MARKET DATA REVIEW: Hurdles of raising funds for infrastructure development

Raising funds for infrastructure development is difficult, not only to us but in many African economies. The experience may be different among and between countries, i.e. the process being slightly easier to others, but difficult to many. For instance, countries such as South Africa, Nigeria, Botswana, Mauritius, and Ethiopia are said to have made some significant progress, relative to others, in developing their infrastructure financing framework (regulatory environment, financing availability, capacity to get deals done, etc). On the other side, much as Tanzania has the necessary regulatory environment and has sufficient economic opportunity to be attractive to investors in infrastructure development, but it lacks financial availability and has limited capacity of public and private sector to get infrastructure deals done. This is according to the recent report by the Africa Finance Corporation and the Boston Consulting Group, the report titled ‘ Infrastructure Financing in Sub-Saharan Africa -- Best Practice from Ten Years in the Field’, dated May 2017.

Estimates of Tanzania’s annual infrastructure gap put us between $5 billion to $7 billion – as is, every dollar of that gap represents a drag on our development and a diminution of the potential we have, i.e. unless and until we acquire good transport systems, power generation capacity, and other basic infrastructure that we need, we will continue to lag behind not only the developed world but other emerging countries as well. That’s why current efforts by the government coupled by sufficient political will to significantly invest in our infrastructure development is commendable – it is a clear indication that our government recognize and appreciate the magnitude of the infrastructure problem we face and the need to seriously do something about it. However, it is also a fact that despite all the good intents, we have limited domestic financial resources and capacity needed to close the gap. There is a need for creating the environment that will enable private capital and expertise to be mobilised for fast pacing this development.

MARKET DATA REVIEW: Hurdles of raising funds for infrastructure development

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