exim Bank aims to pave the way for a greener tomorrow. 

The Central Bank of Tanzania, in its role as a regulator, has taken proactive steps by mandating businesses in the financial sector to develop climate change policies. This directive presents an important opportunity for banks to enhance their support for clients in achieving ESG compliance. This regulatory measure not only reinforces the importance of addressing climate change but also encourages banks to play an active role in fostering a more sustainable and resilient financial sector in Tanzania. Citibank Tanzania Limited is part of the Citigroup and is committed to drive the transition to a Net Zero economy. Citi is committed to achieving net zero in its operations by 2030 and net zero on financing activities by 2050. In line to its sustainability strategy, Citi has committed $1 trillion sustainable finance by 2030 and is focused on supporting key sectors including energy, power, steel, auto manufacturing, mining, commercial real estate, etc. Between 2020 and 2021, Citi financed and facilitated a total of $222bn into sustainable finance. In Tanzania, Citibank is working closely with the central bank to adopt the newly introduced climate related risk management guidelines which is an important milestone for the financial service sector towards supporting sustainability linked opportunities. It also supports its clients in their transition journeys into low carbon business models. Citibank offers thought leadership sessions and various sustainability solutions including green bonds, sustainability-linked bonds, social bonds, carbon credit, to name a fe

Sustainable Investments and Market Access

The insights shared during the discussions brought inspiration to business leaders. It was refreshing to learn about the different initiatives already in place, from microforests that are being set up in schools to companies that are shifting from physical archiving of documents to digitised record keeping. To further enhance knowledge sharing, there was a call for more case studies to be shared among leaders. 

One notable case study presented during the session was by Mr. Jean-Francois Schoepp , Managing Director of TotalEnergies Tanzania. Recognizing the growing demand for electricity and a global need for decarbonized energy, TotalEnergies underwent a transformative journey driven by sustainability. The company transformed from an oil-focused company to a broad energy company that produces and markets various forms of energy on a global scale. Harnessing opportunities in the climate sector in Tanzania, one of the things TotalEnergies does is propose solar solutions to clients. The company also acknowledges that these are long-term investments, and aims to achieve net zero compliance in its operations by 2050. By exploring and learning from the initiatives implemented by other companies, businesses can broaden their exposure and raise awareness about available opportunities.

When considering the contrast between reactive and proactive approaches, business leaders acknowledged the distinction in responding to regulatory requirements versus consumer demands. While reactive responses to consumer demands may occur more organically, it prompts businesses to reflect on their own procurement policies. By adopting the role of consumers and actively demanding green compliance from suppliers, businesses can effectively foster sustainable practices throughout their value chains. This proactive stance empowers businesses to play a crucial role in driving sustainability and facilitating positive changes within industries.

The Way Forward

Collective action plays a pivotal role in driving forward the climate action agenda. In Tanzania, harnessing public-private partnerships can be a powerful strategy to mobilise resources and expertise for sustainable infrastructure development. It is crucial for industry leaders to have a comprehensive understanding of the costs associated with energy consumption within their businesses. This awareness will influence the establishment of organisational key performance indicators (KPIs) and facilitate the identification of cost-saving opportunities. Through actively assessing and managing energy consumption, businesses can contribute to sustainability efforts while improving their overall financial performance.

Thank you to our speakers: Shemane Amin ( A&K Tanzania ), Kalpesh Mehta ( Oryx Energies ) Jose D. Moran ( Tanzania Breweries Limited (TBL PLC)