Tanzania forecasts Sh22.5 trillion PPP boom by 2025

Dar es Salaam. The government is forecasting a significant surge in Public-Private Partnerships (PPPs), with a projected $9 billion (Sh22.5 trillion) invested by 2025. 
This ambitious target stems from a combination of promising infrastructure projects in the pipeline and recent legal reforms that have bolstered investor confidence.
PPP commissioner David Kafulila revealed the forecast during a recent visit to Mwananchi Communications Limited headquarters.
 He highlighted the government’s commitment to improving PPP execution efficiency, aligning with recommendations from investors.
An American entrepreneur, who has invested in the agricultural sector in Tanzania, Mr Michael Coudrey, told The Citizen during a recent interview that Tanzania was growing, and as an emerging economy, there is an opportunity to grow more.
“But I think that there are some limitations in capacity,” he said. He pointed out key issues affecting his business operations in the country  like poor infrastructure and roads, which hinder exports. 
“We have solved a lot of these challenges in the private sector. In my opinion, the private sector has an opportunity to build if the government allows it. When we ask the government if we want to build a 30-kilometer road from the farm through the village and show them our architectural plans, there has never been a time when they said no,” he added.
The Oxford University economics Professor Stefan Dercon during a separate interview said the idea that the public and private sectors come formally together as a form of PPP is not easy to pull off.
He said it is one thing for the government to be supportive of the private sector, which is what he appeals for, “but there is another form where you want them to get married, which is what happens in PPPs, and that doesn’t always work well,” he said, adding, “I would rather slow down than believe that the PPP will provide an answer.”
However, Mr Kafulila said much has been done by the government in the areas of legal reforms that increase investors’ trust and confidence in the execution of joint venture projects with the government.
“An assessment done by the government shows that currently, the country is implementing $1 billion (Sh2.5 trillion) worth of PPP projects. However, they are anticipated to reach $9 billion (Sh22.5 trillion) by 2025,” he said.
“It’s doable because the projects that are in the pipeline are of great value, including the Mtwara Bamba Bay road project worth $5.4 billion, the $300 million solar power project stretching from Same, Dodoma, and Iringa, as well as the construction of a power transmission line in northern Tanzania worth over $300 million,” he added.
According to him, other projects include the implementation of the Kibaha-Chalinze-Morogoro and Dodoma Expressway projects worth $1 billion and the construction of a 130-kilometre road costing $200 million.
He said the amendment to the PPP Act has increased investors’ confidence after accommodating provisions that allow the settlement of disputes in international dispute arbitration organs, as well as the government’s readiness to fund the projects through the Viability Gap Funding (VGF).
Furthermore, he said the amendments allow the provision of investment incentives and single-source procurement for projects executed under urgency without demanding government funding.
 “The amendment has increased our competition within the East African Community (EAC) as the Six Phase government under President Samia Suluhu Hassan has displayed a strong political will to cooperate with investors in the implementation of projects,” he said.

Credit rating
He said for the first time in the country’s history, Tanzania has been credit-rated by two globally reputable firms, Moody’s and Fitch. “During the assessment held between June and September 2023, Tanzania has been graded B+, which is the highest mark to be awarded to a country in the region, therefore further increasing investors’ trust and confidence in cooperating in the execution of PPP projects,” he said. He said the credit rating shows the country’s economic health, noting that the involvement of Moody’s and Fitch was an added advantage to Tanzania.
“Moody’s and Fitch are the credit rating companies assessing global economic superpowers like the US, China, Vietnam and several others,” he said.

Kibaha-Chalinze Express-way project
Mr Kafulila said five companies were picked out of nine that applied for project implementation; they, however, asked for a time extension until February 2024 in order to complete feasibility studies on the project. 
“However, the companies raised concerns about demanding an extension of the lot for the project’s viability. Instead of Kibaha and Chalinze, the government is finalising feasibility for the Chalinze-Morogoro portion to allow project implementation from Kibaha-Chalinze and Morogoro in the first phase,” he said.

Informal sector formalisation
Furthermore, Mr Kafulila stated that formalising the informal sector was the key to Tanzania’s private sector’s future and development.

Losing trade cases
He said good governance was the only way to avoid losses made on cases submitted for international settlement of investment disputes, noting that failures were either caused by violations or incompetent representation.
However, he emphasised that it does not mean Tanzania has not  won cases there, referring to victories registered in cases related to City Water and Independent Power Tanzania Limited (IPTL) as examples.