Mr. Rished Bade, Commissioner for External Finance, Tanzania joined the INFF Report: ‘Making finance work for people and planet’ launch event hosted by the Government of Spain and INFF Facility during the Financing for Development (FfD) Forum 2024 in New York on 24th April 2024.
The Commissioner outlined how Tanzania is leveraging the INFF approach to align development plans with financial resources, ensuring inclusivity and environmental sustainability. By adopting the INFF in 2021, Tanzania mapped diverse financing pathways, including private sector engagement, green bonds, and innovative financing strategies. This led to significant reforms, credit rating upgrades, and successful capital market initiatives, catalyzing private investment and empowering communities. Through the Climate Finance Unit, Tanzania aims to coordinate climate financing and establish carbon trading mechanisms, driving sustainable development. Subnationally, initiatives like sustainable bonds and digital revenue collection systems in Zanzibar further enhance Tanzania's development landscape.
The full transcript of the speech is attached below:
Thank you very much.
I think this is a fantastic opportunity to speak. For me, having heard from all these people, I feel there's a lot to talk about with the integrated national financing framework. As I have been asked to speak about Tanzania experience and particularly the questions you asked, I started looking at the topic itself. The topic itself tells a lot, saying that 'Making finance work for the people and planet'.
Most of the time, we've been looking for it to work for the people because it has never worked like that before. So, we need to see that it works for everyone. Then on top of it, we also need to be careful in making sure that the financing is working for the planet. I think the testimonies that we've had from various people here tells that every country is now really cautious about the planet, particularly the climate. I think the topic is very fit for this. I'll start just by saying that in most of the developing countries, there's been a mislink between the national development plans and the financial resources needed to achieve them. That is the key issue addressed with this integrated national financing framework.
I think for me, if you ask me, what has it done to Tanzania? This is exactly that. For the first time, we managed to link what we desire in the five-year development plan and what we can source to achieve our desires. In the process of developing INFF, the Government of Tanzania and UNDP, collaborated to develop and implement the Development Finance Assessment, DFA, first, and later on, it became a financing strategy, which we adopted in 2021.
Through the Development Finance Assessment or DFA, we mapped out all the traditional and not-so-traditional financing pathways, including innovative ways of funding for our development plan. We looked at domestic revenue resources, non-traditional domestic resources, and external grants; which we traditionally use to receive grants and some concessional loans, but we looked at our external borrowing, both concession and non-concessional, a climate change fund, which was quite a new addition domestic savings; we've been hearing here that some of the time we were just looking outside, but there's a lot to do and if you align well, you can find that the money is even available domestically. Domestic savings, bank financing, private-public partnership, venture capital, corporate bonds, private equity, and all those sorts.
We mapped out with the support of UNDP, we mapped out when we were creating now the development finance assessment and finally, the strategy. I would say that the key milestones of the INFF process in Tanzania include the realization of the alignment between the planning and financing concepts. We've had a few testimonies here that are purely the key or the core concept of INFF.
Our last five-year development plan came up with a financing strategy All together, marked together. You mentioned about 45 but it was actually 49 billion dollars. 65% of it is marked to come from the private sector. Since 2021, when we adopted the INFF, there have been significant reforms in the financing of the government development plans. This includes our need to go for the credit rating. Indeed, that's one thing we have achieved.
Now, the country is rated for the first time. Very recently, we all know that Moody's have recently upgraded the rating from B2 to B1 with a stable outlook. It's one of the key milestones out of the INFF that we've been working together with the UNDP and other partners. In 2002, we managed to establish crowdfunding guidelines for capital markets and securities. Also, we established corporate bond issuance guidelines and formulated alternative project financing strategies. All of these were achieved under the INFF.
I would probably like to mention a few key successes that are out of these processes. For the first time, the government and public investment has managed to access key private capital. And this, including last year, one of our banks, by the name of CRDB Bank, with the support of IFC, managed to issue a green bond, and it was one of the kind in Africa there. And this is a very key thing, that's definitely a result of the outcome of INFF. Other than that, we also, with the support of IFC, managed to do some credit enhancement; and another bank called the National Microfinance Bank, managed to issue a gender-based bond.
This is to target funding for the women empowerment because there was no anything like that in the market, and that was issued, and it was very successful. That was a $100 million ticket. This is one of the key achievements. But very recently, this year, one of the local town councils, which is a water utility, managed to do a social bond; and it worked very well. This is quasi-supported, but they managed to do that and raise about $50 million to do the investment in water and waste management. That's also out of the INFF. Apart from that, because also we have other partners with whom we've been doing work along the way because we have now a set of frameworks that we worked on.
We have been doing rural electrification projects with the support of the World Bank. This is some of these are off-grid solar power projects. In that sphere, we've been encouraging the private sector to jump in and invest in that. Because of some risks, we have managed to work out with the World Bank through IDA financing to do a blended financing and the open up of private sector, and it's working very well. We've got quite a number of private sector getting into that business through borrowing from Commercial Bank, which the rate is down because it's blended with the IDA (International Development Association) financing. But again, with the help of cooperation with the Federal Government of Germany, we have an agreement in place where it's a performance-based grant.
We work out some of the public SoEs (State-owned Enterprises). We target mainly the water utilities and the water utility companies, they can access; if they can manage to prove they can access funds from the commercial banks, they're getting grants. It's a performance-based grant. That grant ends up blending the rates that they can access from the Commercial Bank in a very affordable way. It's been working very well. A number of what the utilities have been benefiting from that. Apart from that, on this blending finances, which is quite new in the government.
We've been very closely working with the UNDP country office to map up all the possible areas or opportunities that can be used, along with mapping the SDG investors to see how we could capitalize on that. Those are a few things that already on the ground are working, and we're very happy with this because if it wasn't for this, we wouldn't be talking about this now. But looking ahead, some of the things that are on the board now, of them have been mentioned here. We are establishing a climate finance unit, and this is working for the planet. This is under me. I'm quite busy making sure I establish the Climate Finance Unit.
We're establishing the Climate Finance Unit to make sure that we're coordinating all the different opportunities and different things that we could do under the climate finance so that the finance could work for the planet. Also on the carbon footprint, we're working on to establish a way of measuring and finally trading with a carbon credit. That's one of the main things that we are hoping will happen. Others, including green taxonomy and tax for SDG 13, which is the climate change.
Already, we're trying to identify some areas where we could raise money to support the climate change mitigations. It is quite hefty, but we are progressing well there. On your other part, I know I'm overtime. This is the last point. On the other point that you asked for subnational, we have Zanzibar, which is kind of semi-autonomous. There we are doing a sustainable quasi-sovereign bond framework. It's just a framework. We're also doing SDG Investor Map and Zanzibar local digital revenue collection system. So, we are very confident that things are working. And sorry that I've spent more than seven minutes.
Thank You.
