Skills in Tanzania

Public-private partnerships and incentive restructuring for skills development and sustainable local content policies in Tanzania

Summary:

The shortage of technical skills in Tanzania has been one of the most fundamental constraints to its industrial development. Vocational training institutions are funded by a skills levy collected by the Tanzanian Revenue Authority. One third of the skills levy is spent on Technical Vocational Education and Training (TVET), while two thirds remain with the government. From the Association of Tanzania Employers (ATE) report, it is shown that one of the key constraints in skill development is that the skills development levy is not implemented nor distributed transparently.
The project aims at identifying new skills development models involving firms and vocational training institutions, as well as the restructuring of the current fiscal costs and incentives for skills development. The adoption of discrete choice experiment (DCE) techniques will allow testing of the feasibility of these different models among different stakeholders and tailoring models for different sectors and firm-types.

The Corruption issue:

At the same time Vocational Education and Training Authority (VETA) remains severely underfunded and the lack of qualified teachers and training infrastructure have been identified as a bottleneck in the provision of education and skills training. Moreover, given the dramatic shortage of skills and despite local content policies restricting the employment of foreign workers, companies in Tanzania have increasingly relied on foreign workers and bribed the Immigration Agency to provide illegal short term work permits. This corruption has a meaningful impact on the viability of the local content policy as well as undermining relationships between locals and migrants.

Theory of Change:

  • IF incentives around sector-specific skills profile training in the private sectors are targeted and restructured with the introduction of a skills levy rebate system, and VETA are involved in the joint certification of training quality alongside firms already engaged in some on-the-job training in certain sectors or export/ economic zones
  • THEN leakages and rents capture in the skills development sector will be reduced, skills training will improve and the local content policy regulation on foreign workers employment will become more enforceable
  • BECAUSE the incentives of firms and vocational training institutions will be aligned, firms and vocational training institutions will engage in collective action and PPPs programmes in their own interest, and the demonstration effect of the new models could generate further experimentation in other sectors

Research Methods:

The potential for incentive restructuring can be assessed by Discrete Choice Experiments (DCE). Discrete choice experiments (DCEs) are a quantitative technique for eliciting preferences that can be used in the absence of revealed preference data. Knowledge about preferences is pivotal in designing effective inventive structures. Hence, DCEs are particularly useful for comparison of alternative policy solutions and assessment of the efficacy of existing policies.
Data and reports of existing skills programmes implemented in Tanzania can reveal region, sector and firm specific heterogeneity. Experiences of previous and ongoing projects are particularly useful for the design of DCEs and for cross validation of preliminary DCEs results. Pilot outcomes of the DCEs can be mapped against the performance of existing programmes to see whether attributes have been chosen appropriately.

Partners: Antonio Andreoni and Sophie Van Huellen (SOAS), Sam Wangwe (REPOA) and Palladium Tanzania

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