Socio-Economic Sustainability of Biofuel Production in Sub-Saharan Africa: Evidence from a Jatropha Outgrower Model in Rural Tanzania

In Africa, there is a growing interest for biofuel projects by foreign private investors, as well as increasing support from bilateral and multilateral donors towards incorporating biofuels into governments’ development plans and energy policies. For non-oil producing African countries, biofuel production has the potential to partially displace costly oil imports. Biofuels also have the potential to provide a new market, income opportunities, and economic growth in rural areas and their production may stimulate improvements in local infrastructure and eventually broaden development. Investment in biofuel production has the potential to transform the economy, landscape, and standard of living. Hence, to maximize benefits, the promotion of biofuels needs to be carefully planned and sustainably implemented. Sub-Saharan Africa in particular has seen a rising tension between governments’ desire to promote investments in biofuels to supply local or international markets and their desire that this new business benefit local farmers and villages and increases economic growth in rural areas.

This paper broadens the measurement of sustainable development by reconsidering the socio-economic approach at a different level of analysis, making use of a case study. Typically, socio-economic implications are measured in terms of material gains and economic indices, such as employment and income. This paper enlarges this approach and the analysis also includes non-material goods such as relationship, wellbeing, and perceptions. This paper investigates whether an outgrower scheme for a Jatropha production project in Tanzania is capable of developing “socio-economic sustainable outcomes for farmers.” The answer relies on the inclusion of an analysis of the farmers’ material benefits and subjective perceptions about the overall welfare contribution of the outgrower scheme. This research is the first to propose a practical way to operationalize such an analysis and to apply it to a concrete investment project. The paper addresses three questions:

1. Is it profitable for farmers and companies to produce Jatropha straight vegetable oil (SVO) by implementing an outgrower scheme in Tanzania?
2. How can Jatropha SVO production be considered socio-economically sustainable for farmers?
3. Are there best practices and structures that can be implemented by biofuel investors in order to ensure that rural farmers benefit from Jatropha production?