Tanzania needs Sh32tr to attain semi-industrialised economy

Tuesday September 25 2018

 

By Alex Malanga @ChiefMalanga amalanga@tz.nationmedia.com

Dar es Salaam. The government needs some $14.1 billion (about Sh31.8 trillion) to finance 30 projects in an effort to attain an industry-driven economy, according to The Citizen calculations from figures compiled by the Tanzania Investment Centre (TIC).

For the country to achieve its goal come 2020, TIC executive director Geoffrey Mwambe has called on investors to invest in the projects in the forms of Public Private Partnerships (PPP) and joint ventures.

Going by the project booklet titled ‘2018 Project Briefs Selected Investment Opportunities’ , the projects cover the sectors of oil and gas, and energy, which account for $8.96 billion (Sh20.2 trillion) and $3.61 billion (Sh8.158 trillion) respectively.

Also in the list are manufacturing, economic infrastructure and mining, which account for $895.59 million (Sh2 trillion), $637.35 million (Sh1.4 trillion) and $4.5 million (Sh10.17 billion), respectively.

The most expensive project in the list of Oil and Gas sector is a $7.3 billion worth offshore Southern Tanzania-based Block 4/1B, which is meant to supply gas to local, regional and international markets.

In the energy sector, there is an $821 million worth Mbeya-based Ngozi 200 megawatts Geothermal Plant, which involves development of 600MW geothermal plant in two phases with 200MW for Phase I and 400MW for Phase II.

Manufacturing is represented by the Monduli District-based Engaruka Soda Ash Project, which will be implemented by the National Development Corporation (NDC) in a joint venture with a strategic investor at a cost of $750 million.

In economic infrastructure, the most expensive project is the construction of a Fishing Port, which will be implemented to the tune of $600 million.

Besides, a $4.5 million worth Kagera-based Kyerwa Tin Project, which was meant to provide ready and reliable market for small scale tin miners, stood alone on the list.

“The door is open for all investors. It is through industries that Tanzania can export finished goods instead of raw materials,” said Mr Mwambe.

The sector, according to him, will also create employment, expand markets for agricultural products and generate revenue for both the investors and government.

Mr Mwambe said Tanzania has all it takes to attract investors as it is widely considered to be a major investment hub in the East African region.

According to the 2017 World Investment Report, Tanzania continues with a strong performance as compared to other countries in the East African Community (EAC).

According to Rand Merchant Bank (RMB) statistics of 2016, Tanzania is among the top 10 most attractive business hubs on the continent.

“Investors seeking to invest in the region have to understand that Tanzania is the largest country in the region by both size and population,” said Mr Mwambe.

President John Magufuli has put more emphasis on industrialisation as the main agenda for the government, stating categorically that the fifth phase administration focuses on building an industry- oriented economy.

“I promise to work closely with the private sector because the fifth phase government strongly believes in private sector partnership as it strives to improve the welfare of citizens,” Dr Magufuli was quoted as saying during past public rallies.

In a fresh bid to create friendly business environment for investors, the President launched a war on corruption and bureaucracy.

He also instilled discipline in the public sector with a view to creating a more stable, predictable and attractive business climate.

In response, the Tanzania Investment Centre (TIC) has been carrying out intensive campaigns in promoting establishment of new industries, a move that would encourage and strengthen investment inflows into Tanzania.

So far, both local and foreign companies have shown great support to the government’s initiatives of encouraging companies and individuals to set up industries.

“As the primary agency of the government for investment promotion and facilitation, TIC is looking forward to facilitating potential investors to put money into various projects,” noted TIC boss.

The Tanzania Private Sector Foundation (TPSF) executive director, Mr Godfrey Simbeye, was quoted by The Citizen last year as saying capital crunch was adversely affecting PPPs, adding that big projects need lots of money, which is hard to source from local banks. Expounding on that, he said a bankable feasibility study for a project worth $300 million (about Sh678 billion) would cost between Sh2 to Sh5 billion to finance.

To address the financial challenge, he called on the government to turn to international development institutions, which would guarantee private sector loans for PPP projects at relatively low interest rates.

“We’ve a limited budget to finance long-term projects, but this is just a transition period as the rationale for PPP remains ‘best practice’ globally,” noted Mr Simbeye.

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